Asian powers to hold trilateral FTA talks
Reuters and AFP Monday, May 14, 2012, 12:10 am TWN
BEIJING -- China, Japan and South Korea agreed at a summit on Sunday to launch negotiations for a three-way free trade pact they said could help fend off global economic chills, saying it would boost the economies of the entire region, but the talks are expected to be long and difficult because of decades of rivalry.
The three nations are major traders, and together accounted for 19.6 percent of global gross domestic product and 18.5 percent of exports in 2010, according to a feasibility study issued by their governments last year on the trade pact.
The issue has been on the trilateral agenda for the past decade, beginning with an agreement among the three in late 2002 to launch a feasibility study on a free-trade area.
Chinese Premier Wen Jiabao said closer regional economic integration, in response to a slow global recovery and an overall rise in trade protectionism, would help unlock new growth potential.
"Northeast Asia is the most economically vibrant region in the world. So there is huge potential for our three countries to have closer trade and investment cooperation," Wen told reporters after talks in Beijing with Japanese Prime Minister Yoshihiko Noda and South Korean President Lee Myung-bak.
"The establishment of a free-trade area will unleash the economic vitality of our region and give a strong boost to economic integration in East Asia."
China, Japan and South Korea combined would have the world's largest economy — ahead of the European Union — when measured by purchasing power parity, which takes into account differences in living costs across nations.
China is the biggest trade partner of Japan and South Korea. A free trade treaty could lift China's GDP by up to 2.9 percent, Japan's by 0.5 percent, and South Korea's by 3.1 percent, the official Xinhua News Agency said in a commentary, without citing the basis for its estimates.
But agreeing on a fully fledged pact, which has been on the table for a decade, will not be easy.
The three Northeast Asian neighbors are divided by political distrust, trade barriers, and diverging investment policies, as well as regionwide worries about China's expanding economic and military power.
The proposed treaty must also vie for attention with the United States' push for a broader Trans-Pacific Partnership (TPP), a trade liberalization initiative that has drawn in nine countries, with Japan also expressing interest. China and South Korea are not part of those negotiations yet.
Policymakers in Beijing worry that U.S. influence could erode Chinese sway across the region.
Japan's Prime Minister Noda said he saw no conflict between the two trade negotiation proposals.
"We will promote the TPP and the trilateral FTA in parallel," Noda told reporters. "These efforts can be mutually reinforcing to each other."
Later in the day, Wen met Noda for bilateral talks, with both sides pledging to push ties between the world's second- and third-largest economies further.
"Both sides must seize the opportunity, increase mutual trust ... and push forward the healthy and stable development of relations between the two countries," Wen told his Japanese visitor.
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