Japan-China-Korea Economic
Integration in Pluri-lateral Context
Yukiko Fukagawa

1Outline
 China-Japan-Korea (CJK) integration inMega (Plurilateral) pacts
 Specific issues for CJK:
(1) WTO+(2) WTO extra(3) Data trade Data trade issues for CJK
 Conclusion2

Questions for JCK in Mega FTAs
 Passive integration in Pluri-lateral context,

or Positive, independent and strategic
integration?
 What are the common interests: Theinterface with the growth strategies now?
 How to protect GVC in the U.S.-China
trade war? (Industrial adjustmentmechanism in the market?) How to mitigate sovereignty problems?
3Domestic Value Added in Gross Export for the U.S.
and China

60.0
50.0
40.0

China
30.0

U.S.A

20.0
10.00.0

Taiwan4KoreaJapanVietnam

Thailand

ASEAN

EU28

Specific issues for JCK WTO plus: Tariffs, Facilitation, SPS, SoE,Government porocurement
 WTO extra: Competition policies,Environment, IPR protection, Investment
 New: Data trade and “ TPP-3”, Capital/
Service sector regulations (ex. Cryptcurrency)
 Political issues: Hong Kong and Taiwan
5

CJK in other Plurilateral pacts
 China: Hardware orientation but theinitiative for E-commerce and Telecom
 Korea: Common interests with Japan,Pluri-pacts for overcoming nationalism

6Digital Economies in JCKKorea for ICT (Communication/ Matching services), Japan for
IT (AI, Robots, Big Data and IoT) but China tries both
 China for B to C, C to C (E-Commerce, Transportation,Settlement and Fintech….), but Japan for B to B (IoT, CASE) ,Korea??
 China’s Business seeds/ free environment: Solution-oriented
services, Smaller legacy cost in regulations, Entrepreneurshipfor start-ups, Young customers for new technologies
 The flat world: Different from “catch-up” period inindustrialization (Interactive innovation)
 End of “export-oriented” growth for Korea? Or coming back of“Infant industry protection”?
7

Digital Trade Restrictive Index (DTRI)
by European Centre for International Political Economy(ECIP)

8

China as the single outlier(Source: Same as Figure 1.)

DTRI and development

9

FDI and Technology transfer

Policy discussions for Data flows
 Data flow rules based on trades in goods:(1) No tariffs/ Restrictions (including NTB, Trade related
services, Standardization) and Facilitation → Free flows(2) Complementary policies to cover market failures(Externalities, Public goods, Economy of scale, Imperfectcompetition, information asymmetry…) → Consumer

protection, IPR protection, Competition policies(3) Non-economic values (Public health, Environment,Security…) → Data/ Privacy protection, Cybersecurity(4) Internal/ External adjustment → Taxation, Settlement,Information opening measures for platformers
10Discussion 1: Is data the same as goods innature?
 The policy balance of (1) to (4) should be/ could be thesame? : Principle (1) + Complementary (2), (3), (4)→ “Comparative advantage” exists in data trade or datadriven business/ services?
→ How to “re-design” FDI and service liberalization?
(Conventional Modes or “National treatment” will work?)→ China + (Large) developing economies vs. Matured
economies (Different regulations framework based on
security vs. privacy)☞ Flexible rules feeding back the technology changes?
☞ Multi or Pluri-lateral approach?: EU, CPTPP, USMCA…..
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Discussion 2:How to deal with China?
Privacy protection: 8 principles for privacy protection (OECD),
General Data Protection Regulation (GDPR by EU), Cross
Border Privacy Rules (APEC, but only 6 participants)
 Data localization control: Asymmetric relation (China(Restriction on personal and “crucial” data) vs. U.S./ Japan(Free) Security standard and Source code opening requirement:
Market power as the leverage (China vs. Matured economies) Competition policies against the mega platform firms:
Incentives for “the rest” for infant industry protection (Chinavs. “The rest”)→ What will motivate China to join/ lead the global rules?
→ Relations with WTO reforms? (Reforming S&D status?)
12

Discussions 3: Liberalization andcooperation among JCK for Asia?
 IT/ ICT capacity building: Narrowing the gap

between China and “the rest”
 FDI/ service sector liberalization for data driven
business: Protection and incentives for different
categories (B to B, B to C, C to C….)
 Targeted cooperation for social business for creditbuilding? (Beyond E-commerce: Environment,
Medical service, Nursing care, Education….)
 Data pool/ archives for evidence-based policies
and data-driven social business
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Conclusion
 Mega/ Pluri-lateral pacts works for JCK
 Emerging issue for JCK (1) : Still under thede-route approach, or independentapproach?
 (2): Promoting globalization of China in
Plurilateral pacts
 (3): Tackling Data trade and other newissues related the growth strategies
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