Key To China, Japan And Korea FTA

In May 22nd this year, Chinese Premier Wen Jiabao announced that after the closure of Japan, China and Japan, three countries will complete the joint study on production and administration in the negotiation of free trade area (FTA) this year, and strive to start negotiations next year, and strive to complete the trilateral investment agreement negotiations this year.

The total economic volume of China, Japan and Korea

China's experts on international relations say that Japan's traditional multilateral framework arrangement relying on WTO has little interest in bilateral trade agreements such as FTA.

However, the Duha Round negotiations under the WTO structure have been difficult for many years, and Japan's demand for FTA has begun to dominate.

In particular, in 2001, China reached an agreement with the ASEAN (ASEAN) to open the China ASEAN FTA within 10 years. Japan's domestic sense of urgency increased, signed the economic cooperation agreement (EPA) with the ASEAN and the individual countries, signed the EPA with India, and so on. In terms of layout, Japan's EPA strategy reduced its trade and investment costs to the main trade partners and investment targets of the ASEAN, which is undoubtedly conducive to Japan's economic growth.

The experts also revealed that Japan's interest in FTA between China and Japan for a long time was not high. The reason for this is that Japan has always regarded mainland China as its trade rival, and Japan has signed a great deal of EPA with the ASEAN, because it has been "stimulated" by the mainland of China. It hopes that the realization of the "encirclement" of the Chinese mainland through the EPA strategy and the capture of the so-called "regional economic dominance" has been the established policy of the Japanese government. The signing of the Sino Japanese FTA deviates from this policy, at least not in the series of priority issues that Japan has solved.

In November 4, 2002, Zhu Rongji, the former Chinese premier, proposed the idea of establishing the China Japan Korea Free Trade Area in Kampuchea, Japan and South Korea at the summit meeting held in Phnom Penh.

The South Korean side has already studied and analyzed, because in the industrial chain, South Korea is between China and Japan. If Japan and South Korea achieve FTA, there will be a big trade deficit between Korea and Japan. The trade deficit with Japan can be offset by the surplus of FTA between China and Korea. Therefore, the realization of FTA in China, Japan and Korea is very attractive to Korea.

The key to achieving FTA in China, Japan and Korea is in Japan.

The reason why Japan agreed to speed up the three countries' FTA now is because

Japanese economic circles are increasingly dissatisfied with the slow progress of the government in promoting FTA, prompting the Japanese government to change its attitude towards China, Japan and South Korea FTA.

The entry into force of ECFA in mainland China and Taiwan is also a stimulus to Japan.

Of course, after the "311" earthquake, the Japanese economy was affected, and it was also one of the reasons for Japan to change its mind.

After the Naoto Kan administration came to power last year, it has been pushing the US led Pan Pacific Strategic Economic Partnership Agreement (TPP). Japan wants to take part in TPP to achieve Japan's EPA, which can not be promoted positively, at least to the United States.

In September last year, the Naoto Kan regime suddenly expressed its desire to participate in the TPP negotiations and vowed to take the lead in the third opening of the country.

However, after the opposition of agricultural groups, the vigorous "Founding" plan ended abruptly.

In the future, FTA problems in China, Japan and South Korea will probably face the same difficulties.

Therefore, the negotiation process between China, Japan and Korea may be more difficult.

Japan has always had difficulties in promoting free trade. In essence, Japan is a country which lacks the present interests for the future.

The realization of FTA is bound to have gains and losses for any country in the short term, especially for low productivity industries such as agriculture.

Participation in FTA is a matter of interest coordination in the short term, that is, the industry gains from free trade, and the government subsidize and help agriculture through the tax growth brought about by the increase in corporate profits.

At the same time, competition brought by FTA can promote the development of agriculture from decentralized small agriculture to intensive agricultural development.

For the vast majority of industries in a country, FTA can bring positive effects in the long run.

However, in the process of pformation, there will be farmers or enterprises unable to compete in the face of bankruptcy or unemployment, which will become the biggest obstacle to free trade, because for these individuals, the losses caused by participation in FTA are absolute, and this is likely to fail.

Japan's agricultural interest groups have a lot of say in politics. Neither the Liberal Democratic Party nor the Democratic Party dare to offend peasant groups. Therefore, agriculture is always a bottleneck on the issue of FTA.

The negotiation of FTA is not only the coordination process between the interests of nations, but also the coordination process of the interests of various industries and interest groups in the country. The prestige of leaders is very important in the process of coordination.

Therefore, for China, Japan and South Korea, even if FTA enters negotiations, it will probably be a time-consuming process.