Argument in brief

The book’s theoretical framework brings together the supply-side and demandside perspective. As illustrated in Figure 1.1, institutions of trade policymaking (or domestic trade governance) serves as the primarily variable that explains long-term

Frameworkpatterns in Japan and Korea’s FTAs

FIGURE 1.1 Frameworkpatterns in Japan and Korea’s FTAs. Periods of cohesive domestic trade governance is linked to high-level FTAs and periods of fragmented cohesive domestic trade governance is linked to low-level FTAs. Institutions, however, undergo major changes due to decisions made by political leadership. In other words, political leadership serves as the catalyst that can set Japan and Korea on alternate paths of FTAs. Given this context, interest groups and civil society exert pressure both on political leadership and the institutions of trade policymaking to impact FTAs. Ultimately, the end outcome is the product of the complex interaction among these variables. The book seeks to unravel the dynamic relationship among these variables and tell a comprehensive story of Japan and Korea’s FTA politics.

International politics and FTAs

Although the focus of the book is largely on domestic FTA politics in Japan and Korea, international politics inevitably impact FTAs. For example, the failure of the WTO to conclude a successful multilateral trade agreement is often identified as a key reason behind the recent proliferation of FTAs (Mansfield and Reinhardt 2003). States seek FTAs as a means to gain export markets since the chances of multilateral trade liberalization are slim. States are further motivated to pursue FTAs for strategic reasons such as countering the emergence of a rival economic partnership, enhancing their international negotiation power, and strengthening security alliance with important allies (Urata 2015;Yoshimatsu and Ziltener 2010). Simply, domestic economic and political considerations are not the only factors that shape FTA politics. One only needs to look at the absence of a Northeast Asian FTA among China, Japan, and Korea to understand the importance of geopolitics.

For the period under study, which spans from the late 1990s to 2020, international politics should have had a roughly similar impact on Japan and Korea’s FTAs. Stalled trade rounds in the WTO, the declining economic (and perhaps political) power of the U.S., the enlargement of the EU’s market, and, most importantly, the rise of China as a global economic power are common contexts against which both countries pursued FTAs. Moving forward, international politics is expected to have a larger role in shaping Japan and Korea’s FTAs. The escalating trade conflict between the U.S. and China places Japan and Korea in a predicament. Not only are the U.S. and China the top two destinations for merchandise exports for Japan and Korea, but the U.S. and China pose significant security implications for Japan and Korea (WTO 2017).This theme is considered more carefully in Chapter 6.

overview

Chapter 2 overviews the empirical contexts that underpin the book’s comparison of Japan and Korea’s FTA politics. The chapter begins by situating Japan and Korea’s FTAs against a global typology of FTAs over time and across regions. The chapter then provides an in-depth examination of the diverging patterns of Japan and Korea’s FTAs from the late 1990s until the present, with a focus on the selection of FTA partner, sectoral coverage, and scope of liberalization. The diverging patterns of FTAs are then assessed through economic explanations. The chapter concludes that although economic factors can explain the proliferation of FTAs since the late 1990s, they cannot adequately account for the diverging patterns of FTAs between the two countries.

Chapter 3 analyzes intra- and inter-country variations in Japan and Koreas FTA patterns from an institutional perspective. From the late 1990s to 2012, Korea exhibited cohesive domestic trade governance, whereas Japan exhibited fragmented domestic trade governance.Then from 2013 to the present, the pattern has reversed. Administrative reorganization under President Park Geun-hye weakened the cohesion of Korea’s domestic trade governance. In contrast, Japan’s domestic trade governance became more cohesive as Prime Minister Shinzo Abe introduced new institutional forums for trade policymaking. Changes in the domestic trade governance explain Korea’s shift from high-level to low-level FTAs and Japan’s shift from low-level to high-level FTAs since 2013.The chapter demonstrates the linkage between domestic trade governance and FTAs through case studies of the KORUS FTA, the Korea-China FTA, the Korea-Japan FTA, the Japan-Australia FTA, and theTPP.

Chapter 4 explores the role of political leadership in shaping Japan and Korea’s FTAs. While the institutions of trade policymaking provided the context that made high or low-level FTAs more or less likely, political leadership determined the timing and political momentum for FTA negotiations. More importantly, political leadership played a critical role in shifting the structure of Japan and Korea’s domestic trade governance in 2013, leading to the reversed pattern of FTAs since then. The role of political leadership in Japan and Korea’s FTAs is examined through case studies of the KORUS FTA, the Korea-China FTA, and theTPP negotiations.

Chapter 5 shifts the focus to the demand side, examining the role of various societal interests in FTA politics. The chapter highlights two points. First, civil society-state relationship on trade policies is highly institutionalized in Japan, whereas such institutionalized relationship is absent in Korea. In Japan, interest groups that support and oppose FTAs have each formed close ties with politicians and ministries to push their desired trade agendas.These groups work within existing political institutions to shape FTA policies. In contrast, civil society has mobilized in favor and in opposition to FTAs from outside existing political institutions in Korea.These mobilizations have taken the form of candlelight vigils and mass rallies. Second, the main civil society actors involved in FTA politics vary between the two countries. In Japan, conservative interest groups such as business federations and farm groups play a dominant role, while labor unions and the broader public are largely disengaged on the topic of FTAs. In Korea, however, a large number of societal actors from various backgrounds come together to voice their preferences on FTAs. This is most apparent for the coalition opposing FTAs, which include unions (e.g., labor, teachers), farm groups, NGOs, and the general public.

Chapter 6 situates the discussion of Japan and Korea’s FTA politics in the context of growing trade tensions between Japan and Korea in recent years. Shifting geopolitical conditions have altered the strategic priorities shaping Japan and South Korea’s trade decisions, ultimately weakening the incentives of Japan and South Korea’s political leaderships to cooperate on trade issues. As traditional East Asian security and economic allies of the U.S., Japan and South Korea have long worked to preserve cooperative economic relations despite continuing historical and political tensions. The rise of China as a global economic and political power, however, has led to a divergence in the trade policies of Japan and South Korea. The Japanese government has responded by reinforcing its ties with the U.S. against China and strengthening its commitment to multilateralism. In contrast, the South Korean government, irrespective of its political orientations, has pursued a strategy of appeasing China mindful of China’s important role in shaping interKorean relations (i.e., between North Korea and South Korea).The 2019 Japan and South Korea’s trade conflict is a culmination of growing divergences in their trade positions in the global trade regime, which has significantly weakened the incentives of the two countries to maintain cooperative trade relations.

The book concludes with a discussion on the implications of East Asian FTA politics on future international security and relations. Particular attention is paid to changing trade relations among Japan, Korea, the U.S., and China.The rise of China in the global arena has now led to open US.-China competition on economic and security issues. In particular, US.-China trade conflict has deepened under the administration of U.S. President Donald Trump, who is president at the time of writing this book. The U.S. has dramatically shifted away from its prior reliance on conventional trade measures and mega-FTAs to secure its economic interests. Instead, the U.S. now openly embraces managed trade and reciprocity.This chapter examines the implications of these changing geopolitical conditions on recent issues such as the US.-Japan Trade Agreement, the Japan-Korea trade conflict, and China’s role in the global trade regime.

 
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