Digitrade Digest #52
South Korea to join CPTPP, UNCTAD e-Commerce week begins next week and much more....
South Korea
S. Korea decides to join CPTPP trade agreement
The Korea Herald: South Korea decided Friday to join a mega free trade agreement involving 11 Asia-Pacific nations as the country seeks to diversify its export portfolio amid heightened economic uncertainty.
Late last year, the country launched the process to accede to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.
The plan to join the CPTPP was approved at an economy-related ministers' meeting Friday, and the government will submit an official application after completing domestic procedures, including a report to the National Assembly, officials said.
The CPTPP is the renegotiated version of the Trans-Pacific Partnership led by the former US President Barack Obama administration. In 2017, then US President Donald Trump withdrew from the TPP, widely seen as a key counterweight to China's growing economic clout.
The CPTPP, launched in December 2018, has been signed by 11 countries, including Japan, Australia, Canada, New Zealand and Mexico.
The government has said it plans to submit the CPTPP application before President Moon Jae-in's five-year term ends on May 9. The incoming government of President-elect Yoon Suk-yeol is expected to take on negotiations for the country's membership, which is expected to take at least one year.
The CPTPP accession would boost trade and investment for South Korea, increasing its gross domestic product by 0.33-0.35 percent, the state-run Korea Institute for International Economic Policy estimated.
Farmers and fishermen have opposed the move, citing its potential damage to the agricultural and fishery sectors.
The government said it will make efforts to reflect calls by the potentially affected sectors as much as possible in its negotiations for the CPTPP accession and draw up measures to support them, when needed.
Singapore -US
Singapore, US expand bilateral economic cooperation to include AI governance
ZDNet: Both countries signed new Memorandums of Understanding (MOUs) to expand bilateral cooperation outlined in the Singapore-US Partnership for Growth and Innovation, which was first signed last October. The partnership agreement aimed to establish "inclusive growth" for both economies and regions, according to Singapore's Ministry of Trade and Industry (MTI).
It encompasses collaborative efforts in digital economy and smart cities, energy and environmental technologies, advanced manufacturing and supply chain resilience, as well as healthcare. Under the agreement, both nations aim to develop common technical standards and build more "trustworthy and interoperable" systems.
This week's MOUs looked at new areas of cooperation, the Singapore ministry said. First, Singapore's Infocomm Media Development Authority (IMDA) and the US Department of Commerce (DOC) would jointly develop interoperable AI governance frameworks and drive the adoption of ethical AI. The two government agencies would co-organise mapping exercises, workshops, and various events with participation from both Singapore and US organisations.
Indo-Pacific Economic Framework
What is IPEF, and will it help the US counter China’s influence in the Asia-Pacific?
SCMP: What is IPEF?
IPEF is seen as reflecting US ambitions to solidify ties with key economies in the Asia-Pacific by building a supply chain that excludes China.
In October last year, President Joe Biden said at the East Asia Summit: “The US will explore with partners the development of an Indo-Pacific economic framework that will define our shared objectives around trade facilitation, standards for the digital economy and technology, supply chain resiliency, decarbonisation and clean energy, infrastructure, worker standards, and other areas of shared interest.”
US Secretary of Commerce Gina Raimondo and Trade Representative Katherine Tai visited countries in the Asia-Pacific in the following months to secure their participation in the framework.
Details have yet to be made public, but IPEF differs from a traditional trade bloc based on free-trade agreements. It seeks to establish trade rules, covering areas from data protection to cutting carbon emissions. Member countries can opt to participate in parts of the framework.
William Alan Reinsch, a senior adviser and Scholl Chair in International Business at the Centre of Strategic & International Studies (CSIS), said in a January report the framework would help bolster the US presence in the region.
“The United States has deep and abiding interests in the Indo-Pacific region, which accounts for roughly half the world’s population, economic output and trade, and where there is a fierce competition over whose economic rules and norms will prevail,” he said.
Which countries are taking part?
The US expects allies such as Japan, South Korea and Australia as well as key countries in Southeast Asia to be involved in the initiative.
While it is centred on the Indo-Pacific, it is unclear whether India will take part. Negotiations are expected to kick off in the coming months, aiming to set up a basis for the initiative by 2023.
The US and China have attempted to secure the support of middle powers to increase their influence in the region. Japan and Australia have sided with the former, while the decision of others have been less clear.
Some experts said these economies should not feel obliged to choose one over the other. “For these countries, it is important to take an open stance toward both sides,” said Sung Tae-yoon, professor of economics at Yonsei University in Seoul.
What are the sticking points?
Governments in the region have claimed that IPEF does not offer crucial incentives for participation, such as greater access to the US market.
And with IPEF set to be based on a presidential executive order, it could be discarded by the next administrations as it is not a senate-ratified treaty.
It is also unclear whether countries with deep trade relations with China will be willing to take part in the anti-Beijing coalition.
“The IPEF holds promise, but it will need to be well engineered and managed if it is to advance US economic and strategic interests, become a credible alternative to other regional initiatives, and be seen by allies and partners as a durable US commitment to the region,” said the CSIS report.
What alternative trade agreements already exist?
Washington is not part of key regional trade blocs such as the Beijing-led Regional Comprehensive Economic Partnership (RCEP) or the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), formerly the Trans-Pacific Partnership (TPP), which the US pulled out of during the presidency of Donald Trump.
RCEP is the world’s largest trading bloc, with 15 member states centring on the Association of Southeast Asian Nations (Asean) and including major non-Asean economies such as China, Japan, South Korea and Australia.
The grouping, first discussed at an Asean Summit in November 2011, was signed in November 2020 and went into effect in January this year.
RCEP is composed of developed economies and developing countries, which are expected to create synergy, as technology is merged with abundant natural resources.
Aside from economic benefits that come with slashing tariffs on imports, the partnership seeks to set up trade rules for member states.
Meanwhile, the CPTPP has 11 signatories but spans a greater area as it includes economies in North and South America bordering the Pacific as well as countries in the Asia-Pacific. The US had been a member of its first incarnation, the TPP, which was signed in 2016.
The Obama administration had pushed the TPP to increase US influence in the Asia-Pacific and benefit from the free flow of goods and services in what was meant to be a single market.
But the US withdrew from the TPP immediately after Trump’s election, amid nationalistic sentiment focusing on protecting American jobs.
Since the CPTPP was signed in March 2018 and went into effect in December of the same year, more economies have applied for membership, including Britain, China and Taiwan. South Korea also plans to apply.
Japan, as the leading economy in the bloc, has shown support for Britain’s membership. A new country’s entry requires the approval of all 11 members. But Japan and Australia have been less welcoming toward China.
UNCTAD e-Commerce Week 2022
The eCommerce Week will take place simultaneously in Geneva and online from 25 to 29 April 2022, organized by UNCTAD in collaboration with eTrade for all and other partners.
It will look at ways to strengthen the ability of developing countries, including least developed countries (LDCs), to continue engaging in and benefiting from e-commerce and the digital economy, to build more resilient and inclusive societies in a dramatically different post-COVID-19 environment.
Digital Trade Alliance (DTA) in partnership with
CIPIT is organizing a panel on April 26, Tuesday, at 4 pm (Geneva time).
Panel: Data Governance in the world of unequals
Register here: https://indico.un.org/event/1000432/