The China-Japan-South Korea Free Trade Agreement negotiations have been going on for a full 22 years, and the restart of negotiations indicates that the process has been consistently stalled, suggesting that cooperation among the three countries has not progressed as intended.
Why has the China-Japan-South Korea Free Trade Agreement taken so many years without reaching an agreement?
Simply put, the core intention of this agreement is similar to that of the North American Free Trade Agreement, which is to eliminate trade barriers and promote trade and investment cooperation.
However, to achieve this goal, the three countries need to complement each other in industries, similar to how in the North American Free Trade Agreement, the United States provided markets and technology, Canada provided mineral resources, and Mexico served as a cheap production factory.
Twenty years ago, China, Japan, and South Korea did indeed have similar needs.
At that time, China was becoming the world's economic engine with double-digit annual economic growth rates, while Japan and South Korea, as providers of capital and technology, were highly compatible with China's industrial development.
Establishing a free trade zone would have enabled Japan to reduce its dependence on the United States, China to alleviate the impact of US dollar depreciation on exports, and South Korea to gain a certain level of independence.
2012 was the most promising year for the China-Japan-South Korea Free Trade Zone.
At that time, the combined GDP of the three countries was close to that of the United States, while the economic aggregate of the Eurozone exceeded that of the United States.
If China, Japan, and South Korea had also moved away from US dollar settlement and aligned themselves, the dominance of the US dollar might have ended a decade ago.
However, unexpected events occurred.
Shortly after signing the China-Japan Bilateral Currency Swap Agreement, the Japanese finance minister committed suicide, the nominee for ambassador to China died of a heart attack, and massive anti-Japanese protests erupted in China.
This series of events led to a freezing point in Sino-Japanese social relations.
By 2016, China and South Korea were trending closer, but the US government, citing the North Korean issue, deployed the THAAD system in South Korea, leading to a rapid cooling of China-South Korea relations.
In short, whether through conspiracy or otherwise, the progress of the China-Japan-South Korea Free Trade Zone has been forced to pause, and the relationship between the three countries has entered a pattern of political coolness and economic warmth.
Twenty years have passed, and the China-Japan-South Korea Free Trade Zone remains in the negotiation stage, with little substantive progress even if negotiations are restarted.
Today, the economies of China, Japan, and South Korea rank second, third, and in the top ten globally, respectively, with a combined GDP of $20 trillion, accounting for about 20% of the global total.
If the free trade zone could be realized, East Asia would surpass the European Union, both in terms of population and market.
However, the practical difficulties are significant.
Some say that Asia is the most complicated place in the world, East Asia is the most complicated region in Asia, and China, Japan, and South Korea are the most complicated within East Asia.
During China's rapid development over the past decade, it has surpassed Japan and South Korea in multiple fields, transitioning from complementary development to intense competition.
According to a report released by South Korea in 2021, competition between China and South Korea in high-tech industries is intensifying.
By 2023, China's exports to ASEAN had grown rapidly, while South Korea's exports had declined significantly, even resulting in a trade deficit with China.
Japan's situation is slightly better but still affected by Chinese competition.
Chinese beauty products are popular in Japan, and certain electronic device brands have market shares in the double digits.
Meanwhile, sales of Japanese cars in China have plummeted, and market shares of electronic products have gradually decreased.
China, Japan, and South Korea are all major manufacturing powers globally, and industrial competition is inevitable.
China's advantageous industries include electronics, home appliances, automobiles, textiles, and new energy;
South Korea's export industries are concentrated in semiconductors, automotive components, and electronic devices;
Japan is an important country in the automotive and electronic device manufacturing industries.
Although officials have stated that there are opportunities for cooperation among China, Japan, and South Korea in the industrial chain, the situation over the past decade or so has shown that even without a free trade zone, China's shipbuilding industry has surpassed South Korea, and its automobile industry has surpassed Germany and Japan.
In the fiercely competitive industrial environment, if Japan and South Korea do not adjust their domestic industrial structures and cooperate with China, they will continue to lose their market shares.
In conclusion, restarting negotiations for the free trade zone is not difficult; what's difficult is overcoming pressure from the United States and redefining one's own position.
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