China, Japan and South Korea are working toward a free trade agreement. Speeding up FTA negotiations is expected to benefit the three countries together in the face of threats from unilateralism and protectionism. While China may seek an agreement more urgently, Japan and South Korea are more cautious. Negotiations are progressing slowly due to the countries’ competitive industrial structures.

To further accelerate an FTA, the three countries may exercise greater flexibility and creativity than before on the major issues, such as goods, services and investment. On trade, in particular, they may develop a mentality to bring about fair contributions and a balance of interests, reflecting differences among the three countries in their trade structures.

The three countries have relatively strong economic ties and together account for 20 per cent of global GDP. But South Korea and Japan are allied to the US, which sees China as a strategic rival. China has stepped up efforts to build a global trade network with greater use of FTAs to diversify its markets and counter protectionism. So far China has 17 FTAs with 25 countries and regions, and is in talks over 12 new or upgraded FTA deals.

Such efforts have become more evident in the past two years, especially after the US began imposing punitive tariffs on Chinese goods to push the world’s second largest economy to lower its market barriers.