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Masakazu Tokura, the chairperson of the Japanese Business Association, Japanese Prime Minister Fumio Kishida, South Korean President Yoon Suk-yeol, Chinese Premier Li Qiang, Korea Chamber of Commerce and Industry Chairman Chey Tae-won, and China Council for the Promotion of International Trade Chairman Ren Hongbin take part in the eighth trilateral business summit at the KCCI building in Seoul on May 27, 2024. (pool photo)

The leaders of South Korea, China and Japan unanimously called for stronger cooperation, including the resumption of trilateral free trade agreement (FTA) negotiations.

The joint declaration that came from their first gathering in four and a half years also included the statement that “joint efforts in the economic and trade field among the three countries play a significant role for the prosperity and stability of the regional and global economy.”

It is difficult to tell whether the three sides will go beyond rhetoric to produce practical results. Their trade and diplomatic relations remain bound by the force of the conflict between the US and China — a relationship that has chilled even further. Experts are noting the significance of the very fact that they agreed to continue holding dialogue.

On Monday morning, South Korean President Yoon Suk-yeol met with Chinese Premier Li Qiang and Japanese Prime Minister Fumio Kishida for a ninth trilateral summit at the Blue House’s state guesthouse. Afterward, they issued a joint declaration in which they pledged to “keep discussions for speeding up negotiations for a Trilateral FTA, aiming at realizing a free, fair, comprehensive, high-quality, and mutually beneficial FTA.”

They also said they would “continue to work to ensure a global level playing field to foster a free, open, fair, non-discriminatory, transparent, inclusive, and predictable trade and investment environment.”

Since November 2012, there have been 16 rounds of formal negotiations toward a trilateral FTA among South Korea, China and Japan. But the talks have been on ice since 2019, as their diverging interests have prevented them from reaching a conclusion.

Other factors in the suspension of negotiations include the COVID-19 pandemic that spread in 2020 and the souring of relations between Washington and Beijing. While the three leaders announced plans for “speeding up negotiations,” the prevailing analysis is that this amounts practically to a pledge to resume the suspended talks.

In referring to a resumption of negotiations, each side is coming from a different place.

Facing stagnation in its domestic economy and pressure from the US and EU to raise tariffs, China is looking at a trilateral FTA as a way to open up trade avenues. Japan, which has taken issue with China’s overproduction and subsidy policies during FTA negotiations, may spy an opportunity to create a trade environment that is more favorable to itself.

From South Korea’s perspective, a trilateral FTA might represent a way of creating room for it to take advantage of the cracks between the Regional Comprehensive Economic Partnership (RCEP), in which China is taking part, and the Japan-led Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

But it remains unclear to what extent these references to resuming negotiations will translate into visible outcomes. Without establishing a timeline for such a resumption, the three sides only said they would “keep discussions for speeding up negotiations.”

Han A-reum, a senior research fellow at the Korea International Trade Association’s Institute for International Trade, suggested, “China appears to have agreed to FTA negotiations as a way to escape global trade pressures, while Japan is approaching it with demands to remedy China’s overcapacity.”

“The joint declaration amounted to generalities, so we’ll have to look at the concrete content,” Han added.

Similarly, the three sides also made references the same day to supply chains and export controls, but only at the level of generalities. The joint declaration only mentioned “reaffirm[ing] our commitment to [. . .] strengthening supply chain cooperation and avoiding supply chain disruption” and “shar[ing] the need to continue communication in the field of export control.”

Additionally, they made plans to establish a regional financial safety net through the Chiang Mai Initiative, the ASEAN+3 Macroeconomic Research Office, and the Asian Bond Markets Initiative.

The leaders also noted “the need to promptly address the possible impacts of AI on the daily lives of humanity, and the importance of mutual communication on AI.”

Kim Yang-hee, a professor of economics at Daegu University, said, “Due to various factors, it is not easy for the three countries to pursue a [trilateral] free trade agreement.”

“For now, we can view this as significant in terms of opening up the possibility of dialogue to this end,” Kim suggested.

By Jun Seul-gi, staff reporter

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