The recently proposed free trade deal
among the three major Asian economies will help China counter the
U.S.-oriented Trans Pacific Partnership (TPP) agreement, Chinese
experts said Thursday [22 November].
South Korea, China and Japan declared on Tuesday the start of free trade talks aimed at boosting their trade despite territorial tension in the Northeast Asian region. They said they will kick off negotiations over the three-way free trade deal next year.
The ambitious three-way pact, if realized, would create one of the world's largest markets, as the three nations account for 20 percent of the global gross domestic product (GDP), 17.5 percent of all global trade, and 22 percent of the global population.
Li Guanghui, vice president of the Chinese Academy of International Trade and Economic Cooperation, said the possible trilateral free trade deal will maximize China's benefit, cushioning the impact of the TPP sought by the U.S.
The TPP aims to enhance trade and investment among Pacific nations. The U.S. is in talks with Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, Vietnam, and Japan, trying to complete a deal this year.
"The three-way free trade agreement will be the premise and the foundation for the Association of Southeast Asian Nations (ASEAN) plus the three countries or for the Regional Comprehensive Economic Partnership," said Li.
The East Asia Summit (EAS) held earlier this week in Cambodia launched free trade talks involving 16 members. The EAS is a forum grouping the 10 ASEAN nations and its eight dialogue partners -- South Korea, China, Japan, the United States, Russia, India, New Zealand and Australia.
All but the U.S. and Russia are taking part in the negotiations to forge what has been dubbed the "Regional Comprehensive Economic Partnership" or RCEP, which is a counterweight to the TPP agreement.
"It will accelerate the creation of the single economic entity in Asia, and at the same time check and balance the U.S.-led TPP."
Liang Guoyang, an economic affairs officer at the United Nations Conference on Trade and Development, held a similar view, saying it will serve as an economic pivot in Asia.
"Following the global crisis, the world economy has now three nodes -- America, Europe and Asia," said Liang.
"While America and Europe have integrated economies, Asia has yet to establish one. It has a great potential to grow."
The anticipated FTA in East Asia is also projected to boost the status of the Chinese currency as the regional currency.
"The internationalization of the yuan will start from the neighboring countries," said Sun Huayu, director of the China International Currency Research Center.
"The FTA will allow for the expansion of trade and investment within the region, and broaden the use of the yuan."
The three nations' push for their free trade agreement came as the region is still mired in territorial disputes and unsettled historical legacies.
Relations between Seoul and Tokyo have sunk to a record low as Tokyo renewed its claims to South Korea's easternmost islets of Dokdo after South Korean President Lee Myung-bak made an unprecedented visit to the East Sea islets in August.
Japan has experienced a similar row with China over a group of East China Sea islets.
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