A step to economic unity

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A step to economic unity

Korea, China and Japan made meaningful progress in strengthening their regional economic cooperation during a recent summit on Jeju Island.

They adopted a resolution dubbed “Trilateral Cooperation Vision 2020,” outlining a direction for stronger regional ties over the next 10 years. Under the resolution, the three countries will pursue a trilateral free trade agreement, examine forming an economic bloc, strengthen cooperation for environmental protection and exchange human resources.

On a bilateral level, Korea and China signed a memorandum of understanding to detail plans for a trade pact. Korea and Japan also agreed to upgrade the status of their FTA talks to the director-general level. The three countries also decided to complete a joint study on the trilateral deal by 2012.

The three nations have so far agreed in concept on the need for closer economic relations, but have differed in how they envision an economic bloc in the East Asian region. They have discussed a free trade treaty for nearly 10 years, but talks circled around the principles rather than the specifics due to the many sensitive areas.

Finally, leaders of the three countries have come to see things in a different light following the global financial crisis. Korea was able to recover from the turbulence quickly due in part to currency swap agreements with Japan and China.

The three countries were also instrumental in creating the Chiang Mai Initiative, a fund set up by Asean plus Korea, Japan and China in March to supplement international funds to address short-term liquidity among member countries.

With economies mainly driven by exports, Korea, Japan and China have come to reassess the role of their trilateral relationship in the aftermath of the global financial meltdown and the more recent European debt woes. They have awakened to the importance of regional cooperation and unity to keep the damage at bay.

A free trade agreement among three countries differs from a pact with a single market across the ocean. It can create immeasurable synergy due to geographic proximity and economic similarities. But at the same time, it can be perilous, because the three economies overlap in their industrial focuses. Internal struggles may be inevitable, and we must find the best possible solution to these problems.

The three countries should address the talks with sincerity and prudence. We hope the latest summit has served as an important stepping stone toward the common goal of a regional free trade agreement and economic unity.

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