Joint Report and Policy Recommendations on Strengthening Economic Cooperation among
China, Japan and Korea

-------------------Executive Summary-----------------------

The Trilateral Joint Research Project has been undertaken by the Development Research Center of the State Council (DRC) in China, the National Institute for Research Advancement in Japan (NIRA) and the Korea Institute for International Economic Policy (KIEP) since 2001. The three institutions recommended to the leaders the launch of a new research phase from 2003, studying the topic of “Long-term Economic Vision and Medium-term Policy Directions”. The research will be carried out on a step-by-step basis, beginning with the “Economic Effects of Possible Free Trade Area among China, Japan and Korea,” as the research theme for 2003. The policy recommendations herewith have been developed jointly, based on analysis and intensive discussion in this year.

The following are the policy recommendations made jointly to the leaders of China, Japan and Korea by the three institutions involved in the research program.

Establishment of a Research Agenda for a Trilateral FTA

According to the simulation, an FTA will bring about massive macroeconomic benefits to the three countries in terms of production, trade and economic welfare, in this sense, the establishment of a trilateral FTA will be a win-win-win situation. Given the perception of the respondent enterprises and the macroeconomic benefits expected, a sense of urgency should be shared by the governments of the three countries. For next year, it is recommended to deepen the joint research by conducting a sector-oriented study on a trilateral FTA with further examining policy and institutional aspects. The “Sector Impacts and Policy Study of a Trilateral FTA” will enable us to make concrete and realistic recommendations. The study next year will also contribute to identifying suitable arrangements that will accelerate trade and investment in the region.

Trade Facilitation and Improvement of the Environment for FDI

The business survey underscored a demand from the enterprises, before the establishment of a trilateral FTA, to further facilitate trade and improve the environment for FDI. The previous phase of the joint research recommended several concrete measures, including establishment of communication channels of laws and regulations, a training system for customs, inspection and quarantine institutions, establishment of a trade dispute early warning system, and improvement of business person mobility, and establishment of a platform or network of information exchange among the three countries. While some of the recommendations have been implemented, the governments are urged to consider the remaining measures to be realized.

Contribution to Tripartite Dialogue Including Academia, Business People and Government Officials in China, Japan and Korea

Recently, tripartite dialogue has emerged in various areas, including ministerial and official meetings, business fora, and academic conferences. Frequent and intensive exchanges under such dialogues will create the foundation to promote the integration of the three countries. To further strengthen the tripartite dialogue mechanisms, it is recommended that the representative institutions participating the trilateral research should actively cooperate with the tripartite dialogue mechanisms by providing of research inputs.

Further Development of the Long-term Economic Scenarios and Common Policy Agenda of the Three Countries

The three institutions identified the importance of sharing common views on the long-term scenarios for the three countries. The joint research project this year began with the preliminary discussion of a scenario for macroeconomic growth. The study of scenarios and the common policy agenda should be continued and further elaborated for the next several years. The scope should cover a wider range of common policies for the development of economies and industries, concerning areas such as information technology, standardization of technology, and standardization and conformity.

Trilateral Joint Research By
Development Research Center of China
National Institute for Research Advancement of Japan
Korea Institute for International Economic Policy of Korea