BEIJING: Chinese Premier Wen Jiabao called on northeast Asia’s powers to cooperate more in the face of global economic headwinds, as China, Japan and South Korea agreed at a summit on Sunday to soon launch negotiations on a three-way free trade pact.

The three nations are major traders, and together accounted for 19.6 percent of the world’s economy and 18.5 percent of its exports in 2010, according to a feasibility study of the proposed trade pact that the governments issued late last year.

But they are also divided by political distrust, trade barriers and diverging investment policies.

“There are many instable, uncertain and unpredictable factors in northeast Asia and east Asia,” China’s Wen said at the meeting in Beijing attended by Japanese Prime Minister Yoshihiko Noda and South Korean President Lee Myung-bak.

“The international financial crisis is not yet over and the prospect of the European debt crisis is uncertain,” Wen said, according to a report from the official Xinhua news agency.

The three governments plan to counter such worries by launching the talks for the free trade agreement (FTA), an idea that has been under discussion for a decade.

“We are pursuing high-level economic cooperation as part of our national strategy,” Noda told the Wall Street Journal in an interview before the summit. “The Japan-China-Korea FTA is an extremely important piece of it.”

The three leaders also agreed to a three-way investment treaty – one stepping stone to the bigger and much more contentious goal of a free trade deal – said Xinhua.

China is the biggest trade partner of both Japan and South Korea. A free trade treaty could lift China’s GDP by up to 2.9 percent, Japan’s by 0.5 percent, and South Korea’s by 3.1 percent, Xinhua said, without citing the basis for its estimates.

“China is simply a huge market,” said Noda, according to the Wall Street Journal. “That’s all there is to it.”

Source: Reuters