By Ding Gang Source: Global Times Published: 2018-9-26
After the US began to replace the multilateral rules-based order with a bilateral one and launched one-on-one offensives against global trading partners, officials from China, Japan and South Korea vowed to speed up negotiations for a trilateral Free Trade Agreement (FTA) at a forum in Beijing last week.
As the major engine of the global economy, China, Japan and South Korea will create a vast strategic market through the FTA, with 21 percent of the world's population, 23 percent of the GDP and 20 percent of the global trade. Integrating economic benefits will lead to greater political and economic stability and prosperity in East Asia.
China, Japan and South Korea are Asia's most important economies. Economic and trade relations between the three countries have never been so close and they have formed a production chain and a trade chain that can affect the whole world.
The seemingly intriguing macroeconomic data has driven the start of negotiations. However, due to historical reasons and the US factor (Japan and South Korea are US military allies), the formation of economic and free trade mechanisms has taken a tortuous path.
Since negotiations began in 2013, talks have been affected by political and diplomatic spats between the three countries, and have, from time-to-time, stalled.
The situation shows the urgency of promoting FTA negotiations. The integration of the Asian regional economy must first be based on the FTA involving China, Japan and South Korea. Only when the three economies reach a deal can there be a solid large-scale cooperation among Asian economies.
This is not only because the three countries are economically important, but also because they are politically significant. The trio needs to maintain sustainable cooperation. If it keeps clashing because of historical reasons or on being instigated by external forces, peace and stability in Asia cannot last. As it is not easy to solve these problems, we might as well depend on a basic mechanism.
The purpose of the FTA is to gradually eliminate tariff barriers between the three countries and strengthen trade, investment, finance and currency exchanges. This is the basis for regional economic integration in Asia, and the FTA is the cornerstone. It is also the fundamental thing that the three parties are most likely to push forward and can achieve results under the current political and economic circumstances.
China, Japan and South Korea have frequent economic and trade exchanges. In global trade, goods are not produced in a single country but assembled as part of a global value chain. The FTA can create smoother and more convenient conditions for customs clearance of raw materials, semi-finished products and logistics in the three nations. It will not only speed up the production chain but also help the formation of a larger market.
Although the three countries are competitors, and the competition sometimes gets intense, they have to increase cooperation and become more closely linked to expand the production chain to other Asian economies.
The three countries can capitalize on their comparative advantages, strengthen cooperation and extend their influence to new markets.
Although there are still many political, diplomatic and historical factors that may surface to hinder cooperation among the three countries, it may now be a perfect opportunity to transcend such barriers and look to new horizons.
Currently, the global economic and trade environment is undergoing significant changes, witnessing new trade protectionism and curbs. These rising tensions have not only hindered economic development but also restricted economic and trade progress. Therefore, the FTA will help promote economic growth in the region and play a more important role in building a new trade order.
Strategic changes often come from transcendence, and transcendence requires courage, more wisdom and keen insight. If the three countries can seize the opportunities and promote negotiations, Asia will find a way out of the post-war labyrinth and achieve the goal of "Asia for Asians."
The author is a senior fellow at the Chongyang Institute for Financial Studies at Renmin University of China.