[Kim Kyung-ho] Trilateral trade talks in limbo

By Kim Kyung-ho
  • Published : Nov 8, 2017 - 17:39
  • Updated : Nov 8, 2017 - 17:39
Few people in South Korea, China and Japan now appear to be aware the three countries have held negotiations on concluding a trilateral free trade agreement over the past five years.

The latest and 12th round of negotiations held in Tokyo in April drew little attention, having made little headway from previous discussions.

During their meeting in November 2015, leaders of the three countries agreed to continue their work toward economic integration by making “further efforts to accelerate the trilateral FTA negotiations,” which were launched in 2012.

At the time, Chinese Premier Li Keqiang and Japanese Prime Minister Shinzo Abe traveled to Seoul to meet with then-President Park Geun-hye.

The trilateral summit had been held annually for five years, with the venue rotated among the three nations, until being suspended in 2013 over historical and territorial rows.

After their talks, Park, Li and Abe issued a joint declaration for peace and cooperation in Northeast Asia, in which they said “trilateral cooperation has been completely restored on the occasion of this summit,” and from now on, the tripartite summit “is to be held on a regular basis.”

What has since then happened in the relations among the three neighboring countries has driven the optimistic declaration into oblivion.

South Korea was hit by China’s reprisals over its decision last year to have the US deploy an advanced anti-missile system here.

China’s retaliation, which seems to be easing after Seoul and Beijing recently agreed to end the dispute, is estimated to have caused more than $12 billion in economic losses to South Korea.

Seoul and Tokyo have hardly got any closer to settling longstanding historical issues, while the Abe administration has stepped up efforts to counterbalance a rising and more assertive China by joining forces with the US and other regional powers.

It is no wonder that the three Northeast Asian powers have lost momentum toward arranging for a trilateral summit again and making headway in negotiations on a free trade framework encompassing them.

The establishment of stable and strong political leadership in the three countries may prove helpful for reactivating the process toward tripartite cooperation in the economic field if they manage to separate it from sensitive diplomatic and security issues.

Chinese President Xi Jinping consolidated his power in the communist party’s congress last month, raising speculation he is likely to stay on beyond his second five-year term that ends in 2022.

Abe’s Liberal Democratic Party won a landslide victory in the Oct. 22 parliamentary elections, setting the stage for him to become Japan’s strongest and longest-serving leader in the postwar era.

President Moon Jae-in has enjoyed high approval ratings since he took office in May, though some of his policies have come under criticism for being ineffective and divisive. His five-year term is set to be overlapped or outlasted by those of his current Chinese and Japanese counterparts.

With their domestic political landscapes settled down, it is conceivable that the three countries will move toward reviving the summit between their leaders, which could renew a joint will to reach a comprehensive, high-level and reciprocal free trade accord.

Different stages of economic and social development might continue to hamper discussion on integrating the three countries into a common market.

South Korea and Japan also have reason to worry that the envisioned free trade deal would prompt the transfer of domestic businesses to China and intensify competition from Chinese companies.

Nevertheless, the three countries are positioned to benefit more from their free trade deal.

South Korea, China and Japan, which boast the world’s 11th, second and third largest economies, respectively, have a combined gross domestic product of over $16 trillion, accounting for one-fifth of global GDP.

But the volume of trade among them accounts for about 19 percent of their total external commerce, far less than 24 percent for members of the Association of Southeast Asian Nations, 42 percent for those of the North American Free Trade Agreement and 65 percent for EU members.

A free trade pact grouping the three Northeast Asian countries would help increase trade among them and boost the growth of their economies.

It could go further to result in facilitating the broader economic integration of the Asia-Pacific region.

If so, South Korea, China and Japan might find themselves presenting a rare and unique united front against US President Donald Trump’s persistent protectionism, which has put them under heavier pressure to reduce trade surpluses with the world’s biggest economy.

South Korea is considered to be in a position to play a bridging and catalytic role between China and Japan in reaching a trilateral free trade deal.

China and Japan have been competing to take the lead in setting up a new free trade framework for the Asia-Pacific region, with the Trump administration retreating from the multilateral trade order.

China has focused on negotiations to form the Regional Comprehensive Economic Partnership, joined by 15 other countries, while Japan has adhered to the Trans-Pacific Partnership, a multinational deal that Trump has rebuffed and Abe still wants.

With its experience in sealing free trade deals with many countries around the world and no hegemonic agenda, South Korea could play a mediating role between China and Japan, turning their attention to concluding a trilateral free trade accord.

By Kim Kyung-ho

Kim Kyung-ho is the Sejong-based business editor of The Korea Herald. He can be reached at khkim@heraldcorp.com -- Ed.