Despite the challenges presented by the global public health crisis and anti-globalization headwinds, there are increasing expectations that China, Japan & the Republic of Korea will sign an advanced free trade agreement.
Being Members of the recently inked Regional Comprehensive Economic Partnership agreement, China, Japan and the ROK lay an important foundation for an FTA, which, if concluded, will become a new engine for Asia-Pacific economic integration and the global economy’s recovery.
The industries of the three countries are highly complementary and their trilateral trade volume has increased from $132 billion in 1999 to $622 billion in 2019, up 370 percent in 20 years.
Their economies account for 70 percent of the Asian economy and 20 percent of the world economy, and along with China and Japan, the ROK is expected to be among the world’s 10 largest economies this year.
However, trade among the three accounts for just 23 percent of their total trade, much lower than the 65 percent trade among members of the European Union, and 40 percent among economies in the United States-Mexico-Canada Agreement.
While the pandemic has led to the contraction of global industrial and supply chains, the natural geographical, industrial and economic advantages shared by China, Japan and the ROK have helped accelerate the integration of their industrial and supply chains.
The three enjoy good interaction in the upstream, midstream and downstream of the global semiconductor industrial chain; Japan produces upstream raw materials, the ROK produces midstream chips and other products, and China produces downstream final products.
An FTA among them will help promote regional economic cooperation, consolidate the global industrial and supply chains, and promote the recovery of the global economy.
As important nodes along the ancient Silk Road, China, Japan and the ROK enjoy close economic and trade ties. High-quality cooperation among the three within the framework of the Belt & Road Initiative will not only promote the free flow of goods and capital but also contribute to closer personnel exchanges and the conclusion of an FTA.
The three countries should not only strengthen economic cooperation and push for the conclusion of an advanced trilateral FTA, but also increase mutual trust so that they can work closely in multilateral organizations such as the World Trade Organization.
This will not only help reduce transaction costs and promote economic integration in East Asia, but also contribute to economic recovery in the Asia-Pacific, restore the world trade order, and make the three economies the stabilizers and engines of world economic growth.