Ulterior motives in pursuit of Northeast Asian free trade deal?

A Korea-China-Japan free trade agreement, over which the leaders of the three countries agreed Sunday to start negotiations this year, could reshape the economic map of the three Northeast Asian nations, which account for a fifth of the global economy.

With significant differences in economic levels and trade environment among them, however, the three sides have markedly different stances internally.

Japan, which is lagging behind Korea in competition for free trade agreements, has a strong desire to gain an upset win through a single shot of the trilateral accord. Through the agreement, China internally wishes to maintain its economic leadership in Northeast Asia. In contrast, Korea judges that it has no reason to hurry since it recently began free trade negotiations with China after concluding similar deals with 45 countries, including the U.S. and European nations.

○ Japan wary of Japan; China vigilant of US

Ahead of their summit, Korea, China and Japan staged an intense war of nerves over when to start negotiations on the trilateral agreement. Seoul and Beijing insisted on opening talks "within this year,” but Tokyo demanded advancing the schedule for the talks’ opening.

Japan is more proactive toward the free trade agreement because Korea and China declared in a bilateral trade ministers` meeting early this month the start of their negotiations on a bilateral free trade deal. They agreed to begin the first round of negotiations Monday.

Japan announced its intention to proactively participate in the Trans-Pacific Partnership, led by the U.S., and the Regional Comprehensive Economic Partnership, led by the Association of Southeast Asian Nations, but no notable progress has been made due to the nature of the negotiations involving so many countries.

The Japanese government has recently come under mounting pressure from the Japanese public, as it is compared with Korea, which has expanded its economic territory by signing free trade deals with the U.S. and EU. As such, progress in talks over a Sino-Korean agreement will effectively come as a “disaster” to Tokyo.

Japanese Prime Minister Yoshihiko Noda said, “The three nations’ agreement to open FTA talks within this year is a significant achievement,” reflecting his recognition of the serious mood.

Many analysts say China is more mindful of diplomatic and security factors rather than economy when it comes to the trilateral trade accord. Beijing was originally passive about such a pact but changed its stance after the Korea-U.S. agreement took effect and because it recognized the need to keep in check the U.S. after Japan announced its participation in the U.S.-led Trans-Pacific Partnership.

China internally judges that a free trade deal in Northeast Asia is OK, be it one between Korea and China or among Korea, China and Japan, as long as the U.S. is not included.

○ Korea prioritizes Sino-Korean deal

Korea, which begins free trade talks Monday with China, its largest trading partner, has taken a more relaxed stance toward the proposed deal among the three nations. Since Japan exports cars and electronics just like Korea and boasts stronger overall competitiveness in manufacturing than Korea, the latter feels burdened over Japan being a negotiating partner for a free trade deal.

Seoul and Tokyo opened negotiations on a bilateral free trade deal in 2003, but their talks collapsed in just one year because they failed to narrow differences over the opening of their manufacturing and agriculture markets. As such, Korean trade authorities place priority on a free trade agreement with China.

Kim Young-gwi, senior researcher at the Korea Institute for International Economic Policy, said, “The Sino-Korean FTA is meaningful in that it is more non-economic in nature, including security.”

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