With the clinching of the China-South Korea free trade agreement (FTA), and fresh opportunities brought by an improved political environment, China, Japan and South Korea should accelerate their negotiations for a trilateral FTA.
In a sign of warming relations, a trilateral summit is expected to take place in early November after a three-year hiatus, providing a fresh but precious opportunity for the three sides to advance their talks for a long-awaited FTA, a three-way treaty that can help bring their advantages into full play, further unleashing economic vitality of the three countries, boosting regional integration and driving world economic growth.
SIGNIFICANCE OF TRILATERAL FTA
During China's week-long National Day holiday on Oct. 1-7, Chinese tourists flocked to Japan, leading to a big boom in the sales volume of Japan's shopping malls, Japanese Nikkei has reported.
"Sales of duty-free products in some Japanese department stores were twice the amount of the same period last year," Nikkei said on its Chinese website. "The slowdown of the Chinese economy that's worrying before did not seem to have a big impact."
Meanwhile, Chinese mainland travelers spent 466 billion yen (3.8 billion U.S. dollars) in the July-September period, out of the 1,000.9 billion yen (8.2 billion dollars) by foreign visitors, Japan National Tourism Agency said. Spending by per Chinese visitor stood at 143,620 yen (1,178 dollars), almost twice the average spending by a foreign tourist.
The surging number of Chinese tourists and their growing buying power, which have pleased Japanese retailers, serve as a microcosm of the increasing economic and trade ties between the two countries.
In fact, China is the largest trading partner of Japan and South Korea, while Japan is China's second largest single-country trading partner and South Korea the third, with their respective trading volume in 2014 totaling at 307.5 and 235.4 billion U.S. dollars, according to China's Ministry of Commerce.
Furthermore, the three countries, whose combined GDP accounts for 20 percent of that of the whole world, constitute one of the three largest economic blocks, along with the European Union (EU) and North America, both of which already have an FTA within themselves.
However, despite the high trade volume they enjoy, trade dependency between the three countries is only 19.4 percent, much lower than the 63.8 percent of the EU and 40.2 percent of the North America, leaving much room for improvement.
Moreover, during the 8th round of FTA talks in September this year, Chinese Vice Commerce Minister Wang Shouwen warned in an interview with China Radio International that taking down trade barriers is critical, particularly given what's been happening in East Asia this year.
"During the first eight months of this year, bilateral trade between China and Japan decreased by almost 11 percent. China-South Korea bilateral trade dropped by close to 5 percent. Trade between Japan and Korea is not that good either," Wang said, noting the importance of the FTA negotiation work.
The planned three-way FTA will expand trilateral and bilateral trade and investment and provide a comprehensive and institutional framework in which a wide range of trilateral cooperation would evolve.
Yang Xiyu, a researcher with the China Institute of International Studies also said "Differences in economic structure bring comparative advantages, which provide huge room for mutually beneficial cooperation."
Virtually, benefits are more than that. Apart from boosting cooperation within the three Northeastern Asian countries, a China-SKorea-Japan FTA marks the starting point of economic integration in Asia as a whole, said Lee Bong-geol, an expert with Korea International Trade Association, noting that's why it requires "a big-picture determination."
BARRIERS TO FTA NEGOTIATIONS
Since their launch in November 2012, the trilateral FTA negotiations have been carried on despite an unfavorable political environment. So far, eight rounds of talks in this regard have been held, with the ninth scheduled for December this year.
However, advancement has been slow and concrete results are yet to be achieved as the three countries haven't moved on to discuss specific tariffs.
Each country has its soft spots that need strict protection, and wants to expand the market share of its strong industries in other countries, Yang said. "That's why negotiations are complex."
