Trade Agreement between China and Japan: What You Need to Know
In November 2020, the world`s third- and fourth-largest economies, China and Japan, signed a trade agreement that aims to strengthen their economic partnership and promote free trade. The agreement, known as the China-Japan-Korea Free Trade Agreement (CJK FTA), covers a wide range of areas, including goods, services, investment, e-commerce, and intellectual property.
Here are some key takeaways from the trade agreement between China and Japan:
Increased Market Access for Both Countries
The CJK FTA is expected to reduce tariffs and remove non-tariff barriers that hinder trade between China and Japan. By doing so, it will increase market access for exporters and importers from both countries. For instance, China will lower tariffs on Japanese cars and auto parts, while Japan will remove tariffs on Chinese food products such as soy sauce and instant noodles.
A Boost to Regional Integration and Cooperation
The CJK FTA is part of a broader effort to promote regional integration and cooperation in Asia. The agreement involves three major economies in the region, which together represent about 20% of global GDP. By deepening economic ties between China and Japan, the CJK FTA could pave the way for other regional initiatives, such as the Regional Comprehensive Economic Partnership (RCEP).
Positive Impacts on SMEs
Small and medium-sized enterprises (SMEs) are expected to benefit from the CJK FTA. With reduced trade barriers, SMEs in both countries will have more opportunities to expand their business and access new markets. The agreement also includes provisions to facilitate customs clearance, reduce transaction costs, and protect intellectual property rights, all of which could help SMEs operate more efficiently and effectively.
Challenges and Concerns
Despite the potential benefits of the CJK FTA, there are also some challenges and concerns that need to be addressed. One of the main concerns is the asymmetry of trade between China and Japan. China is Japan`s largest trading partner, while Japan is only China`s third-largest trading partner. Some Japanese companies fear that the trade agreement could lead to an influx of cheaper Chinese goods, which could hurt their competitiveness.
Another challenge is the ongoing political tensions between China and Japan, which could affect the implementation and enforcement of the trade agreement. Both countries have a history of disputes over territorial and historical issues, and there are concerns that these tensions could spill over into economic relations.
In conclusion, the trade agreement between China and Japan is a significant development in the ongoing efforts to promote free trade and economic integration in Asia. While there are challenges and concerns that need to be addressed, the agreement has the potential to benefit both countries and contribute to regional prosperity. As the two largest economies in Asia, China and Japan have an important role to play in shaping the future of the region`s economy.