China-Japan-ROK FTA has to advance

By Zhang Jingwei
0 Comment(s)Print E-mail, August 3, 2016
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Japan, ROK and China should initiate breakthroughs to make the FTA a reality.

As China and Japan are yet to solve their disputes over the Diaoyu Islands, South Korea added to the regional complexity by agreeing to deploy the THAAD system, which weakens its relations with China. Despite these geopolitical issues, common economic interest does exist among the three countries, and it may even be a reasonable solution to the differences.

The 10th round of talks for the China-Japan-ROK FTA concluded in Seoul on June 28, seeking more common ground while retaining differences. Japan and South Korea want a higher level of free trade whereas China expressed more concern on protecting its industries and thus remained prudent on tariff reduction. But the three countries agreed to commence discussions on five topics including financial services, telecommunications, and the movement of natural persons. They also decided to exchange information on barriers of market access for important service sectors.

This means the talks regarding the China-Japan-ROK FTA are about to enter the "deep-water zone," heralding more arguments out of direct conflicts of interest. But it also means that the FTA talks are entering a concrete stage.

The regional free-trade mechanism became a new option for the global market amid the difficulties in the Doha Round within the WTO framework. But the desire for free trade is under an increasing influence from trade protectionism due to the "new mediocre" in the global economy, so that regional FTAs started to play supporting roles for geopolitics. For example, the U.S.-led Trans-Pacific Partnership (TPP) amounts to Washington's denial of China's potential leadership of global trade.

The China-Japan-ROK FTA lagged behind, resulting from disturbances from other aspects. For example, Japan's anxiety of a rising China affected its outlook in the larger picture. In addition, out of its reliance on the United States to counterbalance China, Japan would rather join the TPP than accelerate the regional FTA with China and South Korea.

As a result, China and South Korea advanced smoothly the bilateral FTA, whereas the Japan-ROK talks were greeted by challenges and the China-Japan FTA is even beyond feasibility. On the other hand, the three countries share an equal difficulty in bypassing such bilateral talks and directly entering trilateral talks.

But despite the difficulties, the China-Japan-ROK FTA ought to have transcendental development.

In Asia, the TPP and the RCEP (Regional Comprehensive Economic Partnership) have overlapping areas of interest whereas the FTAAP (Free Trade Area of the Asia-Pacific) is starting to be mulled over.

The three regional FTAs represent a struggle over geo-economic leadership, let alone fundamental interest. Therefore, only the China-ROK FTA could ease the geo-economic tension since it can lubricate the frictions between other FTAs. This is because the TPP doesn't include China or South Korea, RCEP doesn't have the United States while FTAAP is only as good as a long-term vision.

Therefore, the Asia-Pacific trade integration will rely on the future of the China-Japan-ROK FTA, without which the individual FTAs in the region will remain isolated, and the eco-economic struggle will escalate into one of geopolitics.

China, Japan and South Korea are all important economies for the world evident in their economic size, trade volume and trading activity. But the three countries feature only less than 20 percent in terms of trade dependence whereas the figure for the EU market and the North America Free Trade Zone exceeds 60 percent and 50 percent, respectively.

Since examples show that integrate markets helped fend off risks, an FTA among China, Japan and South Korea will not only meet their own interest but also comply with global trends.

Historical issues and current problems do harass East Asia, and the U.S. interference even complicates the situation, but leaders of the three countries have managed to meet regularly. In the post-financial crisis era, China rose to be a new advocate for global free trade, its currency was included in the basket of SDR and the China-proposed "Belt and Road" initiative facilitates trade integration apart from exporting capacity and capital.

The free trade agreement (FTA) between China, Japan and the Republic of Korea (ROK) will bring about what is called the "Era of East Asia." While the three countries hold a critical place in the region, they should initiate breakthrough to make the FTA a reality.

Zhang Jingwei is a researcher at the Charhar Institute.

The article was translated by Chen Boyuan. Its original version was published in Chinese.

Opinion articles reflect the views of their authors, not necessarily those of

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