Trans-Pacific Partnership

Big hurdles to three-way, free trade talks

PUBLISHED : Monday, 01 April, 2013, 12:00am
UPDATED : Monday, 01 April, 2013, 3:00am

Territorial tensions, rivalries and suspicions are hardly the ideal environment for long-awaited free-trade talks between China, Japan and South Korea. But Beijing's wish to counter the American-led push for a Trans-Pacific partnership (TPP) that does not include China - part of Washington's strategic pivot back towards Asia and the Pacific - has helped get them off the ground. China is already in free-trade talks with the Association of Southeast Asian Nations. A trilateral deal between the largest, second-largest and fourth-largest economies in Asia would boost trade between them that totalled nearly US$700 billion in 2011.

The opening talks between trade ministers in Seoul, to be followed by meetings in Beijing and Tokyo, are to prepare the framework for practical negotiations, which must overcome a range of obstacles from domestic sectoral opposition to competition to fear of a flood of cheap Chinese imports.

That is not to mention the day-to-day possibility of diplomatic complications arising from the dispute between China and Japan about sovereignty over an archipelago in the East China Sea, and the involvement of Japan and South Korea in historic disputes over ownership of several islands. On the other hand, separate ongoing negotiations that stand to deliver significant economic benefits can do no harm to the case for restraint and patience over provocation.

According to Xinhua, a pact could lift China and South Korea's GDPs by about 3 per cent and Japan's by only 0.5 per cent. An added incentive for Tokyo, which also plans to join the TPP, is the need to strike a balance in relations with two great economic rivals.

Moves to liberalise trade between richer nations are a reminder that the big losers in the stalled Doha round of trade talks are poorer developing nations, which stand to gain wider market access and capital investment from a new world trade order. The failure of world talks has helped prompt bilateral, trilateral and regional initiatives, including also separate negotiations on alliances between Japan and Europe, and the US and Europe. The latter will focus on non-tariff barriers to trade such as health and safety rules, since tariffs between the US and Europe are already low, and could serve as a benchmark for other countries.

While such pacts would expand global trade, they would leave much work to be done to spread the benefits evenly.