11 years since the start, 16 rounds completed, and 4 and a half years of stagnation: China, Japan and South Korea agreed to "discuss accelerating free trade agreement negotiations"
On May 27, the China-Japan-ROK leaders’ meeting concluded in Seoul, South Korea. The three parties issued a "Joint Declaration", which clearly stated that "discuss the acceleration of negotiations on the free trade agreement between the three countries, with a view to reaching a free, fair, comprehensive, high-quality, mutually beneficial free trade agreement with its own value."
Outsiders believe that on the occasion of the 25th anniversary of the establishment of the China-Japan-ROK cooperation mechanism, the leaders of the three countries reached a consensus on accelerating the negotiation of a free trade agreement, which can be said to be one of the important results of this meeting. So far, the negotiations on the China-Japan-ROK Free Trade Agreement have been launched for 11 years and 16 rounds have been completed. How far are China, Japan and South Korea from reaching a free trade agreement?
As early as the beginning of this century, China, Japan and South Korea had come up with the idea of establishing a free trade area, which was first proposed at the China-Japan-ROK leaders' meeting in 2002, attracting attention from the outside world.
In November 2012, China, Japan and South Korea held a meeting of economic and trade ministers in Cambodia and announced the launch of negotiations for a trilateral free trade agreement. The first round of negotiations was held in March 2013.
Since then, the three parties have completed 16 rounds of negotiations. However, due to factors such as historical issues, territorial disputes, and geopolitics, the negotiations have experienced twists and turns and have been suspended since November 2019.
However, in the past two years, as the Regional Comprehensive Economic Partnership Agreement signed by the 10 ASEAN countries and China, Japan, South Korea, Australia and New Zealand has come into full effect, the world's largest free trade area has been established. China, Japan and South Korea are both RCEP members, which creates positive conditions and provides a basic framework for the advancement of negotiations on the China-Japan-South Korea Free Trade Agreement.
Against this background, the Joint Declaration adopted at this China-Japan-ROK leaders’ meeting once again sends a signal to promote regional economic integration.
Article 24 of the "Joint Declaration" reads: We understand the importance of the transparent, smooth and effective implementation of the Regional Comprehensive Economic Partnership Agreement as the basis for the China-Japan-ROK Free Trade Agreement, and will continue to work on accelerating the China-Japan-ROK Free Trade Agreement. Negotiate the agreement with a view to reaching a free, fair, comprehensive, high-quality, mutually beneficial free trade agreement with its own value.
The outside world generally believes that this meeting is a new good start for the economic and trade relations between China, Japan and South Korea, and the resumption of free trade agreement negotiations is "encouraging". It will help the three countries more fully leverage their economic complementarities, lower trade and investment barriers, and achieve a more reasonable allocation of resources within the region, thereby bringing benefits to the enterprises and people of the three countries and injecting vitality into regional economic integration and global economic growth.
After four and a half years, China, Japan and South Korea have once again pressed the button to speed up free trade agreement negotiations, sending a clear signal to safeguard multilateralism and free trade. China, Japan and South Korea have always been beneficiaries of free trade and are active advocates. The economic size and economic and trade interdependence of the three countries lay the foundation and provide impetus for the advancement of free trade agreement negotiations.
On the one hand, China, Japan and South Korea are both important global economies, major manufacturing countries, and stable growth poles. The total economic output of the three countries accounts for about 24% of the world, the total population accounts for about 20% of the world, and the economic and trade scale accounts for about 20% of the world. The three countries also share 70% of Asia's economic growth and 36% of world economic growth.
On the other hand, the three countries are each other's important trade and investment partners, with high interdependence and strong economic complementarity. They have formed a close interactive relationship in the global supply chain and East Asia production network. China has been the largest trading partner of Japan and South Korea for many years in a row. Japan and South Korea are China's second and third largest trading partners respectively. Japan and South Korea are also important sources of foreign investment for China.
However, last year, the bilateral trade volume between China, Japan, and China and South Korea both declined compared with the previous year; South Korea experienced its first trade deficit with China in the 31 years since the two countries established diplomatic relations, and Japan also began to experience a trade deficit with China. Behind the scenes, the decline in data is related to multiple factors such as the difficulty in global economic recovery after the epidemic, obstruction of global trade, and the downturn in China-Japan and China-South Korea relations.
Public opinion pointed out that historically, whenever the global economy slows down or encounters economic and financial turmoil, the process of international cooperation and regional economic integration will be boosted to a certain extent. At present, global economic growth is slowing down, the global supply chain system still needs to be repaired, and all major economies are facing challenges. Against this background, China, Japan and South Korea need each other and their desire to strengthen cooperation has become increasingly urgent.
However, the three countries still face a series of challenges in advancing the free trade agreement negotiation process.
Economically, there are differences in development levels, industrial competitiveness, and tariff structures between China, Japan, and South Korea, and they have different interests in different industries and issues.
For example, Japan and South Korea have always had a conservative attitude towards agricultural issues. The Korean agricultural community is not only worried about the loss of market share, but also cares about details such as intellectual property rights, food safety and quarantine regulations for agricultural-related technologies and varieties. It is still difficult for the three countries to open their markets to each other for agricultural products.
Another example is that the three countries have different strategies for free trade agreements. On the one hand, Japan wants to exclude agricultural and fishery production from the agreement, but on the other hand, driven by the Japan Chamber of Commerce, Japan advocates reaching high standards that include not only significant tariff reductions, but also liberalization of services, intellectual property rights, environmental protection, and labor policies. protocol.
In addition, in recent years, as China's technological level continues to improve, the technological gap between China and Japan and South Korea in automobiles and parts, petrochemicals, semiconductors, electronics and other industrial fields is narrowing. Competition among the three countries in related industries has intensified.
In the past, Japan held a monopoly position in the upstream of the semiconductor industry chain, while South Korea had advantages in the fields of memory, panels, and components. Today, the competitive advantages of Japan and South Korea's traditional export commodities have narrowed. A previous report released by the Korea International Trade Association's International Trade and Economic Research Institute stated that with the development of China's manufacturing industry, the export similarity between the two countries in the world's medium and high-tech industries has increased from 0.347 in 2011 to 0.39 in 2021. The closer the index is to 1, the higher the degree of similarity.
Politically, the challenges are equally daunting. The geopolitics of Northeast Asia are complex, and the development of relations among the three countries has had ups and downs. Some countries outside the region regard Northeast Asia as the global strategic frontier, create group confrontations, and step up efforts to build a "small circle" to contain and contain China. The strategic autonomy of Japan and South Korea is affected, which objectively hinders the development momentum of cooperation between China, Japan and South Korea.
In this regard, public opinion pointed out that the restart of the three-country free trade agreement negotiation will inevitably be accompanied by a complex game of political and economic interests. The three parties need to uphold the principles of openness, inclusiveness, mutual benefit and win-win, and in a future-oriented spirit, find their own positioning, eliminate external interference, and strive to find the best balance point for the interests of all parties.
