China, Japan, South Korea To Start Trilateral FTA Talks

On November 20, during the Association of Southeast Asian Nation meetings held in Phnom Penh, Cambodia, the Chinese, Japanese and South Korean economic and trade ministers announced the launch of trilateral free trade agreement (FTA) negotiations.

The decision followed three preliminary working-level consultations, which were launched after the three countries� premiers met in May this year at the signing of a tripartite investment agreement, and the final one of which was held in September this year. The three countries have also undertaken their own domestic procedures to determine whether to launch the trilateral FTA negotiations, the first round of which is planned to be held in early 2013.

It is recognized that, if a deal can be reached, the mutual benefits arising from a trilateral FTA could be substantial. The total gross domestic product of the three countries was USD14 trillion in 2011, accounting for about one-fifth of world output, and trade between the three countries had already grown to some USD690bn last year.

While China is the main trading partner for both Japan and South Korea, Japan and South Korea are China�s fourth and sixth trading partners, respectively. The three countries cooperate closely in industrial supply chains, and it is said that establishing an FTA between them would merely reflect the present need to strengthen their economic and trade ties.

While Japan and South Korea are obviously looking for improved access to the huge Chinese market, the Chinese government is also looking at ways to counteract the development of the United States-led Trans-Pacific Partnership trade treaty.

However, it has also been recognized that the issue of tariffs on sensitive goods and services could be challenging for all three countries and, while Japan and South Korea are competitors in the supply of many manufactured and technological goods to China, tariffs on the import of agricultural products from China would be also be a problem for both those countries.

At the same time, negotiations are progressing on a bilateral FTA between South Korea and China, after their launch in May this year, The fourth round of those talks was held between October 30 and November 1, and the two countries have agreed to hold the fifth round of FTA negotiations in Beijing and to consult on its specific schedule at a later date. It is still hoped that the talks can be accelerated and concluded at an early date.

November 25, 2012

Source: Tax News