China-S.Korea FTA sets positive precedent

Source:Global Times Published: 2015-6-1 23:58:02

China and South Korea on Monday formally signed a bilateral free trade agreement (FTA). The agreement, which is China's largest ever FTA so far, will remove tariffs on more than 90 percent of goods after it comes into force. The FTA is forecast to stimulate economic growth in both countries, raising China's real GDP by 0.3 percentage points and South Korea's GDP by 0.96 percentage points.

The deal is a historic milestone which will have multiple influences on free trade in East Asia. Deemed by many as having an unpromising future, the negotiations on the China-South Korea FTA had lasted for 10 years.

This is not surprising given an ideological division between China and South Korea, the delicate situation on the Korean Peninsula, and Seoul's status as a US ally and its active attitude toward joining the US-led TPP.

South Korea is an important neighbor of China. The China-South Korea FTA displays Beijing's real intent of opening-up to the world.

Japan will feel the pressure from conclusion of an FTA between China and South Korea. In 2014, bilateral trade volume between Beijing and Seoul was $290.5 billion, quickly catching up with China-Japan bilateral trade.

If Japan keeps hesitating, China and South Korea will soon become the trade centers of East Asia and Japan's economic clout in the region will be impaired. 

South Korea has skillfully maintained balanced relations with China and the US, keeping the US as an ally and China as its biggest trading partner. Strategic maturity and balance has become South Korea's core competitiveness among new emerging developed countries in the Asia-Pacific region.

The China-South Korea FTA reaffirmed that China is the world's largest trading power and trade is the basic element in defining relations between China and the outside world. That China is an aggressive power challenging the world order is a subjective and paranoid geopolitical speculation peddled by a minority of countries out of their own interests. 

China and South Korea are not disturbed by those speculations, but rather will go on tapping the potential of bilateral free trade. With the price of South Korean-made electronics, automobile and chemical products dropping in the Chinese market, the competitiveness of Japan and Taiwan-made products will be challenged.

Seoul and Beijing only established diplomatic relations in 1992, the latest among East Asian nations, but bilateral trade has grown to be world-class, sustaining regional peace and prosperity. The experience deserves to be studied by other Asia-Pacific countries.

Disputes in the South and East China Seas have diverted attention and sent misleading signals.

What does China mean to neighboring states and the world? The question can be viewed through a Cold War lens, or provide inspiration for future globalization.

Posted in: Editorial

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