A free trade agreement for asia

A free trade agreement for asia

Two pathways

The ASEAN-led pathway begins with the ASEAN FTA which includes experienced place since 1992, combining it with the ASEAN+1 FTAs with China, Japan, Korea, India, Australia, and New Zealand, and consolidating these with the trilateral C/J/K FTA. The resulting East Asian FTA could then be expanded to cover each of the ASEAN+6 and be the CEPEA. This sequential method of trade integration reflects Asia’s pragmatic bottom-up method of integration that supports sub-regional cooperation as the inspiration of an eventual broader, deeper, and more unified regional architecture (Asian Development Bank 2008).

The choice pathway, the US-led Trans-Pacific Partnership (TPP), can be gaining currency (Plummer 2012). As well as the nine countries in three continents – Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, USA, and Vietnam, at the APEC Summit in Honolulu in November 2011, three more countries – Japan, Canada, and Mexico – expressed their interest in joining the negotiations aswell. The 12th round of negotiations just concluded in Dallas, Texas, and the goal is to make an effort to wrap it up by the entire year end. A key component of the Obama Administration’s commitment to create US engagement in the Asia-Pacific a high priority, the TPP targets a deep “top quality, 21st century” FTA which covers not merely trade in goods and services, but also intellectual property rights, government procurement, labour standards, environmental regulations, and small and medium enterprises. It seeks to eventually achieve the APEC’s stalled Free Trade of the Asia-Pacific (FTAAP).

Complementary or competitive?

Will be the two pathways to region-wide FTA in Asia, complementary or competitive? Japanese Prime Minister Noda has been quoted as saying: “We will promote the TPP and the trilateral FTA in parallel. These efforts could be mutually reinforcing to one another” (Financial Times 2012). Others have a different take. Jagdish Bhagwati, a trade economist from Columbia University, has argued that among the major known reasons for the stalled efforts to market the Free Trade of the Americas between THE UNITED STATES and SOUTH USA was the insistence by the united states that high doses of non-trade related issues including labour standards be contained in the talks. Brazil’s former President Luiz Lula Inacio de Silva, totally rejected the inclusion of labour standards in trade. THE UNITED STATES efforts, therefore, resulted in the division of SOUTH USA into two blocks (Bhagwati 2011).


When the leaders of China, Japan, and Korea announced on 13 May 2012 that that they had decided to begin negotiations on the C/J/K FTA later this season, in addition they announced a complementary agreement on a three-way investment treaty. Although the C/J/K FTA have been on the drawing board for quite a while, progress was not made in days gone by as the three north-eastern neighbours are divided by political distrust, protectionist interests, and divergent investment policies, together with by regional worries about China’s expanding economic and military power. Also China and Japan have yet to initiate talks for a bilateral FTA, and the South Korea and Japan negotiations have stalled since 2004. Why the sudden change?

The leaders described their steps as a way never to only boost trade but also to cement East Asian regionalism and build political trust among one another. All three countries are major global exporters and together they take into account nearly 20% of world GDP. The Xinhua news agency reported that the C/J/K FTA could lift China’s GDP by up to 2.9%, Japan’s by 0.5%, and Korea’s by 3.1%.

Still many hurdles remain for the successful negotiation of the C/J/K FTA. Furthermore to those mentioned previously, China is unlikely to create concessions that could threaten the state’s capability to control what it perceives as strategic industries, and agriculture producers in Japan and Korea have the political clout to guard the extensive trade barriers that benefit them.

If the intent of the leaders’ announcement last month was showing support to the ASEAN-led pathway to a region-wide FTA in Asia – because of the perceived threats from the US-led pathway – they should overcome the political and other obstacles and conclude the negotiations as swiftly as possible. By the end of the day that’s what matters rather than expressions of interest to begin with negotiations.


Asian Development Bank (2008), “Emerging Asian Regionalism”.

Bhagwati, J (2011), “America’s Threat to Trans-Pacific Trade”, projectsyndicate.org, 30 December.

Financial Times (2012), “China, Japan, and S Korea in Free Trade Talks”, 13 May.

Francois J, P Rana, G Wignaraja (ed.) (2009), Pan-Asian Integration, Palgrave Macmillan

Joint Declaration of the Fifth Trilateral Summit among the People’s Republic of China, the Republic of Korea, and Japan (2012), Beijing, China, 13 May.

Kawai, M and G Wignaraja (2012), “Pattern of FTAs in Asia: AN ASSESSMENT of Recent Evidence”, paper presented at the ADBI/RSIS Conference on “The Evolving Global Architecture: From a Centralized to a Decentralized System, Singapore, 26-27 May.

Plummer, M (2012), “The Emerging Post-Doha Agenda and the brand new Regionalism in the Asia-Pacific” paper presented at the ADBI/RSIS Conference on “The Evolving Global Architecture: From a Centralized to a Decentralized System”, Singapore, 26-27 May.

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