China, the country＇ s leading export market, has expressed interest in beginning government-level talks with Korea for an early free-trade agreement.
The Ministry of Foreign Affairs and Trade affirmed that China＇ s Premier Wen Jiabao during a meeting in Beijing with Prime Minister Lee Hae-chan on June 21 had said he finds it necessary to spur the process of official negotiations, once research on the economic impact on the two countries have reached some degree of progress. The two high-ranking officials met to discuss further economic cooperation.
"We have taken the statement as displaying China＇ s interest in a free-trade agreement with Korea," said an official at the ministry＇ s FTA Coordination Division, asking not to be identified.
The official sought to rectify "false" reports about how China＇ s premier during the talks mentioned that major sensitive "agricultural" products to Korea would be exempted.
Although the latest remarks signify significant initial progress towards a possible FTA between the two countries, the official emphasized that it is still in the early stages and he could not give a rough time frame for when preliminary meetings could begin.
"We still need more substantial research on the general economic effects of a bilateral trade agreement between the two nations," the official said. He added that the joint economic research will continue until next year and that once a general assessment is made, relevant government branches would need to carefully examine the results.
"So, at this point, we can＇ t predict when talks could begin," he stressed.
Asia＇ s second-largest economy replaced the United States as Korea＇ s largest export market in 2002. U.S. imports are larger than those from China, but the Chinese are gaining market share quickly. Experts note that as the United States and Japan face a loss of leverage in the Korean market, this reflects one reason for the growing interest in a regional trade pact with China. Korea is also now in FTA talks with Japan, while China is as well. But negotiations between China and Japan are at a standstill, observers say. They say that China＇ s interest in Korea could be seen as a shift in strategy to conclude a trade pact with Korea first rather than with Japan.
Economists note that a Korea-China FTA will most likely be realized in 5 to 10 years.
Northeast Asian countries, such as China, Japan and Korea, began to show interest in regional trading arrangements like Free Trade Agreements after the 1997-98 financial crisis. A trilateral FTA between China, Japan and Korea has been raised as a possible means to cope with the expansion of the European Union and North America Free Trade Agreement