The Korean economy will benefit the most from a CJK (china-japan-korea) FTA (free trade agreement) in terms of GDP growth and welfare. For instance, the macroeconomic effects of a CJK FTA in terms of GDP growth will be 5.14 percent for Korea, 1.54 percent for China and 1.21 percent for Japan. Furthermore, the simulation shows that the macroeconomic benefits from a CJK FTA for the Korean economy are greater than the sum of the benefits from a Korea-Japan FTA and a Korea-China FTA.
After concluding their third round of trilateral summit at the end of May, 2011 in Jeju island, South Korea, leaders from China, South Korea and Japan have agreed to complete a joint research task by 2012 on the feasibility of grouping the three nations into a free trade zone.
China and the ASEAN Free Trade Area, the world’s largest of its kind, came to birth on the first day of 2011. It has a 1.9-billion-population with 6,000 billion U.S. dollars in terms of the GDP and 450 million dollars in trade.
If grouped China, Japan and Korea would include Asia’s first, second and the forth largest economies and account for 70 percent of Asia’s GDP or 20 percent of that of the world, standing next only to the European Union and the North American Free Trade Area.