SEOUL – Last month, the leaders of China, Japan, and South Korea agreed to begin negotiations later this year on a trilateral free-trade agreement. If the talks succeed, the global trade map will need to be redrawn. An FTA that encompasses, respectively, the world’s second, third, and 12th biggest economies (in purchasing power parity terms in 2011), with a population of 1.5 billion, would dwarf the European Union and the North American Free Trade Agreement, comprising the United States, Canada, and Mexico.
Indeed, Northeast Asia would become the third major axis of regional economic integration, following the EU and NAFTA. Until now, the region has been unable to institutionalize economic cooperation as vigorously as Europe and North America have. But if the proposals discussed in Beijing last month are realized, the resulting FTA could surpass NAFTA in its degree of integration and importance to the world economy.