General

On January 1 this year, RCEP officially entered into force in China, Japan, Australia and New Zealand, as well as the six ASEAN countries, and South Korea will also take effect on February 1, marking the smooth sailing of the world's largest free trade area. The entry into force of RCEP has created new conditions for deepening China-Japan-ROK economic and trade cooperation. Against this specific background, can the 10-year-old China-Japan-Korea FTA negotiation achieve a major breakthrough?

The entry into force of RCEP provides important conditions for the construction of the China-Japan-Korea Free Trade Zone.

RCEP provides an important foundation for the China-Japan-Korea Free Trade Area negotiations. RCEP is not only the first free trade agreement between China and Japan, Japan and South Korea, but also lays an important foundation for the construction of the China-Japan-South Korea Free Trade Zone in terms of tariff concessions, market access, and regional supply chain adjustment. For example, RCEP will enable 86% to 88% of goods between China and Japan to achieve zero tariffs, and 83% of goods between Japan and South Korea to achieve zero tariffs. At the same time, RCEP is also the first free trade agreement that China, Japan and South Korea jointly participate in, providing an integrated institutional framework for China, Japan and South Korea economic and trade cooperation. On the basis of this framework, China, Japan and South Korea can carry out higher-level economic and trade rules arrangements in the fields of origin, service trade, and e-commerce.

The entry into force of RCEP has injected impetus into the economic and trade cooperation between China, Japan and South Korea. The entry into force of the RCEP agreement not only drives down the trade and investment barriers between China, Japan and South Korea, but also promotes the further integration of the industrial chain, supply chain and value chain among the three countries through more flexible rules of origin accumulation. Relevant data show that RCEP will drive China, Japan and South Korea to increase their exports by 8%, 5% and 8% respectively, and their investment by 0.4%, 1.0% and 1.6% respectively, forming an important dividend for economic and trade cooperation.

RCEP puts forward realistic demands for high-level China-Japan-Korea economic and trade cooperation. According to World Bank data, the GDP of China, Japan and South Korea in 2020 accounted for 82.44% of the GDP in the RCEP region. It can be said that the economic and trade cooperation between China, Japan and South Korea has a significant impact on the implementation of RCEP. To this end, striving to achieve a breakthrough in the construction of the China-Japan-Korea Free Trade Zone and accelerate the formation of a higher-level and wider-scale trilateral cooperation mechanism will not only help consolidate the achievements of RCEP cooperation, but also promote the formation of a new pattern of regional economic integration.

China's establishment of a high-level and institutional opening pattern provides significant benefits for the construction of the China-Japan-Korea Free Trade Zone.

China is the largest market for Japan and South Korea. China is not only the largest consumer market for Japan and South Korea, but also the largest investor in high-end manufacturing in the region. For example, it is estimated that by 2025, China's total retail sales of consumer goods may surpass that of the United States and become the world's largest retail market for commodities. Importantly, with the transformation and upgrading of the economy and society, there is huge room for growth in the service consumption of Chinese residents. It is estimated that by 2035, the proportion of Chinese residents' service-oriented consumption is likely to increase from about 45% in 2021 to about 60%, which will bring trillions of dollars in consumption growth. This will bring great benefits to Japan and South Korea's medical and health care, culture and entertainment, information technology and other industries. For another example, affected by factors such as rising labor costs and accelerated aging of the population, it is estimated that the scale of China's industrial robot market is expected to maintain an average annual growth rate of about 20% in the next five years. At present, Japan and South Korea are at the forefront of the world in the utilization of industrial robots, and they are both powerful countries in the manufacture of industrial robots. China, Japan and South Korea have great potential for cooperation in intelligent manufacturing such as industrial robots.

China promotes high-level opening up focusing on service trade to expand market space for China-Japan-Korea economic and trade cooperation. In the five years from 2014 to 2019, Japan exported a total of US$135.2 billion to China, with an average annual growth rate of 12%, which was 2.4 times the overall growth rate of Japan’s service exports; South Korea’s cumulative exports of services to China were US$120.7 billion, accounting for its total service exports. stable at around 20%. With the transformation and upgrading of China's industrial structure and consumption structure and the improvement of the level of opening up of service trade, it is expected that China's service imports will maintain rapid growth after the epidemic, especially services such as travel, medical and health, intellectual property, telecommunications, financial insurance and other services will become imported focus.

