Takashi Terada: CHINA-JAPAN-KOREA -FTA

I think Chinashould move to realize its own trade and economic interests in the form ofregional FTAs. As such a big economy, China’s move would inevitably have aconsiderable impact on any nation including the United States. 

Reporter:  Che Rui

Che Rui: What may be the possible obstacles against forming a China-Japan-Korea FTA?

TakashiTerada: There is aregulation on foreign investment that requires a consolidation with localcompanies, and principally it does not approvethe shareholding ratio of more than 50% when foreign companies construct anautomotive factory, to which the Japanese industry has expressed complaintsthat the regulation is not always clearly defined and the requirements forapproval get changed without notice. Hence, Japan and Korea both had the commonissue of complaints and requests from companies, which led them to requestChina for the trilateral investment arrangement, including the transparency ofthe regulation and the strengthening of the protection of intellectual property.   

FTA means an industrial adjustment between contractingparties, and, therefore, Japan and Korea, who are less competitive than Chinain terms of the price of agricultural products, were cautious about thetrilateral FTA.

Che Rui: How can we narrow the difference over politicaland economic values between China and Japan?

TakashiTerada:There are many differences:human rights, democracy and so on. Many people may say thatwe need more discussions and dialogues to talk.  At least, we acknowledge themutual differences. Soif we find it almost impossible to narrow the political differences and values,why don’t we go without narrowing them? We can simply find the areas or fields in which China and Japan can cooperate with each other, for instance, regional financial architecture and less dependence onthe US dollars. In this case, we don’t need to narrow suchdifferent political systems and values.

Che Rui :Whatshould China do to establish a regional FTA framework?

TakashiTerada:While thenegotiation for the U.S.-led TPP was progressing, China was claiming morestrongly than before for the promotion of Japan-China-Korea FTA. When Japandecided to participate in the TPP negotiation in November 2011, Chinaaccelerated the movement towards the conclusion of Japan-China-Korea FTA. Thismeans China’s FTA interest, especially the trilateral one, has been inspired bythe United States through TPP. I think China should move to realize its owntrade and economic interests in the form of regional FTAs. As such a bigeconomy, China’s move would inevitably have a considerable impact on any nationincluding the United States. 

Che Rui: How should China improve its labor standards andenvironmental protection to join the TPP? 

TakashiTerada: A labor section in TPP would request member states to follow the rules setup in the International Labor Organization (ILO), including collective bargaining, freedom of association,prohibition of forced and child labor, and discrimination in employment. Yet, I don’t think the Chinese government would allow companies, especiallystate-owned ones, to set up labor unions to negotiate the wages and otherissues.

Che Rui: What do you think about the rise of Chinese-stylestate capitalism in other countries? (As you mentioned in the article:<Games Changes in Economic and Strategic Order in East Asia>)

TakashiTerada: I think the Chinese capitalism means the government intervention inthe market. Beijing’s quick and decisive injection of a four trillion-yuanpackage in November 2008 was touted as a crucial state intervention whichlifted China out of the global economic doldrums in double time. This modelhas attracted many admirers from developing countries which sought tocopy the China model. For instance, a strong indication of an ideological shift is how the crisis hasintensified the relationship between the four developing BRIC (Brazil, Russia,India and China) countries.

At a meeting to discuss the globalfinancial crisis in Russia in June 2009, the BRIC countries reportedly advancedthe possibility of dumping the U.S. dollar as the world’s reserve. Butin western countries, the decision-making process of democracyneeds quite a long time to implement a policy to rescue their people urgently. This is a reasonwhy the China model became attractive. Yet China and Japan differ overpolitical and economic values such as the promotion of democracy, human rightsor intellectual property rights, and this fundamental difference will neverallow Japan to fully join the Beijing Consensus camp, leaving Japan in adelicate position in its relations with China.

Che Rui: What’syour own attitude to the maritime disputesbetween China and its Asian neighbors?

TakashiTerada: If China wants to solve maritime issues, I think China would haveno choice but abide by international law which is UNCLOS. This is aninternational rule on maritime territorial disputes and I think China as a globalresponsible state should legitimize its territorial claims byproviding evidences based on this internationallaw. I believe manycountries and people wantto know what the legal basisof China’sterritorial claims in South China Sea is.  I am aware that the so-calledcyber nationalism has been growing and that people in thisgroup would  like to accuse the government of its weakstance towards foreign affairs, especially territorial disputes. To cope with or control the cyber-nationalism is substantially difficultfor any state, especially when the internet makesit possible to express radical opinions anonymously.

Introduction：

 Takashi Terada，professor ofinternational politics at Doshisha University in Kyoto