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Sino-Korean free trade deal points way toward prosperity for region

Discussion in 'China & Far East' started by TaiShang, Mar 11, 2015.

  1. TaiShang

    TaiShang ELITE MEMBER

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    Sino-Korean free trade deal points way toward prosperity for region
    Published: 2015-3-11 23:58:01

    It was an encouraging sign when China's Minister of Commerce Gao Hucheng said during a press conference on the sidelines of the ongoing annual session of the National People's Congress on Saturday that China will accelerate the free trade talks between China, South Korea and Japan based on the China-South Korea free trade agreement (FTA), which was initialed on February 25.

    Gao's remarks send a message that the China-South Korea FTA will serve as an opportunity to promote economic integration in a wider range, slowly perhaps, but surely.

    The newly-signed FTA between China and South Korea, which is expected to come into effect later this year, will undoubtedly deepen bilateral economic trade ties, which are already very close. For example, citizens from both countries will be provided with more opportunities to purchase quality products and services from each other at more affordable prices, without going abroad.

    Meanwhile, South Korea is estimated to see a 1.25 percent growth in its GDP in five years from this agreement, while China will experience as much as a 0.4 to 0.6 boost from the deal, given the "new normal" of economic growth with slower speed but improved structure.

    More importantly, the agreement could also help promote comprehensive cooperation and collaboration throughout the whole region.

    Since the 2008 financial crisis, an increasing number of economies have been cutting and reducing their trade barriers, in order to improve the free exchange of goods, to ease the investment environment, and to increase exports. By expanding international market shares, countries may effectively further consolidate their economic recovery.

    But how can this be done? The existing free trade deals present a blueprint. For instance, the strategic partnership between China and ASEAN over the past 10 years has widely been described as a "golden decade," with their cooperation elevated to a whole new level with the signing of the agreement on a free trade area.

    The trade volume between the two economies has reached $480 billion in 2014, an 8.3 percent increase year-on-year. The trade volume is also anticipated to be pushed to $500 billion by 2015 and $1 trillion by 2020.

    In the light of this, Chinese Premier Li Keqiang has dubbed the next 10 years of the bilateral relationship a "diamond decade," hoping to establish "an upgraded version" based on previous trade ties, by promoting more practical cooperation and regional economic integration.

    In such circumstances, if the China-South Korea FTA can be implemented and operated smoothly, it will also provide significant impact, become a role model for the economic integration and light up the future of the trade development of the entire Asia-Pacific region.

    Now, with the establishment of the FTA between Beijing and Seoul coming to a final stage, it has potential influence on shaping a larger regional agreement. Some have raised concerns that it could be a counterbalance to the Trans-Pacific Partnership (TPP) led by the US. That is, however, a narrow-minded viewpoint.

    As Chinese President Xi Jinping once said, "The vast Pacific Ocean has enough space for the two large countries of China and the US." There is no point in regarding free trade areas where interests intersect as just competitors. In contrast, we should keep an open mind in how we treat them, because there will be competition, but cooperation as well.

    For one thing, it is an economic partnership arrangement, not a geopolitical scheme. For another, any free trade zone will not only benefit the countries involved, but will also create a positive effect on a broader area.