China, Japan, South Korea Speed-up Creation of New Free Trade Zone

China, Japan, and South Korea are bent on accelerating talks aimed at crafting a new trilateral free trade agreement to counter President Donald Trump's unnecessary trade war launched allegedly to boost American jobs and restore American honor.

Meeting at their fifth free-trade agreement (FTA) forum in Beijing last week, the trio said faster negotiations will send a firm signal to Washington and Trump about their commitment to deepen economic cooperation in response to Trump's trade war that seems to be spinning out of control with no end date in sight.

Japan, China, and South Korea have held 13 rounds of talks since 2012 with little apparent progress in the face of enormous obstacles, especially as regards services and investments and Beijing's reluctance to lower market barriers. The three countries account for 20 percent of global GDP.

Despite the daunting task ahead, the three countries are preparing for the next round of talks, said Yang Zhengwei, a deputy director general at China's Ministry of Commerce in charge of China's FTA talks. Yang said speeding-up FTA negotiations will also benefit all the three countries in the face of threats from unilateralism and protectionism, said Yang.

Hayashi Kazutaka, a counselor at the Japanese embassy in China, reiterated Japan's commitment made in Tokyo in May to accelerate negotiation on a trilateral FTA. He said an agreement will serve the common interests of the three countries, especially with the global economy under threat from Trump's trade war and Trumpian protectionism. Kazutaka said Japan wants to make further efforts to advance negotiations together with counterparts from China and South Korea.

Kim Jeongil, director general of the FTA policy bureau at South Korea's Ministry of Trade, Industry, and Energy, admitted negotiations had progressed slowly. He said this was due to the countries' "competitive industrial structures" but emphasized the importance of free trade.

Kim said that to further accelerate the FTA, the three countries should exercise more flexibility and creativity than ever before on the major issues, such as goods, services, and investment. He said it's very important to develop a mentality that brings about fair contributions and a balance of interests that reflects differences among the three countries in their trade structures.

China is using FTAs to diversify its markets and battle Trumpian protectionism. China has entered into 17 FTAs with 25 countries and regions. It's also in talks over 12 new or upgraded FTAs.

There is a broad consensus in China in favor of accelerating FTA talks. Analysts said China will take more proactive measures to push forward a China-Japan-South Korea FTA and will play a more important role.

There are major obstacles to opening markets, however. For one, China seems reluctant to open its goods trade, services, and investment sectors while Japan and South Korea remain sensitive about opening agriculture-related sectors due to the strength of agricultural lobbying groups in these countries.
Analysts said the three countries must be more flexible and pragmatic in future talks and take a "phased approach." They must agree on a deal on the trade of goods where they have more common interests, before moving on to services and investments, which are more contentious.

Source: Business Times