The annual China, Japan and South Korea summit wrapped up on Monday in Chengdu, China, with attending leaders making generalized commitments to free trade and regional peace and security.
Though a detailed joint statement is expected later, the early indications are that the leaders of China, Japan and South Korea were unable to agree on, or even agree on a timetable for, the “holy grail” of a series of trilateral summits inaugurated in 1999 – a regional free trade agreement, or FTA.
The three did, however, agree to reinforce their commitments to a number of pre-existing international agreements and frameworks.
The summit was chaired by Chinese Prime Minister Li Keqiang, who holds the portfolio for the Chinese economy, with Japanese Prime Minister Shinzo Abe and South Korean President Moon Jae-in both attending.
The Japanese and South Korean leaders had, separately, met Chinese President Xi Jinping, who is customarily charged with global and political affairs, in Beijing a day earlier.
The summit took place in the shadow of an unprecedented trade war between Beijing and Washington. That has directly impacted the economies of the two belligerents, but has also caused collateral damage to manufacturing powerhouses Japan and South Korea, which both number China and the US, respectively, as their number one and number two trade partners.
Seoul and Tokyo have both suffered falling exports throughout 2019.
It also took place as a self-set, year-end deadline for North Korea to withdraw from two years of denuclearization talks with the US looms ever closer, with no breakthrough in sight and tensions rising once again.
No deal in sight
“All of us support free trade and economic investment,” Li said, according to TV news broadcasts. “The three sides should promote China-Japan-[South Korea] free trade agreement talks to make substantial progress at an early date,” added the premier. He also hoped for an early signing of the 15-member RCEP, or Regional Comprehensive Economic Partnership.
Though the annual trilateral summit was inaugurated two decades earlier, a free trade agreement binding the world’s G2, G3 and G11 economies has not transpired. Nor have the three countries made much progress on bilateral deals between each other.
A 2015 free trade agreement between China and South Korea – with a very lengthy 20-year implementation period – has been assessed by trade pros as a “bronze standard” deal, placing it well below the level of the “gold standard” deal signed between Seoul and Washington, which also formed the template for the Seoul-Brussels FTA.
In a speech in Chengdu, Moon appeared to acknowledge the shortcomings of the deal when he said there would be “follow up negotiations” in regard to services under that FTA.
Japan has no FTA with China or South Korea. It has taken the lead on the well-regarded, 11-member Trans-Pacific Partnership, which came into force in 2018. However, neither China nor South Korea are members, and the TPP lost massive economy of scale when the US dropped out after President Donald Trump was elected.
The downgrading of the TPP has led to increased hope in the RCEP.
The implementation schedule of the RCEP, which is being strongly promoted by Beijing, is unclear. Though it was signed by 15 countries in October, after India dropped out earlier this year, Japan has signaled that it may not, in fact, join.
Despite the lack of a big deal – or, indeed, any timetable for a big deal – the trilateral framework has enabled a wide variety of detailed agreements to be made in various areas.
Moon, in a speech to the trilateral business forum in Chengdu that was dispatched to global reporters, referenced “the environment, disaster relief, healthcare and medical services.” He stated that the three countries should join forces in “data, networks, artificial intelligence and healthcare.”
The three countries agreed to reinforce commitments to existing frameworks, such as the Chiang Mai Initiative on financial cooperation and the 2030 Agenda for Sustainable Development.
Moon also noted the potential synergies between China’s “Belt and Road Initiative,” Japan’s “Free and Open Indo-Pacific” and South Korea’s “New Southern and Northern Policies” in that they “all link continental and maritime regions.”
Li said in a press conference that China is committed to creating a market-oriented, law-based and international business environment, and will treat enterprises of all ownership equally, according to Xinhua newswire.
That statement may be aimed at reassuring Washington, which recently agreed to a “Phase 1” deal in the Beijing-Washington trade war.
Washington complains of unfair state subsidies, demands for technology transfers, IP violations and a generally non-level playing field for foreign companies in China. However, both Japan and South Korean companies in China have also suffered from similar issues.
“China will accelerate the opening of services sectors based on the full liberalization of the manufacturing industry, allowing more areas to implement wholly foreign-owned operations,” Li said, adding that China’s investment environment will become more fair, transparent and predictable.
North Korea casts a shadow
Although North Korea has a defense treaty with and is economically supported by China, it is not a member of the trilateral framework.
After President Trump walked out of a summit with North Korean leader Kim Jong Un this year, North Korea has undertaken a range of short-range missile launches while also ramping up its rhetoric against the United States and South Korea.
With two years of negotiations apparently on the verge of collapse, there are fears that the flashpoint peninsula may slide back into tensions of 2017. Yet the Chengdu summit offered no apparent new approaches to the peninsula’s issues, while leaders’ statements suggested divisions.
Li made clear his hopes that the situation would be resolved “through dialogue,” while Abe stated his hopes for increased momentum on North Korea-US talks and called for “full” implementation of UN sanctions. The day prior, Moon had asked Xi to use his influence to bring North Korea back to the table.
On December 17, China and Russia had called for a relaxation of those sanctions. However, the US disagreed. With Washington being the key ally of both Seoul and Tokyo, the latter capitals have limited room to maneuver.
A plenary meeting of the North Korean Workers Party is expected to be held before the end of this year, and all eyes will be on what Kim says in his customary New Year’s Day speech.