* China’s Wen calls for cooperation amid economic
uncertainty
* Three-way trade pact faces long negotiation journey
* China, Japan, S.Korea agree investment treaty
(Adds details of investment agreement, quotes)
By Chris Buckley and Sui-Lee Wee
BEIJING, May 13 (Reuters) – China, Japan and South Korea
agreed at a summit on Sunday to launch negotiations for a
three-way free trade pact they said could help fend off global
economic chills, but the talks are expected to be long and
difficult because of decades of rivalry.
The three nations are major traders, and together accounted
for 19.6 percent of global gross domestic product and 18.5
percent of exports in 2010, according to a feasibility study
issued by their governments last year on the trade pact.
“Northeast Asia is the most economically vibrant region in
the world,” Chinese Premier Wen Jiabao told reporters after
talks in Beijing with Japanese Prime Minister Yoshihiko Noda and
South Korean President Lee Myung-bak.
“The establishment of an FTA will unleash the economic
vitality of our region and give a strong boost to economic
integration in east Asia.”
China is the biggest trade partner of Japan and South Korea.
A free trade treaty could lift China’s GDP by up to 2.9 percent,
Japan’s by 0.5 percent, and South Korea’s by 3.1 percent, the
official Xinhua news said in a commentary, without citing the
basis for its estimates.
But agreeing on a fully-fledged pact, which has been on the
table for a decade, will not be easy.
The three northeast Asian neighbours are divided by
political distrust, trade barriers, and diverging investment
policies, as well as regionwide worries about China’s expanding
economic and military power.
The proposed treaty must also vie for attention with the
United States’ push for a broader Trans-Pacific Partnership, a
trade liberalisation initiative that has drawn in nine
countries, with Japan also expressing interest. Ch i na and South
Korea are not part of those negotiations yet.
At the summit in Beijing, the three leaders also agreed a
three-way investment treaty – a stepping stone to the bigger and
much more contentious goal of a free trade deal – said Xinhua.
China’s Ministry of Commerce said on its website that the
(www.mofcom.gov.cn) investment agreement will help smoothe tax,
dispute resolution and other issues among the three nations.
“Japan, South Korea and China play an important role in the
global economic recovery,” said South Korea’s President Lee.
“When the economy is in crisis, it’s more pressing to set up a
free trade zone,” he told a business meeting that took place
parallel to the leaders’ summit.
Intra-regional trade and investment levels between China,
Japan and South Korea were “much lower” than levels in the
European Union or across the North American Free Trade Agreement
area.
LONG JOURNEY AHEAD
Yet even host China acknowledged the negotiations on a
three-way trade agreement to begin are likely to be difficult.
“The conclusion of the feasibility study in 2011 and the
nearly finalization of the three-way investment treaty has paved
the way for launching the FTA talks, but that only marks one
step forward along the long negotiation journey,” Xinhua said.
“More importantly, political trust is badly needed in this
sensitive region, not only in political affairs but also in
economic ties.”
Tokyo and Beijing have long been in dispute over territorial
claims in the East China Sea, where both sides stake claims to
potentially valuable gas beds.
Beijing also faces insistent demands from Tokyo and Seoul to
put more pressure on North Korea, whose nuclear weapons
ambitions and rocket tests have alarmed the region.
The plan for a three-way northeast Asian free trade pact
jostles alongside other proposals to enhance regional economic
flows, especially the Obama administration’s promotion of the
Trans-Pacific Partnership.
Policy-makers in Beijing worry that U.S. influence could
erode Chinese sway across the region.
Japan’s Prime Minister Noda said he saw no conflict between
the two trade negotiation proposals.
“We will promote the TPP and the trilateral FTA in
parallel,” Noda told reporters. “These efforts can be mutually
reinforcing to each other.”
(Additional reporting Terril Yue Jones and Sui-Lee Wee in
Beijing and Mari Saito in Tokyo; Editing by Sanjeev Miglani)
