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Regional free trade?

Publication Date : 21-05-2012

 

South Korea, China and Japan believe free trade among themselves will help promote prosperity for each of them. As such, they agreed on May 12 to start negotiations on a trilateral free trade agreement this year.

Should the proposed trilateral accord be successfully negotiated, no bilateral accord would be needed. But free trade among the Northeast Asian countries is easier said than done because they are at different stages of industrialisation. No wonder each of them is in pursuit of bilateral trade pacts with each other as well.

Seoul and Beijing had the first round of negotiations on May 14. In the near future, Seoul and Tokyo will reportedly resume talks on bilateral free trade that have been suspended since 2004. But it may be more difficult for China and Japan to pursue free trade than the two other pairs of trading partners because the two countries are wider apart in industrialisation.

A review of Korean-Japanese talks will give a glimpse into how complicated a negotiating process, whether bilateral or trilateral, will be.

The two countries launched negotiations in 2003 only to suspend them the next year. It did not take long before they realised the main obstacle was the gap in industrialisation.

When Korea said it wanted to promote exports of agricultural products, Japan offered to make few concessions at the expense of its farmers, a powerful voting bloc. Nor did it want to lower non-tariff barriers at the expense of manufacturers that would otherwise have lost in competition.

Tokyo apparently became more enthusiastic about free trade talks with Seoul when Korea opened its market wider to the United States and the European Union when its respective trade accords went into effect. When they concluded a currency swap deal last October, Japan agreed with Korea to resume the long-suspended free-trade talks.

No concrete action has since been taken. In March this year, President Lee Myung-bak said a free trade accord could not be actively pursued if mutual benefits were not guaranteed.

A similar difficulty can be found in Korean-Chinese negotiations, given that Korean farmers are no less vocal in their opposition to agricultural imports than their Japanese counterparts. Still, negotiations on the proposed Korean-Chinese trade deal deserve to be given a higher priority because they will likely prove to be easier than those involving Japan.

 

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