The governing NFP suffered a serious setback at legislative elections held on April 13, not only losing its majority in the 300-member National Assembly, but also losing its status as the largest party, which has been claimed by the liberal MPK, which won a total of 123 seats, one more than the NFP. The governing party’s losses reflect disenchantment with President Park Geun-hye’s perceived failure to deliver on the promise of “economic democratization” that was a central theme of her 2012 election campaign, as well as various moves by the Park government that have fed into the opposition’s narrative of creeping authoritarianism.

The People’s Party, which was founded just two months before the elections by a splinter faction of the NPAD (which became the MPK in December 2015), won 38 seats, and will control the balance of power in the new legislature. The division of power within the National Assembly will greatly complicate the task of governing during the remainder of Park’s term, which does not end until early 2018, but the MPK’s hopes of winning the presidency could be undermined if it comes to be perceived as obstinately obstructionist, a consideration that encourage some degree of cooperation.

That said, the post-election resignation of NFP chairman Kim Moo-sung means that the party will need to hold a leadership election, the winner of which will be in pole position to claim the NFP’s presidential nomination in 2017. As such, there is a risk that the contest will create deep, and possibly permanent, rifts in the NFP, a development that would increase the risk of a prolonged period of legislative gridlock, regardless of which party’s candidate emerges victorious in the presidential election.

On the policy front, the outlook for progress on trade liberalization is clouded by doubts about the benefits of an FTA with China that came into force in December 2015. In their haste to reach a deal quickly, negotiators excluded numerous product categories, including automobiles and information technology, and talks on investment and services have encountered delays. There is a danger that negotiations for other trade agreements, including the Regional Comprehensive Economic Partnership between China, Japan, South Korea, and 10 member countries of ASEAN, could become a lower priority if the China agreement comes to be viewed as the standard for judging the merits of free trade.