Politics threatens East Asia FTA

Ministers of commerce from China, Japan and the Republic of Korea are meeting in the Cambodian capital Phnom Penh to initiate talks on a free trade area between the three countries, despite the deadlock in bilateral relations between China and Japan because of Japan’s purchase of China’s Diaoyu Islands.

Once established, the FTA will inject vitality into the economy of East Asia. A bilateral FTA among two of these countries will not be as beneficial as a three-country FTA, according to research conducted by the three countries.

The World Trade Organization does not evolve fast enough to meet the needs of the global trade systems. because it promotes homogenization across the globe.

The mechanism of the FTA places more importance on various countries helping each other using their individual and unique strengths. The FTA of China, Japan and ROK demonstrates the three countries’ common requirements to construct a free trade area outside the WTO paradigm.

Meanwhile, the United States is returning to Asia with a new free trade concept, Trade Policy and Programs, which appears to challenge the format of East Asia, especially the Association of Southeast Asian Nations’ leading role in promoting free trade in East Asia.

Because the TPP has a different concept from the traditional free trade theory of FTA, and its requirements are higher, ASEAN thinks the TPP will weaken its position on free trade in East Asia. That’s why ASEAN has proposed the Regional Comprehensive Economic Partnership, which they intend to lead.

However, the FTA of China, Japan and ROK undoubtedly affects the feasibility of ASEAN’s RCEP proposal.

Japan’s proposal of a Comprehensive Economic Partnership of East Asia, involving Australia, New Zealand and India will actually lower China’s influence on ASEAN.

Yet, neither CEPEA nor RCEP are limited to the region, and both can accommodate changes in international trade.

East Asia is only a global manufacturing base and must rely on the demands of the Western market. The FTA of East Asia should be integrated with the FTA in Europe and the US and has to be open, rather than closed.

No country should connect the negotiation of FTA in East Asia with regional political disputes and use it as a platform to struggle for leadership. If so, the FTA initiative will be derailed.

Although the FTA of East Asia is limited to within the region, it should be open and pro-free trade. Any country meeting the free trade rules of this organization should be permitted to participate in it.

The successful China-ASEAN FTA has so far benefited both sides. Politicizing the FTA only sets barriers for already complicated world trade issues.

Translated from 21st Century Business Herald By Li Yang