The China–Japan–Korea Trilateral Free Trade Agreement: Why Did Trade Negotiations Stall?

Abstract

Launched in 2013, the China–Japan–Korea Free Trade Agreement (CJKFTA) negotiations have slowed in recent years. The three countries have convened at 14 rounds of negotiations but failed to make any substantial breakthrough. A number of previous studies have presented a crisis‐driven approach in explaining the progress of the CJKFTA, and argue that the accomplished China–Korea Free Trade Agreement (CKFTA) will accelerate the CJKFTA negotiation. This study questions optimism over the CJKFTA, and investigates the reasons for the stalemate of ongoing negotiations. It does so by considering three sets of factors that have stalled the negotiation – economic interdependence, domestic politics, and industry interest groups – in addition to international politics/national FTA policies. First, the trilateral economic interdependence shows a downward trend in recent years and has weakened the necessity of having a trilateral FTA. Second, domestic sectoral interests remain highly divergent over a potential CJKFTA; opposition from loser groups in Japan remains strong, and the majority of the Korean business world still regard the utility of an accomplished CKFTA more highly than an accomplished CJKFTA. Finally, the three countries have failed to narrow the gaps during past negotiations because no party views the CJKFTA as a top priority, nor wishes to take the leadership. China does not want a high‐level CJKFTA; Japan's lack of political incentive and Korea's cautious “wait and see” stance have also led to a stalemate of the negotiations. In consequence, this article delivers a relatively pessimistic vision for the CJKFTA negotiation in the near future.