CJKFTA envisages an institutional framework which will foster trilateral co-operation and develop win-win-win situations. This is a refreshing change from Washington’s highly mercantilist approach to the TPP, based on selling access to newcomers by demanding pre-conditions which the U.S itself is not prepared to undertake.
An integrated set of principles will guide the CJKFTA negotiations:
- it will be a comprehensive and high-quality FTA;
- it should be WTO-consistent;
- it should strive for balanced result and achieve win-win-win situations on the basis of reciprocity and mutual benefit; and
- the negotiations should be conducted in a constructive and positive manner with due consideration to the sensitive sectors in each country.
Is China-Japan-Korea deal an alternative to the TPP?
ReplyDeleteby Peter Clark
http://www.ipolitics.ca/2011/12/22/china-japan-korea-fta-alternative-to-the-tpp/
Trade liberalization in Asia has become a hot button item. There is serious competition for the U.S.-led Trans Pacific Partnership (TPP).
ReplyDeleteLast week, China, Japan and Korea finalized their feasibility study for a Trilateral FTA (CJKFTA). These countries account for 20% of global GDP and are ideally placed to expand any arrangement they conclude to the tigers of ASEAN.
CJKFTA envisages an institutional framework which will foster trilateral co-operation and develop win-win-win situations. This is a refreshing change from Washington’s highly mercantilist approach to the TPP, based on selling access to newcomers by demanding pre-conditions which the U.S itself is not prepared to undertake.
An integrated set of principles will guide the CJKFTA negotiations:
- it will be a comprehensive and high-quality FTA;
- it should be WTO-consistent;
- it should strive for balanced result and achieve win-win-win situations on the basis of reciprocity and mutual benefit; and
- the negotiations should be conducted in a constructive and positive manner with due consideration to the sensitive sectors in each country.
The scope of negotiations will include trade in goods and services as well as investment and other as yet unidentified issues. There is no mention of State-Owned Enterprises (SOEs), intellectual property, investor state dispute settlement, environmental and labour standards. In the TPP, Washington is trying to impose American standards in these areas on the rest of the participants.
ReplyDeleteDiscussions about the negotiating plan and schedule will begin soon – and with a pragmatic approach, should move relatively quickly – to a solution. The guiding principles are designed to avoid the political/economic concerns which are emerging in the TPP.
These include rules of origin for textiles and other products, pharmaceutical patents, investor state dispute settlement, market access for rice, sugar and dairy products, health care, education and other services and coverage of government procurement concessions. These problems will delay completion of the TPP well beyond the U.S. elections.
Suggestions by Washington that TPP would be used to offset growing Chinese influence in Asia were almost certainly raised by China at the trilateral meeting in Korea last week. Chinese negotiators are not shy about raising concerns. China has been flexing its muscles in the WTO and playing a leadership role. The US intention to use the TPP as a strategic vehicle to reduce China’s position and influence in Asia would not have been welcomed.
Neither Korea, nor Japan would want to be in the middle of a power play showdown between Beijing and Washington. But the Trilateral Agreement has important attractions. Japan will not be keen to buy into a TPP designed and imposed by the USA. Japan wanted to be at the table helping to shape the deal. Japan will not be pleased with demands for upfront concessions and pre-conditions. This could chill PM Noda’s desire to join, and erode the already shaky domestic support for Japan’s participation in the TPP.
Korea already has free trade with the U.S. in the KORUS FTA. Korea claims it will benefit most from the Trilateral FTA. It expects to increase its food exports by 50% in the Trilateral – this is badly needed to help offset an expected $10 billion increase in imports from the U.S. under KORUS.
The flexibility and sensitivity to each others’ problems in the agreed principles to the Trilateral FTA are reminiscent of Mexico’s pragmatic and flexible approach to FTA negotiations.
Mexico does not focus its attention on resolving the difficult and intractable. It is not obsessed with concluding the perfect deal. It concludes FTAs with as broad coverage as possible, generally well in excess of the 85% baseline in Article XXIV (GATT 1994). The more difficult issues are put aside to be addressed in regular Ministerial contacts and meetings.
Canada’s main interest in joining the TPP is improved access to Japan, particularly to its agricultural markets. The CAW and the Detroit Three can be expected to object to Japan’s participation in TPP at least as much as the auto industry has in the USA.
Canada needs to adopt a Mexican negotiating approach, not engineer another Mexican standoff. The Korean FTA has been comatose for more than three years due to the auto industry’s resistance to Canada even returning to the table. Negotiations are resolved through negotiating. They are not resolved through refusing to talk.
Canada’s farmers and ranchers would do better in bilateral FTA negotiations with Japan, which should start soon – and with China, than it would being in the TPP.
Without U.S. control tactics, demands and pre-conditions, Canada would not be held up for ransom simply to enter the talks and problems could be negotiated on a pragmatic and flexible basis.
ReplyDeleteCanada has also contacted China about exploring freer bilateral trade. Canada’s ability to guarantee supplies of food and resources would be a major attraction to China.
There is considerable value in concluding FTAs before your competitors. Canada’s completion of an FTA with Colombia before the U.S. was very beneficial to Canada. When KORUS enters into force with no Canada-Korea FTA in sight, U.S. farmers and ranchers will eat Canada’s lunch to the tune of over $1 billion a year in lost exports and opportunities.
Canada has FTAs with three TPP candidates. The other potential candidates are Australia, Vietnam – and a number of small countries with populations less than Toronto’s. Hardly exciting.
Canada can engage in FTA negotiations with Japan (there is a Mexico-Japan FTA). Canada should focus its negotiating manpower and resources on bilateral talks with Japan and with China.
And we cannot forget the third side of the triangle – Korea. Canada has already completed 13 rounds of negotiations with Korea. Little remains to be done. This work should not be thrown away. Clearly, it would cost Korea little to give Canada the same terms as they extended to the US in KORUS. But nothing will happen if the parties do not resume negotiations.
However, given the problems experienced in the Korean Parliament (which at times is akin to a UFC match without the Octagon or a referee), timing will likely be an issue. Canada should adopt the trilateral partners’ principle that negotiations conducted in a constructive and positive manner with proper consideration of sensitive sectors in each country.
No one likes a second best deal. Indeed, I have testified to Parliamentary Committees that this is an undesirable approach for Canada. But when delays will put exports at risk – with little prospect of catching up, the second best deal is infinitely better than no deal at all.