WANG SHAN

Creating a regional economic bloc through bilateral and regional Free Trade Agreements (FTAs) is now a definitive global trend.

Since last fall, China and the Association of Southeast Asian Nations (ASEAN) have started taking tangible steps toward implementing FTAs. At the same time, during a recent summit meeting, the leaders of China, Japan and South Korea agreed to consider the creation of a trilateral FTA. China is also actively seeking the creation of a free trade region in East Asia. So what is China's aim?

Leaders of the six countries in the Shanghai Cooperation Organization, also dubbed “Shanghai 6,” initially a regional security framework among China, Russia and central Asian countries, also issued a joint proposal for regional economic cooperation, including steps to simplify customs and quarantine procedures. The proposal aims to enhance the smooth transportation of goods. The creation of a six-nation FTA was also raised as a long-term goal.

Economic growth would help reduce poverty in the region and eliminate terrorism.

Establishing an FTA would create a relationship of substantial trust, with each nation having a stake in one another's economic interests. This would, in turn, create improved conditions not only in economic interests, but also in national security.

Many people in and around China have clearly begun to place emphasis on the concept of “comprehensive security” that closely ties together aspects of economic exchange, diplomacy and national security.

An FTA, naturally, also has its drawbacks. The advent of the market economy is already weeding out many of China's uncompetitive state-owned companies and small firms. An FTA would no doubt be an additional blow.

China, in full recognition of these factors, decided on a policy of actively pursuing FTAs. The decision was a rallying call to domestic businesses to overcome severe international competition.

An FTA between China and ASEAN would be an agreement among mutually developing countries. Since the industry structures are similar in many ways, the agreement would benefit ASEAN countries in the short term. The flow of Southeast Asian manufactured goods and agricultural produce into China, as well as that of Chinese tourists to Southeast Asia, would no doubt increase. At the same time, the presence of Chinese businesses would certainly grow in the future Southeast Asian market of production, distribution and service. An economic union of China and ASEAN through FTAs would benefit all parties involved.

Many eyes are on the tug-of-war between Japan and China regarding who will take the lead role in creating the FTA. From a wider perspective, however, the most important issue is how China, Japan and South Korea, three countries so geographically close to one another, will deepen their economic cooperation.

If the trilateral FTA encounters a glitch, perhaps from difficulties in domestic coordination, another option is for the three nations to sign FTAs individually with ASEAN then move onto the creation of an ASEAN-plus-three FTA. This way, ASEAN will bridge the gap toward the creation of an East Asian FTA. What is important here is not form or protocol, but rather a speedy process toward agreement.

Japan, also, will be unable to ride the new waves of growth without participating in East Asian economic integration. At the same time, a trilateral FTA between China, Japan and South Korea would definitely enhance collaboration and cooperation among the three countries. The tripartite itself will, in turn, become a new framework for the region's comprehensive security.

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Wang Shan, 40, is an associate professor at the China Institute of Contemporary International Relations in Beijing and was a researcher for The Asahi Shimbun Asian Network until this spring.