I am back again with an interesting article about ‘FTA’. I am pretty sure all of us are familiar with the term ‘FTA’ which is an abbreviation for ‘Free Trade Agreement.’ What does FTA actually mean? To figure it out, we first need to know what a free trade area is. A free trade area is a trade bloc whose member countries have signed a FTA. By forming a trade bloc, member countries eliminate tariffs and import quotas, and provide preferential treatments on goods and services traded between the members. I guess that this brief explanation for FTA will help you to understand this post talking about the trilateral agreement between Korea, China and Japan
On November 20, Korea, China and Japan officially announced that the countries will enter into a negotiation process to sign a FTA. Right before this announcement, on 19th of November, there was a trilateral meeting between three countries’ trade Ministers in Phnom Penh, Cambodia. The three countries have prepared for this trilateral FTA over the past decade, since they initiated a cooperative research program on trilateral agreement in 2003.
The trade division at Ministry of Foreign Affairs and Trade (MOFAT) in Korea expects that the trilateral FTA will lead the integrated economic region to become the world 3rd biggest and vitalized market, followed by NAFTA (The North American Free Trade Agreement) and EU (European Union).
Furthermore, MOFAT estimates that Korea’s real GDP will grow by 0.32%~1.45% along with an improvement in welfare index. These expected outcomes are not only limited in numerical sense, but also extending to other numerous positive effects. For example, there will be more open and freer flows in service sector as well as less non-tariff barriers. All together, economic effect will be maximized in a desirable way.
Ultimately, the trilateral FTA will let Korea less dependent on trade flows with other foreign countries. Also, Korea will be able to cut down costs spent for the purpose of vitalizing the market. The three countries are looking forward to cooperation, peace, and accordingly prosperity in East Asia region.