The symbiosis of Korea, China, Japan and ASEAN through Free Trade Agreement!

The symbiosis of Korea,The symbiosis of Korea,China, Japan and ASEANChina, Japan and ASEAN

through Free Trade through Free Trade Agreement!Agreement!

The symbiosis of Korea,The symbiosis of Korea,China, Japan and ASEANChina, Japan and ASEAN

through Free Trade through Free Trade Agreement!Agreement!

May 28, 2002

ITOCHU Textile Institute, Inc.

ITOCHU TEXTEILE INSTITUTE INC 2002.5.28 2

TTaa egueegue① Milano Project.

From just a town of fabric export to a town of fashion.“Chimeric”.

② Foundation of the “Textile and Fashion College”.

③ Korea: the more beautiful ladies than in other Asian countries

Taegue: larger number of Miss Korea than other cities.


Trade Amount of the World in the year Trade Amount of the World in the year 2000.2000. Unit:million US$

AmountGrowth

rate(2000/ 1999)

Share AmountGrowth

rate(2000/ 1999)

Share

Japan 480,701 15.2% 7.7% 381,100 23.0% 5.8%

China 249,240 27.7% 4.0% 225,095 35.8% 3.5%

Korea 172,268 19.9% 2.7% 160,481 34.0% 2.5%

Hong Kong 202,778 16.2% 3.2% 214,353 18.5% 3.3%

Sub total 1,104,987 17.6% 981,029 15.1%

All World 6,273,114 12.3% 6,518,899 12.7%

Export Import


Share in the total trade(export-import total)

1990 2000China Korea 0.6 ％ 5.7 ％

Japan 14.4 ％ 15.1 ％Japan China 3.5 ％ 7.1 ％

Korea 5.6 ％ 9.9 ％Korea Japan 23.1 ％ 16.4 ％

Mutual dependency has become very big in 10 years.

The Trend of Bilateal Trade betweenThe Trend of Bilateal Trade betweenKorea-Japan, Korea-China and China-Japan.Korea-Japan, Korea-China and China-Japan.


Exports Exports （（ 2001.12001.1～～ 1212 ））KoreaKoreaKoreaKorea

ChinaChinaChinaChina JapanJapanJapanJapan450 （ 17 ％）

*313 （ 8 ％）

165 （11 ％

）

*256（

6 ％）

182 （

12％

）

125 （

5 ％）

Unit ：100 Million US ＄（％）： Share in total Export of each country* Conversion rate ： \120.-/US$1.-


Export total-Importance of North-East Export total-Importance of North-East AsiaAsia

Strong ties with each other. In porticular, export

fromJapan to Korea,Korea to China,

andChina to Japan. Geographically close location,

Growth in the intra-industry trade in 1990s.

the less importance of the trade on comparative advantage.


Change of trade Change of trade structurestructure Complementary effect : diminishing.

Japan-China : vertical division of labor. Korea-Japan

Korea-China Japan-China

Korea-ChinaFor example,Japan China: Processing trade intra-industry and intra-firm tradeKorea China: Expansion of intra-industry trade. Textile trade, the same pattern.

: Horizontal division of Labor

: getting more similar.


Comparative Comparative advantageadvantage Among the three countries horizontal division o

f labor is being estabeished, but each country still has their own comparative advantiges, …

China: Labor intensive products,such as …

Japan: Machinery, basic, materials Korea: Chemical products,

mineral manufacture, metal plastic / rubber etc,


Textile Exports Textile Exports （（ 2001.1~122001.1~12 ））

KoreaKoreaKoreaKorea

ChinaChinaChinaChina JapanJapanJapanJapan137 （ 26 ％）

29 （ 38 ％） *

11 （7 ％

）

5 （7 ％

）*

24（

15％

）

27（

5 ％）

Unit ：100 Million US ＄（％）： Share in Textile Export* Conversion rate ： \120.-/US$1.-

HKGHKGHKGHKG

HKGHKGHKGHKG13 （ 8 ％）

9 （ 12 ％） *


Free Trade Agreement Free Trade Agreement (1)(1)

the Purpose of FTA.the difference ofCustoms Union and Free Trade Agreement.

bloc-economy in 1930s.the great Depression andthe World War Ⅱ.



Many Countries were not positive for FTA except EU.

After the conclusion of NAFTA, FTA started to draw world’s attention.

FTAs was beginning to be considered to facilitate the world’s trade.

Korea, China, Taiwan and Japan until last year do not belong to any of the FTAs.


