Executive Briefings

Were China, Japan, South Korea to Establish a Free-Trade Agreement, It Would Pose a Challenge to U.S.

A first reaction to the announcement on May 13th that China, Japan and South Korea are to open talks on establishing a trilateral free-trade area is to shrug. The idea has been around for a decade. There are many obstacles to its realisation. And not so much as a date has been announced for the talks to begin.

A second response is to recognise that, if it did come to anything, this would be a very big deal. In aggregate, the three countries account for nearly a fifth of global output - more than the euro area - and 18 percent of world exports. A third is to note that, with the stalling of the Doha round of multilateral trade talks, regional free-trade agreements in Asia have become one of many arenas of strategic competition between America and China.

It would be wrong to dismiss the effort as pure symbolism, however.

Some see a three-way FTA as a stepping stone to an even bigger free-trade area, including the ten-member ASEAN.

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A second response is to recognise that, if it did come to anything, this would be a very big deal. In aggregate, the three countries account for nearly a fifth of global output - more than the euro area - and 18 percent of world exports. A third is to note that, with the stalling of the Doha round of multilateral trade talks, regional free-trade agreements in Asia have become one of many arenas of strategic competition between America and China.

It would be wrong to dismiss the effort as pure symbolism, however.

Some see a three-way FTA as a stepping stone to an even bigger free-trade area, including the ten-member ASEAN.

Read Full Article