South Korea on Tuesday expressed a renewed interest in joining the Trans-Pacific Partnership, the world’s single largest trading bloc which reached a landmark conclusion on Monday after more than seven years of negotiations.

“Korea will strive to join the mega free trade agreement in any form,” Deputy Prime Minister and Finance Minister Choi Kyung-hwan said Tuesday, adding that “the government will decide on the entry period after thoroughly analyzing the impacts of joining the TPP on the national economy.”

The historic multinational accord, signed in Atlanta following weeks of final talks, is designed to establish one of the largest free trade zones in the world, linking and boosting commerce between the U.S., Japan and 10 Pacific Rim states. The dozen countries represent some 40 percent of the global economy valued at around $38 trillion.

As the TPP has been sealed without Korea’s participation, analysts in Seoul fear that the new global trade deal will weaken the competitiveness of Korean exports globally, as they lose the competitive edge held against Japanese products by signing bilateral FTAs, particularly the one with the U.S.

“From a market accessibility standpoint, Korea may lose its former price advantages in countries with which Korea, but not Japan, had struck FTAs,” said Kim Young-gui, head of the regional trade agreement team at the Korea Institute for International Economic Policy.

Before the finalization of the TPP, Korea had surpassed Japan in striking FTAs with integral trade partners like the U.S., China, the European Union and the Association of Southeast Asian Nations.

By joining the TPP, Japan, which had lagged in signing free trade pacts with its major trade partners, has now effectively established bilateral trade relations at once with numerous actors including the U.S. and the EU.

As Japan is set to gain similar or even more advantageous market access and tariff cuts in TPP countries, Korea’s manufacturing industry -- particularly the automobiles and car parts sector where Japan now holds a competitive edge -- is expected to face tougher competition, according to industry watchers.

This is closely related to TPP’s “rules of origin,” which determine how much of a product needs to be made within the free trade area in order for it to receive duty-free treatment. The stipulation particularly affects assembled goods like cars which rely on global value chains for production.

“For instance, TPP member states may significantly reduce or stop importing materials and parts from Korea, a non-TPP member, and instead turn to TPP partners like Japan to reap tariff-free benefits,” said Kim.

“This condition can hurt Korean auto parts and materials manufacturers which currently compete against Japanese firms in exporting their goods overseas to TPP countries,” he said.

At the same time, others predict that Korean automobile exports will not be highly affected by the TPP, given Korea has already established bilateral FTAs with 10 of the 12 TPP member countries.

The Korea International Trade Association said that Korean car exports will not be overly affected by the TPP, since Korean carmakers will immediately begin enjoying tariff cuts in the U.S. starting next year, based on the Korea-U.S. FTA, whereas the U.S will incrementally lower tariffs on Japanese automobiles over the next 25 years.

As the details of the concluded TPP are revealed in the coming months, the Korean government is set to closely analyze the pact’s content to determine its benefits and advantages to the country’s economy before officially deciding its stance on the major trade pact.

South Korea had officially expressed its interest in the TPP in late 2013, but had been left out of the initial negotiations, effectively ruling out the possibility of becoming a founding member.

“The Korean government chose not to join the TPP back in 2008, since it had already sealed a bilateral FTA with the U.S. and had been negotiating an independent FTA with China,” said Minister Choi.

The Trans-Pacific Partnership is widely perceived as the centerpiece of U.S. President Barack Obama’s stated “pivot” to Asia, through which the U.S., in partnership with Japan, is looking to rise over China by creating an economic zone in the Pacific Rim to balance Beijing’s economic dominance in the region.

By joining the TPP, Korea is forecast to see its grand domestic product increase by 1.8 percent annually over the first 10 years, according to KIEP. Yet, the country’s GDP will decrease by 0.12 percent annually if it continues to refrain from joining, the institute said.

“In the big picture, it is best for Korea to join the TPP because it is more than just a free trade agreement but a basis for building up a new global trade order,” Kim said.

“As a highly open and export-based economy, Korea must remain sensitive to the world’s changing trade order and react accordingly.”

By Sohn Ji-young and news reports (jys@heraldcorp.com)