The trade ministers of Korea, China and Japan declared the launch of a three-way free trade negotiation in Phnom Penh Tuesday. The announcement came six months after the leaders of the three Northeast Asian nations agreed to start preparations for the bargaining during their summit in Beijing ― and 10 years after such an idea first surfaced.
It’s a small surprise then regional business executives are half in doubt about the possibility of this protracted stop-and-go process being turned into reality this time around.
If realized, the three-nation free trade area will emerge as the world’s third-largest economic bloc, following NAFTA and EU, with a combined population of 15 billion and a GDP of nearly $15 trillion. But the daunting obstacles awaiting negotiators remain little changed from a decade ago.
The situation has even aggravated over the past few months or so amid escalating territorial and historical disputes among the longtime rivals.
One needs to look no further than the talks between President Lee Myung-bak and Chinese Prime Minister Wen Jiabao on the sidelines of the East Asian summit, in which they shared concerns about Japan’s rapid swing to the right and failure to clear away the remnants of militarism. From Korea’s standpoint, the hegemonic battle between its two larger neighbors could take away the hard-won momentum at any moment.
In the same vein, Korea may be the only country among the three that approaches the FTA from purely economic interests, or relatively so. China wants to expand it to the 16-nation ``Regional Comprehensive Economic Partnership (RCEP)” to counter a similar scheme of the United States called the ``Trans-Pacific Partnership (TPP).” Japan’s seemingly abrupt eagerness for free trade also reflects its intention to vie with China over economic and political influence on Southeast Asian nations.
Even the economic interests of the three are too different to warrant optimism about the talks’ progress. Especially hard will be how to overcome farming industries’ opposition in Korea, and to a far larger extent, in Japan to ward off the onrush of cheap, competitive Chinese agricultural produce. Actually, Tokyo has a track record of calling off a bilateral process with Seoul over the farm import issue, making Korean officials jittery about their Japanese counterparts resorting to the same tactics when things go unfavorably for them.
All this seems to prove Korean officials are right to take a gradual approach by focusing on the ongoing talks with China, and then apply its results to the three-way bargaining.
Unfortunately, we can’t say the same thing about the Seoul government’s plan to make it a comprehensive, ``deep” free trade agreement like the one it concluded with the U.S., not least because of the hardly-narrowing gap in high-tech sectors with Japan, as well as China’s surprisingly rapid catch-up. Nothing shows this better than the global ranking of manufacturing competitiveness as recently surveyed by U.S. agencies, in which China retained its unshakable top position, while Korea’s ranking fell three notches to sixth place.
Tighter economic interdependence may help to ease political suspicions and historical grievances. And this should be the reason for more prudent and careful handling of the upcoming free trade talks than for undue optimism and haste.