Research Reports
East Asia FTA and the Agricultural Sector
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AuthorChoi, Seikyun
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Publication Date2008.11.01
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Original
East Asian countries try to strengthen regional cooperation to cope with deepening and widening regional blocs in Europe and America. There are several forms of possible regional blocs such as free trade area(FTA), economic common market, common market, and union. Free trade area can be a basis for further economic or regional integration. In this study, the role of the agricultural sector and the impacts of free trade area are discussed or evaluated. Trade patterns, competitiveness, tariff barriers and impacts of the FTA are analysed. The desirable role of the agricultural sector and the ways of enhancing agricultural cooperation for the progress of regional integration are proposed.
Results of simulation by GTAP show positive GDP growth for all of the member countries from The East Asian FTA. GDP growth is estimated to be 2.68% in Korea, 1.41% in Japan, 0.46% in China, 0.76% in ASEAN. Rice export is estimated to be increased by $290 million in China and by $180 million in ASEAN. Rice export destined to Korea and Japan. Therefor, rice production is expected to decrease by 7.6% in Korea and by 9.8% in Japan. Grain trade other than rice is estimated to show small changes, for example, China's corn export is projected to increase $40 million.
Fruits trade is estimated to increase from the East Asian FTA. However increased trade volume would be relatively small compared to rice. China's export of apples and pears is estimated to increase by $10 million and $6 million respectively. Banana export by ASEAN is projected to $6 million. Korea can increase fruit export by $1 million for apples and pears respectively and by $1.5 for grapes.
China becomes the biggest beneficiary in vegetable trade from the East Asian FTA. China's export of garlic and onions will increase by $24 million respectively. More than half of China's export is expected be imported by Korea. The change of meat trade from the East Asian FTA is estimated to be smaller than vegetables. ASEAN countries can increase chicken export to Japan and Korea. Korea and China are projected to increase chicken and pork export to ASEAN and Japan in small amount.
China's agricultural exports and imports are expected to increase by $5 billion and $3.5 billion from the East Asian FTA. ASEAN's agricultural trade surplus is estimated to be even bigger than China. However Korea and Japan can become looser of th FTA. Therefor there should be a mechanism of compensation for the FTA. Without compensation mechanism, member countries the agricultural sector may become an obstacle of the progress of regional integration.
There will be a few difficulties establishing the economic integration including agriculture. To avoid the worst possible role that agriculture might play in the negotiation, cooperative and positive role of agriculture is demanded, which includes reforming the domestic regulations based on the global level. Furthermore, various market openings that would impact on the East Asian agriculture will cause different economic and social problems. Therefore, it is necessary to prepare for the changes adopting the new trade environment. When it comes to trade, various non-tariff barriers should be eliminated, and the useful information has to be shared within the East Asia as well as technical standards for agricultural commodities should be developed. In addition, the existing quarantine procedure and customs, commodity standards, labeling, and other important things should be considered to increase the volume and value of agricultural trade within the East Asia.
As the East Asia FTA promotes the agricultural trade volume within the East Asia as well as with the other countries, food safety would become more important issues. Thus, persuasive quarantine standard must be proposed to prevent from unnecessary social economic losses within the East Asian markets. Moreover, consistent economic cooperation and complementary trade relation should be maintained and developed as well.
For the means of compensation for the various market openings, it is necessary to launch various economic cooperation activities for rural areas and the agricultural industries within the East Asia. Furthermore, technical cooperation, labor exchange, natural resource management, and investment in marketing and processing sections must be considered to accomplish the ultimate objective of being a "Single Market".
Researchers: Choi, Sei-Kyun and Shin, You-Seon
E-mail address: skchoi@krei.re.kr
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