Children from China, Japan and the ROK watch a painting at the sixth China, Japan and ROK Children's Friendship Painting Exhibition in Shanghai on July 28, 2018 (XINHUA)
The global free trade system suffered in 2018 as U.S. trade protectionism prevailed. However, the negative international trading environment has accelerated free trade arrangement negotiations in East Asia, and the once halted cooperation between China, Japan and the Republic of Korea (ROK) began to get back on track.
At the end of 2018, the three countries held the 14th round of negotiations on the China-Japan-ROK Free Trade Agreement (FTA) and agreed to hold a new round this year in Japan. They are committed to establishing a free trade area with high standards.
The significance of the trilateral free trade cooperation runs far deeper. For the three East Asian countries, besides seizing current opportunities to promote cooperation, they also need to show courage and wisdom in face of wider obstacles.
Opportunities and challenges
Promoting trade liberalization has been the main theme of globalization since the end of the Cold War. At times when the global trade system is in flux, countries tend to resort to regional economic cooperation and bilateral free trade agreements to seek trade development.
But everything has two sides, and this is true for free trade. While improving economic efficiency and promoting prosperity, it has the potential to aid strong economic powers in exploiting weak ones. Every country hopes to benefit from free trade while at the same time avoiding being hurt by its existence. Trade protectionism and free trade are twins in trade practice.
There are two kinds of trade protectionism. One is the moderate protection of developing countries to foster their infant industries, which is a transitional measure toward free trade. The other is the protectionism measures of developed countries to maintain their dominance and superiority, such as technical barriers to developing countries and political discrimination against certain countries. The current measures of the United States against China fall into the latter category. Developed countries also use their dominant position to force developing countries' over-opening to ensure their superiority, which is another kind of trade protectionism. U.S. President Donald Trump's trade war against China transcended trade protectionism and can be considered a kind of anti-free trade practice.
The economic development of China, Japan and the ROK has benefited from the development of global free trade. China's reform and opening-up policy has created a sound environment for the development of trade and mutual investment in the region. Today, China is both Japan's and the ROK's largest trading partner. And Japan and the ROK are China's second and third largest trading partners, respectively, as well as the first and second largest source of investment.
China, Japan and the ROK are the world's second, third and 11th largest economies, respectively. In 2017, the overall volume of gross domestic product (GDP) of the three countries totaled $18.4 trillion, accounting for 22.8 percent of the world's total GDP, which exceeded the Europe Union's (EU) $17.28 trillion and ranked only second to the North American Free Trade Area (NAFTA).
The trade volume among the three countries has surpassed $640 billion. Such close economic relations provide the material basis for establishing a free trade zone among the three.
Nevertheless, despite close economic interactions, challenges still remain, which is why after seven years of negotiations, the China-Japan-ROK Free Trade Area still failed to take shape since plans were announced in 2011. Firstly, there is disparity in economic development among the three countries. Japan is a developed country, the ROK is an emerging industrial country, while China is still a developing country.
Theoretically speaking, their different development stages make the three economies complement each other. But at the same time, this also resulted in their different appeals during the negotiations.
For example, Japan is only willing to talk about the free trade of industrial products but adopts strong protectionism with regards to agriculture. Japan stresses the opening up of high-end manufacturing products, in which area it enjoys superiority, but holds a conservative attitude toward labor-intensive industries. In addition, the competition between Japan and the ROK in high-end manufacturing is sensitive.
Secondly, historical issues and territorial disputes among the three add difficulties to their free trade negotiation. Japan's desire to be a political superpower and to play a leading role in the region aggravated geopolitical factors in trade talks.
What's more, following the U.S. suit, the Japanese Government enacted measures to block Chinese telecom firms Huawei and ZTE from bidding on public contracts for building information systems in December 2018. Japan's move reflects developed countries' hypocrisy on the issues of free trade. Once they face competition from developing countries, they directly neglect the rules of free trade by taking unconventional measures.
Aims and significance
When compared with other regional cooperation initiatives, the China-Japan-ROK FTA was proposed relatively late. In the late 1960s and early 1970s, Japan and EU countries completed their post-war recovery and entered a new stage of development. Together with the United States, they formed the major economic powers of the Western World.
At that time, the export-oriented economy in East Asia, jointly pushed by the U.S. geopolitical strategy and Japanese geo-economic strategy, developed rapidly. This process was further accelerated by China's reform and opening up and its normalization of ties with East and Southeast Asian countries.
After the Asian financial crisis, the United States refused to lend a helping hand. The move promoted East Asian countries to seek independent cooperation.
To avoid geopolitical competition, regional cooperation in East Asia is currently led by the Association of Southeast Asian Nations (ASEAN).
However, China, Japan and the ROK account for 80 to 90 percent of the region's GDP, putting the ASEAN-led regional integration in an awkward position of a small horse pulling a big cart. It was this which prompted China, Japan and the ROK to discuss trilateral cooperation in 1999.
The aim was to not only fuel economic growth but also eliminate the roots of geopolitical conflicts and facilitate the integration of East Asia, as well as the Asia-Pacific at large.
However, the United States is unwilling to see such a situation of regional cooperation. Therefore, almost all regional geopolitical crises such as the Korean Peninsula nuclear issue, the Diaoyu Islands dispute and the South China Sea maritime disputes can see the shadow of the United States.
The Shinzo Abe administration's Constitution revision and building a strong army chimed with former U.S. President Barack Obama's "Pivot to Asia" policy, which drove China-Japan ties to a new dilemma.
Obama tried to use the Trans-Pacific Partnership Agreement (TPP) to economically isolate China from other East Asian countries, which also made Japan, a participator of the TPP, be aloof to the China-Japan-ROK free trade deal. With the United States' withdrawal from the TPP, Japan almost dominated the newly established Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a huge market with 500 million people, which also becomes a bargaining chip for Japan to raise prices with China and the ROK during trade talks.
At present, due to Trump's "America First" policy, the awareness of regional cooperation in East Asia has once again reared its head. The East Asia Regional Comprehensive Economic Partnership (RCEP) is likely to conclude in 2019 ahead of China-Japan-ROK FTA negotiation.
When this time comes, the role of the China-Japan-ROK cooperation will run into a dilemma. Is it dispensable, is it a hindrance, or is it a so-called high-standard agreement? It is difficult to find an answer when considering the question from a purely economic point of view.
The goals of the three countries' cooperation are not simply to expand space to gain benefits for capital. What's more important is to enable their peoples and the entire region to enjoy prosperity in a peaceful and stable environment. China, Japan and the ROK must fully realize their responsibilities and obligations.
Chinese Premier Li Keqiang once said that China, Japan and the ROK have an important responsibility for promoting regional economic development, leading regional integration, and maintaining regional peace and stability. Therefore, trying to promote lasting peace and common prosperity in the region is our goal. Now, it is time for us to use our wisdom to achieve this goal.
The author is an op-ed contributor to Beijing Review and a senior expert on international studies
Copyedited by Craig Crowther
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