Bloomberg News

East Asia Leadership Overhaul May Boost Prospects for Trade Pact

November 30, 2012

Trilateral Cooperation Secretariat's Shin Bong Kil

Shin Bong Kil, Secretary General of Trilateral Cooperation Secretariat. Photographer: SeongJoon Cho/Bloomberg

Leadership changes in China, Japan and South Korea may boost prospects for a regional free trade agreement after tensions intensified this year over territorial disputes, a South Korean policy adviser said.

Talks on a three-nation free trade deal are expected to begin in March and continue at a May summit meeting, Shin Bong Kil, who represented South Korea during FTA negotiations with China in 2004-2007, said in an interview in Seoul yesterday.

“The May summit will be a meeting of all new leaders representing new generations,” said Shin, 57, now head of the Trilateral Cooperation Secretariat, an organization funded by the three nations to improve ties. “They can depart from the past and make real changes with fresh ideas and approaches to promote peace and prosperity in the region.”

An agreement between Asia’s biggest economies would create the world’s third-largest trading bloc after the North American Free Trade Agreement and the European Union, according to South Korea’s Ministry of Foreign Affairs and Trade. A pact would also reverse a recent deterioration of economic ties as political tensions flared over two sets of disputed islands.

Japanese automakers reported a plunge in China deliveries in September and October as consumers shunned their cars amid anti-Japan protests over ownership of uninhabited islands known as Senkaku in Japan and Diaoyu in China.

South Korean President Lee Myung Bak’s August visit to another group of islands claimed by Japan led to the cancellation of an extension of a currency swap agreement. The islands, controlled by Korea, are called Dokdo in Korean and Takeshima in Japanese.

Leadership Shake-Up

Xi Jinping replaced Hu Jintao as head of the Chinese Communist Party and the nation’s military on Nov. 15, ushering in the fifth generation of leaders who are set to take control of the world’s second-biggest economy.

Opinion polls in Japan show Prime Minister Yoshihiko Noda’s Democratic Party of Japan may lose to the Liberal Democratic Party led by former prime minister Shinzo Abe in a general election next month. In South Korea, Park Geun Hye, a daughter of a former president and the ruling party’s presidential nominee, holds a lead in polls over opposition challenger Moon Jae In in an election to replace Lee on Dec. 19.

It’s not certain that relations will improve with a new leadership. While Noda told Asean leaders earlier this month he would seek to resolve differences with China in a “calm and peaceful manner,” Abe has promised voters a tougher stance on territorial disputes with Japan’s neighbors.

“The history of invasions and colonization makes it easy for people to hate and blame each other,” Shin said. “The new leaders need wisdom to wade through emotional clashes.”

Trade ministers announced the start of free trade negotiations between China, Japan and South Korea at a meeting in Cambodia on Nov. 20, according to a statement from South Korea’s Ministry of Foreign Affairs and Trade. The three countries’ combined gross domestic product was $14.3 trillion in 2011, compared with $18 trillion for NAFTA and $17.6 trillion for the EU, the foreign ministry said in a separate statement.

To contact the reporter on this story: Eunkyung Seo in Seoul at eseo3@bloomberg.net

To contact the editor responsible for this story: Paul Panckhurst at ppanckhurst@bloomberg.net


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