Free Trade Agreement Free Trade Agreement (3)(3)Movement of US

1985With Israel. 1994NAFTA = North America

Free Trade agreement.With Canada & Mexico.

2000Vietnam (Bilateral Trade Agreement)

2000With Jordan 2000 Negotiating with Singapore and

Chile. Conception of the FTAA.

(Free Trade Area the Americas)



US – Other movement.African Growth and Opportunity Act (AGOA).

Caribbean Basin Trade Partnership Act (CBTPA).


Free Trade Agreement Free Trade Agreement (5)(5) Movement of European Countries.

EU15. Deepening & Expansion. Deepening : from a customs Union

through common currency

EURO to the integrated Europe.

Expansion :EU15 to EU27.the Historical fate of Western Europe.



FTAs in other regions. Association of South-East Asian Nations (AS

EAN. 10countries). Gwf Cooperation Council (GCC. 1981) South Asian Association for Regional

Co-operation (SAARC. 4countries). Thailand with India, Myanmar,

Bangladesh and Sri Lanka.


Free Trade Agreement Free Trade Agreement (7)(7) Japan : With Singapore. 2002, Jan.

Japan : With ASEAN for conception of general

co-operation.With Korea, Mexico and Chile for FTA.

China : With ASEAN for FTA. Singapore : With Japan. 2002, Jan.

With New Zealand. 2002, Jan.Negotiating Australia, US, Mexico and Canada.

Thailand :With Australia, New Zealand, Japan & China, started study for FTA.

Hong Kong :Negotiating for FTA with New Zealand.


ASEAN + Korea, China and ASEAN + Korea, China and Japan (1)Japan (1)

Three countries are studying the possibility of FTA with ASEAN, but it may take some time.

Not FTA, but the Economic Cooperation.

China-ASEAN for FTA. The ASEAN Industrial Cooperation

Scheme (AICO). FTA. Formation of a regional economic

zone by Korea, China, Japan and ASEAN. the stability of Asia.


ASEAN + Korea, China and ASEAN + Korea, China and Japan (2)Japan (2)

China-ASEAN 10 years later. What China wants to do before that:

To form a free trade zone by four Chinese communities : Hong Kong, Taiwan, Macao and mainland China.

Purposes① To let in their kin (Hong Kong firms)

during the grace period.② To stimulate the economic growth of

China.③ To address to the agricultural problem.


Possibility of cooperation by three Possibility of cooperation by three countries (1)countries (1)

Korean and Japanese firms:need to cooperate as partners.

In the area of textile industry, which is typical labor-intensive industry. Now: Japan exports fabric to china

Imports garments manufactured in

China to Japan.

In the future:Japan places orders for fabrics made in Korea make garments at Korean-owned China-based firms

imports to Japan.



Joint marketing for Asian and global market by leading Companies in Korea and Japan.

Strength of Japan : accumulation of capital, brand power, technological capability, size of market.

Strength of Korea : highly productive, large-scale and the most advance machinery equipment they hold.



In the future,Entry of powerful state-owned businesses of China andEmerging of joint ventures formed by European and US companies and Chinese Companies

Intensifies the competition with Korean and Japanese businesses.

A full-scale war :

Necessity of joint works from the every stages.

ChineseCompanies

Korean firmsJapanese Firms

VS


Korea-Japan Agreement on Korea-Japan Agreement on InvestmentInvestment

and Korea-Japan Free Trade and Korea-Japan Free Trade Agreement.Agreement.

Agreement on Investment : Government level negotiations under way.

FTA :Agreed in general, but opposed in parts.

Necessity for Korea and Japan to conclude FTA.


Situation in Situation in Korea.Korea.

The points I want to say most.① Importance of the trade

relationship among Korea, China and Japan.

② the degree of mutual dependence among three countries will be higher.

③ Korea and Japan : Out of the existing network of free trade agreement.

④ Strong fear of isolation from the rest of the world.


Taegu – The Town of TextileTaegu – The Town of Textile From a town of synthetic fibre fabric to a fash

ion town. To characterize textile business,

① It’s global, before anything.International work.

② Changing and Challenging.③ demanding. tremendous effort.④ competitive.⑤ team play but individual ability strongly required.

achieve a goal glow of satisfaction.


ConclusioConclusion.n.

There must be something you don’t like in every business.

Increase of uncertainty is unavoidable and endure the situation.

What you think is right today or today’s common sense, is not necessarily right tomorrow or common sense tomorrow either.

The symbiosis of Korea, China, Japan and ASEAN through Free Trade Agreement!

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