The China-proposed Belt and Road Initiative (BRI) will have a synergistic effect with the proposed trilateral free trade agreement (FTA) among China, Japan and South Korea, as the latter is now on a fast track, Chinese analysts said on Tuesday.
The comments come amid an escalating trade war between China and the US and announced efforts to fast-track the negotiations on the important free trade zone (FTZ) among the three Northeast Asian countries, on which 15 rounds of negotiations have been held.
South Korea and Japan stand to benefit from the further progress of the BRI, which aims to boost connectivity among Asia, Europe, Africa and beyond. Moreover, the participation of South Korea and Japan in some of the BRI projects has expanded those projects’ influence, analysts noted.
The China-Japan-South Korea FTA is the most important one being pursued by China in terms of economic size, according to media reports in April. An FTZ among the three Asian neighbours will also be the most important FTZ for Chinese exports.
Officials from China, Japan and South Korea are calling for further efforts to accelerate talks about an FTA.
Chinese analysts said the FTA will have special meaning in a time of US trade protectionism, unilateralism and bullying practices.
“It would be a trade deal among three of the world’s top 11 economies, that’s its significance,” Bai Ming, deputy director of the Ministry of Commerce’s International Market Research Institute, told the Global Times on Tuesday.
Wu Minghua, a Shanghai-based independent analyst in the shipping industry, said an FTZ will be a major complement to the BRI.
“So far, the BRI is about looking west. An FTZ among the three countries will serve as an important foothold at the eastern end of the initiative,” Wu told the Global Times on Tuesday.
More exciting is the fact that in a number of industries, including shipping, the three countries enjoy a high level of connectivity and have equal development standing, which means that the market can absorb the openness brought by an FTZ with few hiccups, Wu said.
It will also be interesting to see whether the FTZ will enjoy some of the financial arrangements that prevail in the countries and regions in the routes of the BRI, Wu said.
Nowhere is this cooperation more true than in Lianyungang Port, East China’s Jiangsu Province, the eastern end of the Eurasian land bridge and a major BRI port. Here, companies from Japan and South Korea are utilising the sea-over-land trade artery that goes across the Eurasian landmass to Amsterdam. Their use of this trade route has increased its activity and brought down its costs, helping expand the influence of the BRI, Bai said. An FTA could lead to further development in this direction.
“Given that an FTA can bring down tariffs and facilitate trade, Japanese and South Korean companies can further participate in the BRI,” a person at the port told the Global Times on condition of anonymity on Tuesday.
Sun Yuanxin, a Deputy Director of the Research Institute for the Shanghai FTZ at the Shanghai University of Finance and Economics, said that the promotion of an FTZ is brought forward by agreeing on trade rules, while the promotion of the BRI is driven forward by key projects. However, “both are efforts aimed at promoting international economic cooperation.”
“In a world of uncertainty and volatility, Asian countries have a unique chance to show the world how solidarity can be achieved through communication,” Sun told the Global Times on Tuesday.
This year is the 20th anniversary of a trilateral cooperation mechanism among the three countries. During these two decades, trilateral trade has grown more than five fold to $720 billion from $130 billion, media reported.