F REIGN TRADE - 中国国际贸易促进委员会

ASIA-PACIFICment, industrial sector and the academic domain.Eventually, the three countries reacheda consensus in early 2012 that it was time toinitiate the FTA negotiations as all the conditionsfor initiating the FTA negotiations hadmatured. “We should say that this is a verynatural process,” said Zhang.According to Zhang, China, Japan andKorea have all signed free trade agreementswith the ASEAN. However, there exist nobilateral or multilateral free trade agreementsamong China, Japan and Korea, andinter-country investments among the threecountries merely account for 6% of the threecountries’ aggregate outbound investments,which does not match the three countries’status in the global economy and which alsoreflects the Northeast Asia’s backwardnessin regional economic integration. At thisyear’s conference, it was determined to initiatethe FTA negotiations, which is a stepforward and which is of great significance toboost economic integration and to achieve acommonly beneficial result among the threecountries.It is learned that China, Japan and Koreaboast an aggregate GDP of USD 14 trillionand a total foreign trade volume worthUSD 6.3 trillion. However, the economicintegration course in Northeast Asia is relativelybackward, and the inter-country investmentsamong China, Japan and Korea onlyaccount for 6% of these three countries’ totaloutbound investments.Ten years later, China, Japan and Koreahave eventually signed the investment agreementwhich however does not mean thatfree investments can be immediately realizedamong these three countries. The investmentagreement’s taking effect requires thethree countries to transfer the content of theinvestment agreement into their own lawsand regulations and to accordingly formulateinternal legal procedures. Only in this waycan the investment agreement come into forceand then take effect.Will the establishment of the CJKFTAimpact some domestic industries, what willbe the economic and social cost, and whetherwill the opening issue of the sensitive sectorsbecome an obstacle for the three countries todeepen trade. The investment agreement wassigned firstly, which may be in the benefit ofJapan and Korea, while as China is less competitivein the service and investment domainand its commodity trade may be impacted.Although China, Japan and Korea haveannounced that the FAT negotiations willbe initiated, the negotiation process is destined to be long and it may be evenpossible for the negotiations to last for another 10 years. Japan and Koreafear the impact imposed by China’s farm products, while China concernsthat Japan and Korea will squeeze the domestic service and investment sector.Agriculture is the most severe challenge in the FTA negotiations. Japanand Korea put much protectionism on agriculture, and if they insist on notopening the agricultural products market, China will have no way to bringits comparative advantage on agricultural products into full play. If China,Japan and Korea cannot reach a consensus on the agricultural issue, it will bea bottleneck for the establishment of the FTA.Fukukawa Shinji, Chief Japanese FTA Negotiator stressed in the interviewthat China, Korea and Japan needed to initiate the FTA negotiations assoon as possible, as against the backdrop of the sluggish world economy onlythe establishment of the CJPFTA can power the recovery of the world economyand promote economic integration in East Asia. In the course of negotiations,a comprehensive framework is definitely ideal, which however is notthat easy to be achieved. But it is unnecessary to stubbornly require the “onepackage”approach to solve all the problems at one time. The negotiations canbe flexibly carried out by tackling the easy section prior to the difficult sectionand by focusing on consensus to gradually expand the FTA plan. In themean time, to develop industrial cooperation, inter-corporate connection isthe source of economic dynamism. Therefore, it is of great importance to createfair competition conditions and to attach great importance to innovation.According to Zhang Jianping, Director of the International EconomicCooperation Department of the Foreign Economic Research Institute ofthe National Development and Reform Committee, it is a breakthrough forChina, Japan and Korea to officially sign the investment agreement, whichdeepens regional economic cooperation, makes the ties among the threecountries closer and delivers a trip-win result. The signing of the agreementreflects respect to the objective economic law and also the trend for internationalindustrial transfer. The three countries unanimously agree to initiatethe FTA negotiations within this year—which have been prepared for nearly10 years—and each step is not easy. Zhang suggested that the FTA can notonly be treated by which country and industry are benefited most, but by anew strategic perspective on the long-term development of the three countries.The establishment of the FTA is of great significance to stimulate tradeand investment, make the three countries more competitive and to facilitateeconomic structuring of the three countries.55