Screwing with the FTA

After Japan’s declaration that it will join the Trans-Pacific Partnership (TPP) led by the United States, war clouds are hanging over Northeast Asia. Given that Japan has been resistant to the unfettered opening of its domestic market, the move is widely perceived as a drastic shift in Japan’s trade policy. Now China is speeding up its effort to join the Comprehensive Economic Partnership for East Asia (CEPEA), a Japanese-led proposal for free trade arrangements among the 16 current member countries of the East Asia Summit.

China has so far been content with free trade agreements with the Association of Southeast Asian Nations, a geopolitical and economic organization of ten countries in Southeast Asia formed in 1967. China took the position that it did not want to invite India to the CEPEA, but it has changed its mind.

In other words, both Japan and China are aggressively pressing ahead with free trade deals with their neighbors, no matter what. In the background lies the Korea-U.S. free trade agreement, which forced Japan to believe that it cannot delay opening itself up anymore. China, too, appears to have felt keenly that if it becomes a bystander on free trade, it could face crippling isolation. In this context, Korea should have ratified the FTA with the U.S. quickly. No doubt we could have an upper hand in FTA negotiations with Japan and China if our National Assembly had approved the Korea-U.S. free trade pact.

Yasuchika Hasegawa, CEO of Takeda Pharmaceutical and chairman of the Board at the Japan Association of Corporate Executives, made a similar remark in an interview with the JoongAng Ilbo. He said that a process of vying for the leadership in FTAs has begun and, “Who takes it will determine who will be the winner.” We fully agree with his view. We believe that Hasegawa praised our leader’s judgment as we moved faster than Japan on this critical issue.

If our free trade pact with the U.S. went into effect earlier, we could have enjoyed many benefits as the first mover, not to speak of leading economic integration of Northeast Asian economies. But we have lost much of that leverage due to the opposition camp’s vehement resistance to the pact.

Our losses will grow if Japan hurriedly pushes forward the TPP. But it’s not too late - if our National Assembly ratifies the Korea-U.S. free trade agreement for the country’s sake.