A state-funded research institute said South Korea's manufacturing export competitiveness has relatively weakened since the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) took effect, after President Lee Jae-myung effectively shelved plans to join the pact this year.
The Korea Institute for Industrial Economics and Trade released the findings on the 14th in a report titled "Analysis of Korea's Competitiveness Before and After the CPTPP Took Effect." Comparing 2012-2018, before the pact took effect, with 2021-2024, after it did, the report found that South Korea lost export competitiveness within the bloc in 46 of 90 detailed automotive product categories. Those 46 categories accounted for 56.3% of South Korea's automotive exports to CPTPP members.
The institute measured export competitiveness using the revealed symmetric comparative advantage (RSCA) index. The index compares the share a given product holds in South Korea's exports to CPTPP members with the share that product holds in trade among CPTPP members themselves. A higher reading indicates stronger relative export competitiveness in that market.
In automobiles, the analysis pointed to a significant impact from Mexico, which has no free trade agreement with South Korea. Among the categories where South Korean automotive competitiveness declined, Mexico's RSCA rose 0.312 while South Korea's fell 0.199. Mexico has recently applied tariffs of 5% to 50% on some products from countries without a free trade agreement, which is expected to widen the gap further.
Shipbuilding competitiveness also weakened. Competitiveness within the bloc declined in 15 of 35 detailed categories, and those categories accounted for 43.9% of South Korea's shipbuilding exports to CPTPP members. In the declining categories, South Korea's RSCA fell an average of 0.262 while that of CPTPP members rose 0.125. The gap in competitiveness shifts between South Korea and member countries was widest in shipbuilding among the 15 manufacturing industries the institute analyzed.
Beyond automobiles and shipbuilding, the report also found South Korean export competitiveness falling and that of CPTPP members rising in steel, general machinery and household goods. The institute said multiple factors are reflected in competitiveness shifts within the bloc, but cautioned that a prolonged period outside the pact could further erode the standing of South Korean products in the regional market.