Project Syndicate.
SEOUL – Last month, the leaders of China, Japan, and South Korea agreed
to begin negotiations later this year on a trilateral free-trade
agreement. If the talks succeed, the global trade map will need to be
redrawn. An FTA that encompasses, respectively, the world’s second,
third, and 12th biggest economies (in purchasing power parity terms in
2011), with a population of 1.5 billion, would dwarf the European Union
and the North American Free Trade Agreement, comprising the United
States, Canada, and Mexico.
Indeed, Northeast Asia would
become the third major axis of regional economic integration, following
the EU and NAFTA. Until now, the region has been unable to
institutionalize economic cooperation as vigorously as Europe and North
America have. But if the proposals discussed in Beijing last month are
realized, the resulting FTA could surpass NAFTA in its degree of
integration and importance to the world economy.
In
addition, the formation of a China-Japan-South Korea FTA would most
likely trigger a chain-reaction. For example, the momentum could expand
southward and stimulate ASEAN, which has bilateral FTAs with all three
countries, to join the group. Such a turn of events would be equivalent
to establishing the East Asia Free Trade Area, which the ASEAN+3
envisioned about a decade ago. If that happened, other countries –
Australia, New Zealand, and, most importantly, India – might seek to
jump on the bandwagon.
