Free trade in N-E Asia
China and Taiwan signed a de facto free trade agreement, known as the Economic Cooperation Framework Accord (ECFA) this week. The two overcame political and ideological differences in order to achieve mutual economic prosperity. Now is the time to ponder the creation of a free trade area and ultimately a single market in Northeast Asia.
The ECFA could be and should be a baby step toward an FTA encompassing Northeast Asia. Korea, Japan and China could expand trade and stimulate economic vitality through FTAs with each other. This would create an FTA area in the world’s most dynamic region. It would ultimately lead to an EU-style Northeast Asian Community.
Russia, Taiwan and even Mongolia could be invited to participate. China should declare that it will not oppose Taiwan’s signing of FTAs with Korea, Japan and other countries, at least on a nongovernmental basis. It may be premature and untimely for North Korea to join in the process.
South Korea is positive about signing FTAs with any country, including China, Japan and Taiwan. Meanwhile Japan seems to be hesitating over FTAs with China and Korea.
Economic cooperation is the best way to promote peace and stability in Northeast Asia. As is well known, Northeast Asia remains tremendously complex. The two Koreas are still technically at war. China and Japan are not on favorable terms. China still regards Taiwan as part of its lands. North Korea is one of the poorest and most dangerous countries in the world. Russia is still a transitional economy. Furthermore, North Korea and Japan have yet to establish diplomatic ties. Territorial disputes between Japan and South Korea and between Japan and China still linger. Northeast Asia has been behind Southeast Asia in economic integration due to such complicated relations.
China is the world’s largest developing country. Japan is the world’s second largest developed economy. South Korea is a mid-sized developed economy.
The current economic patterns in the region are complementary. Korea and Japan are rich in capital and knowledge. China has an abundant pool of skilled manpower. Taiwan is also economically competitive although it has been diplomatically isolated. North Korea is reclusive but has rich natural resources
Even without FTAs, economic and trade ties involving Korea, China and Japan have been growing. The potential is great. Once North East Asia and South East Asia are linked through FTAs, the renaissance of Asia will take place earlier than anticipated.
South Korea, long regarded as a shrimp among whales in Northeast Asia, can play the role of an intermediary.
The vision must be tempered by reality. North Korea’s nuclear threat must be tackled. Japan should no longer upset China or South Korea over historical issues. China should be magnanimous regarding Taiwan. In creating a regional FTA area, China, Japan, and South Korea should act as the core group.