Daily Yomiuri, Japan

S. Korea’s reluctance clouds FTA / Domestic resistance throws prospects for trilateral trade pact into doubt

By Hiromi Uechi and Yasushi Kouuchi / Yomiuri Shimbun Staff Writers

15 May 2012

BEIJING—Despite an agreement to launch talks on a three-way free trade agreement this year, Japan, China and South Korea have different priorities, leaving the prospects for their trilateral trade initiative unclear.

At a press conference following a summit meeting Sunday in Beijing, Chinese Premier Wen Jiabao said, "The countries should start [trilateral FTA] negotiations as soon as possible. The move would be a driving force to economic integration in East Asia."

Prime Minister Yoshihiko Noda welcomed the agreement, saying: "We’ll aim for a high-level economic partnership. [The agreement] is a great achievement."

However, South Korean President Lee Myung Bak, who was standing next to the Japanese and Chinese leaders, looked less enthusiastic. Lee said the trilateral FTA would be meaningful to the countries’ future, but he was silent on questions from South Korean reporters regarding the possibility of concluding the FTA negotiations.

In fact, South Korea wavered over the trade talks. According to sources familiar with the matter, the three countries were initially expected to launch the FTA negotiations within a couple of months after making a formal agreement at a summit meeting in May. They reached a preliminary agreement last autumn on the early start of negotiations.

However, South Korea suddenly changed its attitude after the preliminary agreement, rejecting a reference to the start of the negotiations in a statement released in December after a public-private joint study for a trilateral FTA.

Even at working-level talks for the summit meeting, South Korea opposed including a specific time to begin the negotiations in a joint statement for the summit talks and tried to postpone the matter.

"Both Japan and China were stunned [by South Korea’s actions]," a source said.

South Korea’s domestic affairs appear to have forced the country to change its stance.

In March, the FTA between South Korea and the United States came into effect with the Asian country aiming to boost its exports to the U.S. market. But opposition to and confusion over the pact remain strong in South Korea.

Some people in South Korea also have voiced concern that an FTA with Japan could become a disadvantage to the country. "For South Korea, [the FTA] would bring little benefit in the Japanese market," said Kim Young Han, a Sungkyunkwan University professor.

Kim argued that if South Korea enters the trilateral FTA talks under the current situation, the country would only end up relying more on Japanese core components and other technology.

South Korea and China were to hold their first meeting on bilateral FTA talks Monday. Some observers say South Korea, which aims to seize market share in China’s automobile, TV and other markets from Japanese companies, now intends to prioritize the bilateral negotiations over the trilateral talks.

Kouuchi is a correspondent based in Beijing.