China - East Asia trade pact talks 'later this year'

Talks on a free trade agreement involving China, Japan and South Korea are expected to start in November during the East Asia Summit, a source from the Ministry of Commerce said.

The source told China Daily that negotiations will be long and intense but was confident of a "substantive breakthrough" on the agreement by 2015.

An agreement was reached in Beijing last month to launch negotiations for a three-way trade pact this year. This follows seven years of research and two years of feasibility studies by governments, industries and academics in the three countries.

"We expect the talks to start at the end of this year, or to be more exact, in November", when the East Asia Summit is held in Cambodia, said the source, who is a member of the Chinese negotiation team.

"Japan is eager to push the process forward," the source said.

Japan is waiting to find out if it will gain access to another regional trade group, the Trans-Pacific Partnership, being launched by the United States.

Japan's bid to join the Trans-Pacific Partnership has yet to be approved by the US as Washington fears Tokyo is not fully addressing US concerns over the automobile market or agriculture. The US plans to wrap up talks on the Trans-Pacific Partnership by the end of this year.

A ministry spokesman said at a recent news conference that Japan is becoming increasingly eager to join the pact after Beijing and Seoul initiated negotiations.

"Japan was not very active, even late last year", when the feasibility study was completed, the spokesman said.

"Whether Japan will join the Trans-Pacific Partnership is still pending, so it is interested and focused on the trilateral trade pact," said Wang Luo, a researcher from the Chinese Academy of International Trade and Economic Cooperation, a think tank under the Ministry of Commerce.

China is the largest trade partner of Japan and South Korea.

A free trade pact, if signed, could lift China's GDP by up to 2.9 per cent, Japan's by 0.5 per cent, and South Korea's by 3.1 per cent, according to the ministry.

"China's market is important for enterprises from Japan and South Korea," said Yang Weiqun, director of the department of Asian affairs at the ministry.

The three economies together accounted for 19.6 per cent of global GDP and 18.5 per cent of exports in 2010, according to a feasibility study issued by the three nations.

"The trilateral FTA will allow the three nations to open their markets wider to each other, and this will definitely involve sensitive industries and products," said Jiang Ji-qing, director of the department of international trade and economic affairs at the ministry.

"How to deal with the issues and reach a balance will be the hard part of the negotiations," Jiang said.

Japan and South Korea have sensitive issues regarding agriculture.

Farmers held protests in South Korea recently when Seoul and Washington were discussing trade deals.

"Agriculture will be the most difficult for the two nations, and Chinese manufacturers may face challenges from imports of goods from Japan and South Korea if the FTA is signed," Jiang said.

"We will push the FTA gradually, working on the easy part before tackling the difficult part," Jiang said.

Wang said South Korea probably has little interest in the trilateral trade pact and is more focused on negotiations with China.

South Korea and Japan compete with each other in some industries, and that may make the trilateral talks difficult, Wang said

Concluding an FTA can be time-consuming. For example, China and Australia started discussions eight years ago, and talks are still ongoing.

In July 2004, China and the Gulf Cooperation Council launched FTA talks, but no trade pact has been agreed to yet.

China has already signed FTAs with 10 nations and regions, including Asean, Pakistan and New Zealand, according to the ministry, and China is in negotiations with other countries including Norway and Iceland.

Ding Qingfen

China Daily

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