Foreign and Military Affairs

China-ROK free trade deal urged

By Ding Qingfen (China Daily)
Updated: 2009-11-24 07:12

Partly induced by the drop in trade between South Korea and China amid the global recession, officials from both sides committed to expediting negotiations for a free trade agreement.

High-level officials from the two nations also said they would focus on trade cooperation in a range of sectors, from manufacturing to relatively new industries such as green energy and hi-tech. The remarks were made yesterday at the sixth joint conference of the China-South Korea Investment Cooperative Committee.

After establishing diplomatic relations in 1992, the nations increased bilateral trade at an annual growth rate of 25 percent for the past 16 years.

In 2002, China became the largest recipient of South Korean direct investment. During the past six years, enterprises from South Korea have been actively investing in China. By the end of last year, South Korea had injected a total investment of $41.9 billion with 70 percent going to China's manufacturing sector. Bilateral trade reached $186.1 billion in 2008.

Both nations set a trade target of $200 billion in 2010, but the goal now seems unlikely. This year, trade has thus far dropped by 20 to 30 percent. The decline has pushed both countries to press ahead with a free trade agreement strategy.

Chen Deming, minister of commerce, said "the establishment of a free trade agreement among China, South Korea and Japan should be examined as soon as possible. Strengthened relations among the three Asian nations would invigorate the world economy."

In November 2004, China and South Korea agreed to initiate a feasibility study performed by universities on a China-South Korea free trade agreement. The study showed that industries from each nation are highly complementary and that each nation's economy would grow due to a free trade agreement.

But negotiations on an agreement have stalled since 2007 because of complaints from various South Korean industries as well as from the US, who fear that a closer China-South Korea relationship would hinder American interests.

In late October, China, Japan and South Korea agreed to launch their own feasibility study on free trade between the three next year.

"China and South Korea should jointly step up efforts to start discussions and sign an agreement," said Nam K. Woo, chairman of South Korea Chamber of Commerce in China.

Despite the fact that there is opposition on free trade from Chinese industries, especially from the auto, chemicals and steel industries, "South Korea should be blamed more for the stagnancy of a free trade agreement," said Lu Jianren, senior expert on Asian economic issues from the Chinese Academy of Social Sciences.

"Official negotiations on such a deal cannot start until the nation eases off negative factors rising domestically and beyond," Lu said.