Implications of a Trilateral FTA between China, Japan and Korea for Australian Bilateral FTAs with China, Japan and Korea

Abstract

After many years and many rounds of negotiations seeking bilateral free trade agreements (FTA) between Australia and China, Japan and Korea, progress has been minimal because they cannot agree on access to markets for agricultural products. To add to the complications and lack of progress made in these negotiations, China, Japan and Korea have started negotiating a trilateral FTA. If a China-Japan-Korea Trilateral FTA is struck, it could affect Australian negotiation of bilateral FTAs with each of these countries, with consequential implications for Australian agricultural exports. These concerns are the main focus of this paper. However when the comparative advantages of agricultural production and agricultural trade complementarities of these countries are examined, it seems that if a China-Japan-Korea trilateral FTA is struck, it ought to not further complicate Australia’s bilateral FTA negotiations. A trilateral FTA between China, Japan and Korea would have limited negative impacts on Australia’s agricultural exports to these countries. Australia has a strong comparative advantage in producing many land-intensive products that these three countries will continue to need to import. Nonetheless, successfully concluding bilateral FTAs with each of China, Japan and Korea remains a formidable challenge because agreement on agricultural trade negotiations remains elusive. In future, Australia’s FTA negotiators may need to be even more pragmatic, strategic and flexible in their approach to agricultural trade negotiations.