Twenty years ago, in 2002, the China Japan ROK Trilateral Meeting put forward a subversive idea at this meeting, namely the establishment of the China Japan ROK Free Trade Area.
Maybe many people had seen this news, but they did not know what it represented. Let's first understand the concept of a free trade area. Free trade agreements are the basis for the establishment of a free trade area. Their purpose is to eliminate trade barriers between countries and promote the circulation of various goods, including services. This requires not only lowering tariffs to a very low level, but also removing the market access threshold.
Let's be more frank. If the China Japan South Korea Free Trade Zone is established, China, Japan and South Korea will be completely on the same ship. Do you think it is possible? We are on the same boat as Japan? Frankly speaking, it is very difficult. The idea of China Japan South Korea Free Trade Area was put forward in 2002, and the negotiation was not started until 10 years later, but it has still not been realized. And every time the negotiations on the China Japan ROK Free Trade Area are launched, there will always be some messy bad things. Let's talk first. If the China Japan South Korea Free Trade Zone is established, what impact will it have on China, Japan, South Korea and even the United States?
Let's start with the most important impact. The dollar is the most powerful weapon for the United States to manipulate the world financial system. If the dollar system collapses, the impact on the United States will be enormous. Frankly speaking, the current situation of the dollar system is not optimistic. In 2012, the GDP of China, Japan and South Korea totaled $15.5 trillion, while that of the United States reached $15.68 trillion. At that time, the total GDP of the European Union, which uses the euro as its currency, exceeded that of the United States, which had a serious impact on the world monetary system dominated by the dollar. It is conceivable that if the China Japan South Korea Free Trade Zone is established and the currency trading system among the three countries is abandoned, the dollar system is likely to face a full collapse. The United States is absolutely unwilling to see such a situation.
In 2019, the total global GDP reached 87.7 trillion US dollars, China's own GDP was 14.3 trillion US dollars, Japan's GDP was 5.08 trillion US dollars, and South Korea's GDP was 1.64 trillion US dollars. The total GDP of the three countries is 21 trillion US dollars, accounting for nearly 1/4 of the total global GDP. Under such circumstances, the United States is even less likely to agree to the establishment of a free trade zone between China, Japan and the ROK. It is for this reason that whenever China, Japan and the ROK sit together to talk about the FTZ, something bad always happens. Assuming that there is no interference from the United States, can the China Japan ROK Free Trade Area be established? The answer is difficult, or almost impossible.
In fact, free trade agreements only apply to countries or economies with similar levels. Nowadays, the more mature free trade areas in the world include the European Japan Free Trade Area, the UK South Korea Free Trade Area, the ASEAN Free Trade Area, etc. These countries have roughly the same strength and can indeed complement each other. But if the level gap is huge, then after the establishment of the Free Trade Zone, it will often become a strong economy. Is there some disbelief in the unilateral bloodsucking of weak economies? Nowadays, there are many failed free trade zones in the world, such as India South Korea Free Trade Zone, EU Vietnam Free Trade Zone and North America Free Trade Zone. I still remember that when the European Union opened the Vietnam market, the disaster caused to the local enterprises in Vietnam was absolutely fatal.
Let's talk about the North American Free Trade Area. The United States and Canada are both advanced countries and can barely match. But not Mexico. After the establishment of the free trade zone in the three countries, Mexico's fragile industrial and agricultural system was almost broken in an instant under the crazy dumping of the United States. The unemployment rate in Mexico rose rapidly, and a large number of cheap labor poured into the United States, which in turn affected the economic and social stability of the United States itself.
If the China Japan South Korea Free Trade Zone is established, who will have the advantage? Presumably, many people will think that we have the advantage. In fact, Japan and South Korea are highly developed industrial countries, while our country just barely gets rid of the label of primary industrial country. Don't be anxious to oppose. What are the main commodities we export to Japan and South Korea? Home appliances, toys, clothing and other small commodities. Our "flagship products" exported to Africa, South America and India are difficult to open markets in Japan and South Korea, such as automobiles, ships, mobile phones, high-speed railways, petrochemical products, semiconductors, LCD screens, medical equipment, etc. These "blockbuster products" are exported to Japan and South Korea. Without tariff protection, our industries may be one-sided when facing Japanese and Korean enterprises. At that time, we are very likely to follow the old path of Mexico. A large number of enterprises will close down, workers will lose their jobs, and labor will become cheaper, which will also damage the economy of South Korea and Japan.
The problem is that since the establishment of the China Japan South Korea Free Trade Zone does not bring much benefit, South Korea and Japan have even repeatedly offended the United States. But why do the three countries negotiate repeatedly? In the final analysis, it is to deal with the United States. The China Japan South Korea Free Trade Area is the chip in the hands of South Korea and Japan. Japan and South Korea can negotiate with the United States on this basis. If the United States pulls wool too hard, the two sides will directly establish the China Japan South Korea Free Trade Zone, which can also force the United States to make concessions. The reason why we agreed to establish the China Japan South Korea Free Trade Zone is to share the pressure. From this point of view, the establishment of the China Japan South Korea Free Trade Zone is not an urgent matter. Put forward this proposal when you have nothing to do. Just sitting down and discussing it will bring great benefits. Why not?
