FTA talks may lead to new trading bloc

FTA talks may lead to new trading bloc
The Star Online > Asia


Saturday April 23, 2005
FTA talks may lead to new trading bloc

PROSPECTS of free trade in Asia are promising as a dazzlingly complicated network of free trade deals is expanding.

Nations on the continent have signed dozens of agreements about bilateral or multilateral free trade agreements (FTAs) and they are in talks for more.

Asia’s three biggest economies – China, Japan and South Korea – are all in respective talks with the Association of South-East Asian Nations (Asean) about FTAs.

What is more exciting is that the respective FTA deals the three countries are involved in might end up in a trade bloc that includes the three of them as well as Asean countries.

Experts mandated by governments earlier this week have begun a study looking at the building of a free trade area that covers the three countries and the 10 nations in Asean.

The FTA could be even bigger because both Australia and New Zealand have expressed interest in the talks.

South Asian countries have also signed a number of FTA deals.

Between East Asia and South Asia, China and Pakistan have started FTA negotiations; China and India also pledged to build a FTA.

However, there are still no signs that such an FTA that covers China, Japan and South Korea will emerge any time soon.

As the biggest economies in the region, their close economic ties would be very favourable for economic co-operation of the entire region, said Xu Changwen, a senior researcher with the China Academy of International Trade and Economic Co-operation, a think-tank under the Commerce Ministry.

Both China and South Korea are willing to build an FTA among the three, but Japan has shown less commitment.

“Japan’s attitude is the key. It does not intend to have talks with China soon,” said China Foreign Affairs University professor Jiang Ruiping.

“It (Japan) puts lots of emphasis on the fact that China is a new member of the World Trade Organisation (WTO). It wants to see how well China can adjust to its WTO membership.”

Openly, Japanese officials have also disclosed their roadmap for their pursuit of free trade with regional trading partners.

Last year, they finished talks with Singapore. Now they are in talks with South Korea, some Asean countries individually and Asean as a whole.

China seems to be at the very bottom of Japan’s list.

The benefits of a three-way FTA for Japan are obvious because its enterprises are the strongest in the three countries. In fact, Japanese enterprises lobbied very hard for it.

Veteran Japan expert Zhao Jinping of the State Council’s Development Research Centre said the Japanese Government did not want to engage in direct FTA talks with China partly because it was wary about the latter’s emerging economic power.

Japan also worries that FTA talks with China and South Korea would force it to open up its agricultural market, which is a very sensitive sector for Japan. – China Daily
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