CPTPP Delay Leaves 47.7% of Korean Exports Less Competitive in Key Markets, Hitting Shipbuilding and Autos

The Quick Take

• Korea Institute for Industrial Economics and Trade finds 47.7% of Korean exports (2,474 of 5,185 products) lost competitiveness after CPTPP came into force
• Shipbuilding and automotive sectors recorded the steepest competitiveness declines as CPTPP member rivals gained tariff advantages
• Korea's delayed application has effectively excluded it from preferential trade terms now benefiting Japan, Australia, and other members

A Korea Institute for Industrial Economics and Trade report comparing pre-CPTPP (2012-2018) and post-CPTPP (2021-2024) periods finds that nearly half of Korea's 5,185 tracked export products lost competitive position in CPTPP member markets after the agreement took effect. The 47.7% competitiveness deterioration is concentrated in high-value manufacturing sectors — shipbuilding and automobiles — where Korean exporters compete directly against Japanese and Australian producers who now benefit from preferential tariff access that Korean exporters must pay full most-favoured-nation rates to overcome. The tariff differential compounds over time as CPTPP members progressively lower barriers among themselves while Korea's non-membership disadvantage compounds annually.

For Korea's flagship export industries, the CPTPP competitiveness gap has tangible financial consequences. Hyundai and Kia face higher tariff costs in CPTPP markets versus Toyota and Nissan, directly compressing their landed-cost competitiveness and forcing either price increases that reduce market share or margin sacrifices to maintain volume. The shipbuilding sector, where Korea's HHI, Samsung Heavy Industries, and Daewoo compete against Japanese peers for LNG carrier and container ship orders from CPTPP-member shipping companies, faces similar structural disadvantages on procurement costs and after-service contract terms within the trade bloc.

Watch for any Korean government announcement of a CPTPP membership application filing — even a formal notice of intent would begin the multi-year accession process and signal to Korean export industries that the competitiveness gap will eventually close. The macro variable is the speed at which CPTPP members extend additional tariff liberalisation among themselves: faster liberalisation deepens the penalty for non-members like Korea while making the eventual terms of Korea's own entry less favourable. Chinese CPTPP membership applications and ASEAN expansion talks are the geopolitical factors that most complicate Korean accession negotiations.

Synthesized from 2 sources.