China's promotion of institutional opening will provide important conditions for high-level economic and trade cooperation between China, Japan and South Korea. The foundation of institutional opening lies in creating a market-oriented, legalized, and international business environment, paying more attention to institutional arrangements in competition, supervision, intellectual property protection, etc., and realizing the connection between rules, regulations, management, and standards with the international community. In particular, the Chinese government has officially applied to join the CPTPP, and South Korea has also started the process of joining the CPTPP, which will provide important conditions for China, Japan and South Korea to carry out high-level economic and trade cooperation on the basis of RCEP. China's application to join the CPTPP is a major measure to create a high-level, institutional open pattern, and it is also a great benefit for promoting economic globalization and regional economic integration.

In the context of the implementation of RCEP, the China-Japan-Korea Free Trade Zone may achieve breakthroughs.

We need to take RCEP as a new path to promote the China-Japan-Korea Free Trade Zone. After RCEP comes into effect, China, Japan and South Korea should make good use of tariff reduction and exemption measures and investment facilitation arrangements, strive to shorten the transition period of tariff reduction, promote the circulation of commodities and factors, and further promote the development of trilateral economic and trade; make full use of more flexible rules of origin to Focus on equipment manufacturing and intelligent manufacturing, and promote the construction of a more resilient and dynamic manufacturing industry, industrial chain and supply chain under the RCEP framework. The Chinese side has proposed that China, Japan and South Korea jointly deepen third-party investment cooperation in ASEAN, continue to promote the establishment of a China-Japan-Korea joint investment fund, explore the establishment of a China-Japan-Korea-ASEAN investment cooperation platform, and promote the connection between China, Japan and South Korea in cooperation initiatives. China's "One Belt, One Road" initiative, Japan's "High-quality Infrastructure Partnership Program" and South Korea's "New Southern Policy" have conditions to actively connect within the RCEP framework.

Achieve breakthroughs in the liberalization and facilitation of trade in services between China, Japan and South Korea as soon as possible. Service trade is not only the shortcoming of RCEP and the China-Korea Free Trade Agreement, but also the greatest potential of China-Japan-Korea economic and trade cooperation. At present, under the RCEP framework, Japan and South Korea have realized the management of the negative list of cross-border trade in services, and China is also actively promoting the transition from the positive list to the negative list. China, Japan and South Korea have the conditions to take the lead in implementing free trade under China-Japan and China-South Korea trade in services, and promote the liberalization and facilitation of trade in services between China, Japan and South Korea. For example, to adapt to the general trend of upgrading China's consumption structure, actively carry out free trade in industries such as tourism, education, culture and entertainment; adapt to the challenges of population aging shared by China, Japan and South Korea, and actively promote free trade in the medical, health and elderly care industry. . At the same time, with reference to the CPTPP rules and arrangements, gradually realize the docking of digital trade rules between China, Japan and South Korea.

Support Chinese, Japanese and Korean companies to jointly develop the fourth-party market. For example, adopt various forms of cooperation including "early harvest plan", framework agreement, multilateral investment agreement, etc., all parties discuss and jointly build flexible and diverse bilateral, multilateral and regional free trade parks; promote "China-Japan-Korea + India" cooperation , to promote India's return to RCEP; to make use of China's production capacity advantages and Japan and South Korea's service advantages to jointly carry out energy cooperation, tourism cooperation, manufacturing cooperation, agricultural cooperation, infrastructure cooperation, etc. The process of regional economic integration in Northeast Asia.

Based on RCEP, while eliminating interference and enhancing mutual trust, it will promote high-level pragmatic cooperation in specific fields, and release the positive effect of mutual promotion between China, Japan and the ROK "small multilateral" and RCEP "large multilateral", which is not only beneficial to China, Japan and South Korea, but also to the three countries. It has an important impact on regional economic and trade cooperation under the RCEP framework.