Indeed, South Korea and Japan are far ahead of China on the trade pact front for obvious reasons. Tokyo has concluded thirteen FTAs (all but four of those in Asia) and is in the process of negotiating five more, including stalled talks with South Korea. Japan is also in the exploratory stage of FTA talks with the European Union (EU), Turkey, and Colombia. Meanwhile, South Korea has not been resting on its laurels either. Seoul has eight FTAs in effect and two more awaiting ratification. It has recently adopted a frantic pace and is negotiating eleven more along with four additional talks that are still in the exploratory stage. Numbers however don’t tell the whole story as South Korea’s landmark agreements with the EU and the U.S. separates it from Japan’s cadre of pacts mainly focussed in Asia.
On the other hand, China has a considerably more modest stable of FTAs with ASEAN, Singapore and New Zealand as the crown jewels. However, China is feeling increased pressure with the aggressive TPP timeline. As a result it has been promoting the Regional Comprehensive Economic Partnership (RCEP) that would include ASEAN and the six countries that have an FTA with the group– India, Japan, China, South Korea, Australia and New Zealand. If completed the RCEP would include 3 billion people, have a combined GDP of US$17 trillion, and account for almost 40 percent of global trade. By way of comparison, a TPP agreement that did not include Japan would have 650 million people, a US$20 trillion combined GDP, and more than 40 percent of global trade.
In addition to the China-Japan-S.Korea FTA and the RCEP, China has also been pursuing FTAs on a bilateral basis. Most notably, Beijing it set to begin negotiations with South Korea as a separate channel outside of the trilateral and multilateral tracks. Earlier this week China also inked its first FTA with a European country when it signed one with Iceland. Although economically negligible in itself, this could potentially lead to China signing FTAs with other European powers.Enjoying this article? Click here to subscribe for full access. Just $5 a month.
While economic regionalism seems to be the order of the day, it is important to remain cautious in making predictions about a trilateral FTA in Northeast Asia. Unfortunately, nationalism and politics will continue to have the potential to have a spoiler effect and drag the region’s new leaders into a prolonged diplomatic fist fight.
Indeed, on Thursday South Korean officials announced that China has asked it to postpone the annual meeting between leaders from these three countries, which was set to take place in Seoul next month. Although “domestic political schedules” was the official reason Beijing gave for requesting that the meeting be postponed, the Sino-Japanese island dispute is widely believed to be the actual motivation.
At this point, however, the second round of trilateral FTA talks are scheduled for China this summer, followed by a third round in Japan before the end of the year.