China, S Korea, Japan To Hold Second Round Of Trade Talks

After the first round of talks in Seoul in March this year on a possible tripartite free trade agreement (FTA) were said to have made progress, China, Japan and South Korea have now agreed to hold a second round in Shanghai at the end of July.

Disclosing the time and venue for the new talks, the South Korean Ministry of Trade, Industry and Energy also indicated that, while only the rules, scope and the working groups of future negotiations were under discussion at their first meeting, the second round will move on to substantive tariff removal proposals and a beginning to talks on other topics, such as issues surrounding services and competition.

As they have agreed to a next round of talks on the FTA, it appears that all three countries still see that, although it will probably be difficult to reach a deal, the mutual benefits arising from a trilateral agreement could be substantial. With a market of 1.5bn people, the total gross domestic product of the three countries was USD14.3 trillion in 2012, accounting for about one-fifth of world output, while their total trade reached approximately USD5.4 trillion, or 35 percent of total global trade.

The three countries already cooperate closely linked in industrial supply chains, and it has been said that establishing an FTA between them would merely reflect the present need to strengthen their economic and trade ties. However, it has also been recognized that the issue of tariffs on sensitive goods and services could be challenging for all three countries.

While Japan and South Korea are competitors in the supply of many manufactured and technological goods to China, tariffs on the import of agricultural products, like rice, from China would be a problem for both those countries.

At the same time, China and South Korea have been pursuing their own separate bilateral FTA talks, after their launch in May 2012. The sixth round of those talks was held earlier this month and was also said to have made significant progress, with the two sides coming closer to an agreement on the basic terms for tariff liberalization over a 10-year period. The seventh round of negotiations on that FTA is expected to be held in China in September this year.

July 19, 2013

Source: Tax News