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Foreign and Military Affairs

Sino-ROK FTA talks on the cards

By ZHANG JIN AND WANG BO (China Daily)
Updated: 2010-05-29 09:23
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But China and ROK will have to 'compromise to reach consensus'

SEOUL / BEIJING - China and the Republic of Korea (ROK), two of Asia's largest economies, are expected to kick off formal talks on establishing a free trade area (FTA) this year or in the first half of next year in a bid to boost trade ties and regional integration, Premier Wen Jiabao said on Friday.

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The Foreign Ministry issued the statement after Wen met ROK President Lee Myung-bak in Seoul, the first stop in the Chinese premier's weeklong Asia tour, which will also take him to Japan, Mongolia and Myanmar.

China, Asia's second-largest economy, and the ROK, the fourth largest, have finished a joint feasibility study of the FTA, which was launched in 2007, after consultations with government officials, business people and scholars.

Discussions on establishing a mechanism to boost trade flow in Northeast Asian countries have been in the air for years.

Analysts said the much-anticipated talks between China and the ROK is a key step forward toward establishing a FTA.

"Despite some headwinds in South Korea, many business people in the country advocate pressing ahead with the free trade mechanism, as the Chinese market is so important to them," said Sun Zhongtao, professor at Party School of the Central Committee of the Communist Party of China.

China is now the ROK's largest trade partner, export destination and source of import, while the ROK is China's fourth-largest trade partner.

Clouded by the global financial crisis, trade between the two countries declined to $156.2 billion last year, down 16 percent from a year earlier.

However, it regained momentum in the first quarter this year, growing more than 50 percent to hit $47.6 billion, according to the Ministry of Commerce. The figure is expected to hit $200 billion this year and $300 billion by 2015.

Experts expect a bumpy road ahead toward forming a common front for establishing the FTA, saying compromises from both sides will be required.

"The ROK does not want to open its domestic agricultural market, and fears that the low-priced Chinese products may flood its market, threatening the development of its own small business sector," said Zhan Xiaohong, fellow researcher at the economy research institute of Chinese Academy of Social Sciences.

"On the political front, the foundation for mutual trust is not solid, which may become a barrier when the talks reach a deeper level," he said.

Yang Ning contributed to this story.

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