BEIJING - The leaders of China, Japan and South Korea agreed Sunday to start negotiations towards creating a free-trade area this year, saying it would boost the economies of the region in a time of crisis.
A free-trade area among Northeast Asia’s three major economies has been on the trilateral agenda for the past decade, beginning with an agreement among the three in late 2002 to launch a feasibility study on the issue.
“The three countries agreed to launch negotiations on a China-South Korea-Japan free-trade area within the year,” said Chinese Premier Wen Jiabao after meeting South Korean President Lee Myung-Bak and Japanese Prime Minister Yoshihiko Noda. Wen told reporters in Beijing that closer regional economic integration in response to a slow global recovery and an overall rise in trade protectionism would help unlock new growth potential.
“Northeast Asia is the most economically vibrant region in the world. So there is huge potential for our three countries to have closer trade and investment cooperation,” he said.
“The establishment of a free-trade area will unleash the economic vitality of our region and give a strong boost to economic integration in East Asia.”
China, Japan and South Korea combined have the world’s largest economy — ahead of the European Union — when measured by purchasing power parity, which takes into account differences in the costs of living across nations. Progress on a free-trade pact had widely expected to be on the agenda of the China-South Korea-Japan leaders’ meeting on Sunday — the fifth such summit to take place.
For Japan, free-trade talks with China and South Korea will come on top of efforts to join the Trans-Pacific Partnership (TPP), a trade agreement being negotiated by a group of countries led by the US, but excluding China.
“We will promote the TPP and the trilateral free-trade area in parallel. These efforts can be mutually reinforcing to each other,” Noda told reporters.
China, Japan and South Korea are pushing the trade liberalisation agenda at a time when their export-dependent economies are under pressure from slowdowns in the key European and North American markets. “When the economy is in crisis, it’s more pressing to set up a free-trade zone. This is my personal proposition,” South Korea’s Lee said.
“In times of crisis, if countries, for their own survival, carry out protectionist ideas, then the recovery of the economy will take a long time,” he said.
In Sunday’s meeting, the three nations also signed an investment agreement concluded earlier this year after 13 rounds of negotiations stretching over five years.
“To further facilitate mutual investment, it is important to have a legal framework. It will help our businesses and mutual investment,” Lee said.