The United States and the European Union agreed to launch talks to free up their markets.
at the start of the G8 summit in Northern Ireland last month.
to create the world's biggest free trade pact in history.
At the same time, Asian economies,. including China,. are also actively promoting free trade
deals,. all of which is expected to reshape global trade order.
So what can the world economy expect from the mega free trade deals?
For this and more, we have Arirang's Hwang Ji-hye joining us live at the news center.
So Ji-hye, what are some of the so-called "mega FTAs" that are under discussion?
There are three huge free trade deals being pursued by the U.S., the European Union and
some Asian countries.
and the U.S.-EU FTA,. dubbed the Trans-Atlantic Trade and Investment Partnership that you
mentioned earlier is one of them.
The other two are the Trans-Pacific Partnership, or TPP,. and the Regional Comprehensive Economic
Partnership, or RCEP.
Currently 12 countries, including the U.S., Japan, Australia and Vietnam are participating
in the TPP talks,. whereas 10 ASEAN nations and six major Asia-Pacific economies, including
China, Korea and Japan are involved in the RCEP negotiations.
The U.S.-EU FTA -- the largest among the three -- comes as both sides attempt to recover
from the global financial crisis.
and to regain the advantange in global trade that's been lost to China and other emerging
nations.
The United States,. which is trying to reaffirm its role in the Asia Pacific region,. is also
spearheading the TPP initiative.
China on the other hand,. is focusing its efforts on the Regional Comprehensive Economic
Partnership.
And experts say these economic blocs are likely going to reshape the order of world trade.
That's right.
The countries of the three mega free trade pacts account for 80 percent of the global
economy,. so the experts say if the deals are reached.
world trade would rapidly reshape around the three new economic blocs.
"World economies are moving toward building a new global trade order through the regional
free trade deals, and there is high competition among nations to become leading states in
the process."
"For the past 20 years, the world trade order was established around the World Trade Organization
in a single form.
But since major countries that used to lead the WTO are now actively participating in
regional economic blocs, the WTO is likely to play a less prominent role in the future."
If the WTO's influence on global trade erodes, what will its new role be?
Experts say.
that the World Trade Organization would then focus on specific areas.
by resolving trade conflicts between nations.
Let's focus on the effect a change in the global trade order,. driven by the three mega
FTAs, would have on Korea.
It would seem that the impact would be largely negative.
In a sense, yes.
Korea's competitive edge in having early free trade deals with the U.S. and EU will weaken.
For example, Japan,. Korea's main competitor in the world export market,. would have the
same level of market access to the U.S. through the TPP.
However, on the other hand.
experts say.
that the increased size of the economies involved in the FTAs could also have positive impacts
on the Korean economy.
"When the FTA is implemented, their economic size is expected to increase.
It means Korea's export market will be enlarged.
In that way, Korea's export opportunity can be increased as well."
In fact,. according to a report by the Center for Economic Policy Research,. the U.S.-EU
FTA is expected to add UP TO half a percentage point to the EU's gross domestic product.
and up to zero-point-4 percentage points to the U.S. economy.
Another report shows.
that the TPP is also projected to boost GDP of involved nations by up to one-and-a-half
percentage points,. while the RCEP will boost the nations' GDPs by up to one-point-8 percentage
points.
So, what will the world trade order look like in the future if and when negotiations for
the three mega FTAs are concluded?
Experts say.
that the center of the world trade order will revolve around the three economic blocs.
with minor regional economic blocs created around countries with large economies that
are not included in the three mega FTAs, like Brazil and Russia.
Hwang Ji-hye, reporting live on how the three prospective mega FTAs could very well reshuffle
the world trade order.