South Korea, China, Japan To Hold Tripartite FTA Talks

Despite Japan’s recent decision to apply to join the Trans–Pacific Partnership (TPP) talks being led by the United States, the spokesman for China’s Ministry of Commerce Shen Danyang confirmed that the first round of talks on the proposed trilateral free trade agreement (FTA) between China, Japan and South Korea will be held in Seoul for three days from March 26.

Firstly, on the move by Japan towards the TPP, Shen confirmed that China’s attitude was that each country should have the right to choose to participate in selected FTAs based on their own trading circumstances, but that all countries should also be committed to the eventual goal of global trade liberalization. In China’s opinion, all regional and bilateral trade arrangements are useful along the road to that goal. China will study the possible impact of the TPP negotiations, while, at the same time, speeding up its own FTA strategy.

With regard to the trilateral FTA, the economic and trade ministers of the three countries had announced the launch of negotiations in November last year, following three preliminary working-level consultations, which were launched after the three countries’ premiers met in May 2012 at the signing of a tripartite investment agreement.

Subsequently, last month, officials from South Korea, China and Japan held a preparatory meeting for the first round of talks, and discussed the agenda and the schedule for the meetings that Shen announced will begin on March 26.

It appears to be recognized by all three countries 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 then already grown to some USD690bn.

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.

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, like rice, from China would be a problem for both those countries.

Shen further disclosed that, after the first round in Seoul, a further two rounds of tripartite talks are expected to be held in 2013; one in China and the other in Japan. He professed that China looked forward to completing the FTA at the earliest possible date.

At the same time, South Korea is also pursuing its own separate bilateral FTA talks with China, after their launch in May 2012. The fourth round of those talks was held between October 30 and November 1 last year, and it is hoped that further progress will be made in a fifth round of negotiations later this year.

March 21, 2013

Source: Tax News