John Larkin reported from Asia for more than a decade for the Wall Street Journal and Time Magazine, and is now an Australia-based writer.

It looks a good idea on paper. Three huge Asian economies — China, Japan and South Korea — will start talks later this year on a free trade agreement which could be a geopolitical as well as economic game-changer.

The outcome has distinct implications for Australia's trade with the three powerhouses. China is our number one trading partner, with Japan second and Korea fourth.

The hope is that a trilateral FTA, dubbed the CJK FTA in trade circles, will provide its three participants with access to new markets, as well as increased investment and technology transfer. That would be no small achievement, as these markets accounted for nearly 20% of global GDP in 2010 and almost three-quarters of East Asia's total output.

The pact's backers tout gains in sectors including agriculture, fisheries, forestry, manufacturing, and services. Though major players in world trade, intra-regional trade between the three is relatively low at around 20% of total trade, compared to nearly two-thirds in the European Union. A study by the University of Incheon in 2009 found that a CJK FTA that tackled the toughest barriers would boost GDP by 2.5% in Korea, 0.6% in China, and 1% in Japan.

But even its most enthusiastic backers don't expect the deal to be sealed anytime soon. Some critics don't expect it to happen at all.

Agriculture is a primary stumbling block; vocal farm lobbies in all three countries, particularly Japan and Korea, will vigorously oppose attempts to dismantle subsidies that enable them to earn a living. Political disputes could also derail the process, despite the best efforts of all parties to prioritise economic growth. China, Japan and Korea still disagree on a range of hot-button nationalist issues.

Seoul and Tokyo are perennially at loggerheads over compensation payments to 'comfort women' sex slaves of Japanese forces during World War II. The two also disagree on the sovereignty of two rocky islets the Koreans call Dokdo and known in Japan as Takeshima. Tokyo and Beijing contest ownership of a chain of islands called Diaoyu in China and Senkaku by Japan. Japanese war atrocities still provoke anger in China, and both Korea and Japan are exasperated by the intrusions of aggressive Chinese fishing vessels into their waters.

If these and other obstacles can be cleared, a CJK FTA would change the face of Asian trade. Australia is negotiating FTAs with all three countries, but it has been slow going and preferential trade arrangements between the three giants could dilute some of the gains. Moreover, an FTA would draw Japan and Korea closer to China politically as well as economically, posing question marks over whether the US and its Western allies could take the support of Tokyo and Seoul for granted as they tend to do now.

Though a presidential election in Korea and an imminent power transfer in China might complicate the FTA talks, success cannot be counted out. Each government has shown the political will to push through contentious FTAs in the past. More than 100 trade pacts have been signed by Asian economies, around half of them in the more developed markets of East Asia.

Photo by Flickr user Ville Misaki