State-run institutions from Japan and South Korea said Tuesday they favor forming a comprehensive mutual free-trade agreement aimed at improving competitiveness and market access.

A joint communique issued Tuesday by the Japan External Trade Organization and the Korean Institute for International Economic Policy says an FTA is a realistic way to accomplish liberalization under a multilateral trade system.

Tokyo and Seoul should pursue a comprehensive framework encompassing broader market unity through mutual recognition, promotion of investment and policies to promote effective competition as well as elimination of tariff and nontariff barriers, the institutions said.

Their recommendation was based on a feasibility study of the economic effects and policy direction of a Japan-Korea FTA, jointly conducted by JETRO’s Institute of Developing Countries and KIIEP.

It was the first joint study on an FTA by Japan and South Korea. It coincided with action programs for the Japan-South Korea partnership toward the 21st century proposed by President Kim Dae Jung during his visit to Tokyo in October 1998.

JETRO chairman Noboru Hatakeyama has privately submitted an executive summary of the study to trade chief Takashi Fukaya.

The think tanks will hold a joint symposium Wednesday in South Korea, using the report as a springboard to gain South Korean support.

With most world economic powers forming regional free-trade areas, including the European Union and the North American Free Trade Agreement, Japan and South Korea can no longer rely solely on multilateral frameworks like the World Trade Organization, Hatakeyama told a press conference in Tokyo.

If an FTA were introduced, Japan’s competitiveness in high-level manufacturing sectors and South Korea’s generally higher average tariff rates would exacerbate Seoul’s trade imbalance with Tokyo. Despite this, the agreement would nurture globally competitive businesses in the two countries as a result of dynamic competition and strategic partnerships, the communique says.