Japan, China and South Korea Inch Closer to Free Trade Deal

March 23, 2012Marketsby EW News Desk Team

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Asia’s three largest economies are moving closer to signing a trilateral investment deal which could soon pave the way for a wider free-trade agreement.

The investment deal, which needs to be signed into effect, is the first legal economic treaty between the three East Asian giants, despite a history of tension that has often slowed integration processes.

In the past few years, the three countries have been studying the possibility of setting up a trilateral free-trade agreement. According to officials, the investment pact is regarded as a foundation for the building of a free trade area between the three countries.

The three nations are growing in importance and clout on the world economic stage.

Economic Statistics: China, Japan, South Korea GDP

China, is already the world’s second largest economy behind the United States, with Japan the third largest. While South Korea’s GDP is not amongst the world’s largest, the country already has strong trade links with both Japan and China.

While the individual trade ministries declined to provide details on the agreement, the investment pact is expected to protect the intellectual property rights of Japanese and South Korean firms currently invested in China.

Samsung Electronics, South Korea’s largest company, is planning to invest $3.5 billion in the western Chinese city of Xian, where the company plans to construct a chip plant. Many have, however, raised concerns over intellectual and operational security.

South Korea, which already has existing free-trade agreements with the United States, the European Union, India, and ASEAN, hailed the investment treaty as the first economic-related agreement between the three countries.

Related News: FTA Between South Korea and the U.S. Comes Into Effect Amid Much Praise, and Fear

Related News: EU Ratifies Big Trade Deal w South Korea, First Asian Partner

Many Asian nations have been keen to boost regional cooperation as economic growth crawled to a slow in the United States and Europe.

The Financial Times reported that China had at times appeared unenthusiastic in the trilateral agreement, and suggested that Japan’s growing momentum in joining the ranks of an Asia-Pacific trade agreement known as the TPP (that would be unlikely to include China) appears to have made Beijing more interested in the three-way deal.

In December Yoshihiko Noda, Japan’s prime minister, and premier Wen Jiabao of China agreed to restart talks on a trilateral trade pact. A three-way summit to be held in China in May is seen as a likely time for the investment agreement to be signed and formal discussions on a trade deal announced.

Read more on the Trans-Pacific Partnership: America’s New “Pacific Offensive” – A Strategy To Contain China. By Sanjaya Baru

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