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Saturday, March 18, 2006


Lack of political will deadlocks Japan-South Korea trade pact

Staff writer

Japan and South Korea need to revive talks on a bilateral free trade agreement -- a stalemate over which appears to symbolize a lack of political will by the leaders of both countries to move their ties forward, visiting South Korean journalists said at a recent symposium in Tokyo.

News photo
South Korean Journalists (from left) Hwang Bong Hyun, Lee Dong Woo, Lee Jun, Chung Young Moo, Lee Chul Ho and Lee Dong Kwan discuss Japan's economic prospects during a symposium at Keidanren Kaikan on March9.

As the two countries concentrated on domestic issues as well as relations with China and the United States in recent years, Japan-South Korean ties have stagnated in economic terms and even moved backward in political aspects, one of the panelists said.

Six journalists from South Korea's major newspapers took part in the March 9 symposium at Keidanren Kaikan, at the end of a five-day program of exchanges with Japanese business leaders, bureaucrats, lawmakers and scholars.

During the symposium, organized by Keizai Koho Center and moderated by Akira Kojima, chairman of the Japan Center for Economic Research, the participants discussed Japan's economic recovery and its implications for South Korea.

In December 2003, Japan and South Korea launched official talks on a bilateral FTA, but the negotiations have been deadlocked since November 2004 mainly because of differences over agricultural and fisheries trade. Seoul believes Tokyo's offer to free up farm and fisheries imports is not ambitious enough.

News photo
Akira Kojima

Meanwhile, South Korea agreed in February to start FTA talks with the United States, with both sides reportedly saying they hoped to conclude the negotiations by March 2007.

Lee Chul Ho, an editorial writer for The JoongAng Ilbo, said the administration of President Roh Moo Hyun has apparently put priority on the talks with the U.S. while keeping the mothballed negotiations with Japan sidelined.

For Roh, the FTA talks with the U.S. are intended as part of his efforts to mend troubled relations with Washington, Lee told the audience.

Lee said none of the issues that have put the Tokyo-Seoul talks on hold are "fatal" obstacles to a bilateral FTA -- a project that has been discussed either formally or informally for nearly a decade.

The fundamental problem, he said, is the lack of political will on both sides to conclude the negotiations by resolving the obstacles.

Lee charged that both Japan and South Korea have given little weight to each other in recent years, placing emphasis instead on their respective ties with the United States.

Last year saw Japan's relations with South Korea strained over a series of issues, including Seoul's protest over Prime Minister Junichiro Koizumi's visits to Yasukuni Shrine, the territorial row over an island in the Sea of Japan known as Takeshima in Japan and called Dokdo in South Korea.

Shuttle diplomacy frozen

Roh canceled a visit to Japan that had been scheduled for late 2006 -- suspending the shuttle diplomacy in which leaders of the two countries paid mutual visits twice a year since 2004.

But Lee said that Japan and South Korea should still strive to agree on a bilateral FTA before Seoul concludes an accord with Washington, given the close economic and cultural exchanges between the two neighbors.

In economic terms, conditions for a Japan-South Korean FTA today have become much more ripe than in the past, Lee pointed out.

According to Lee, South Korea is experiencing a rapid structural transformation of its economy, trying to shift away from heavy reliance on exports to greater emphasis on domestic demand.

While a bilateral FTA was impossible when South Korea's economy depended heavily on Japan, the two countries are gradually moving toward a more complementary economic relationship, creating better conditions for a free trade pact, he said.

Lee Dong Woo, a managing editor of The Korea Economic Daily, said the last 10 years may not have been a "lost decade" for Japan-South Korean ties, but bilateral economic relations did indeed stagnate and political ties were dealt a setback.

Since the 1997 Asian financial crisis, South Korean leaders tended to concentrate on domestic issues, and China became the major focus of their attention in Asia, he said.

During the same period, Japan also appeared too preoccupied with its own economic problems to seriously consider its relations with South Korea, he added.

Lee Dong Kwan, an editorial writer and former Tokyo Bureau reporter of The Dong-A Ilbo, noted that relations between top political leaders of Japan and South Korea used to be more solid during the 1980s.

Today, private-sector exchanges in the economic and cultural fields -- ranging from millions of people traveling between the two countries to tieups between major Japanese and South Korean companies -- are much more brisk, giving an impression that bilateral ties will be all right even as political relations stumble, he observed.

Still, a lack of solid ties between top-level leaders does negatively affect bilateral relations, as illustrated in the deadlock over FTA talks, Lee said.

During the Cold War era, Japanese and South Korean political leaders had a broader perspective, but today's leaders are more narrowly focused as they try to appeal to their own domestic audiences, he pointed out.

Lee said that the Roh administration initially tried to seek closer ties with Japan while keeping a distance from the United States. However, Roh gave up as Japan seemed more intent on its relations with the U.S., he added.

Roh also found it hard to work together with Japan on matters involving North Korea as Tokyo continued to focus on the abductions issue in dealing with Pyongyang, Lee noted.

In recent years, Japan has seized every opportunity to press North Korea to come clean on the fate of more than a dozen Japanese it abducted during the 1970s and 1980s. On the other hand, Roh considers relations with North Korea as the yardstick of his diplomacy -- as he considers ties with the U.S. and Japan, he said.

In fact, Japan and South Korea have a lot of room for cooperation in dealing with North Korea, Lee said, because Japanese support will be the key to rebuilding the North Korean economy.

However, current leaders of the two countries appear narrowly focused on domestic concerns, Lee said. "I hope that rational thinking, rather than emotions, is reflected more in the policymaking process," he added.

Chung Young Moo, head of the business news department of The Hankyoreh newspaper, urged Japanese companies to consider investments in the Kaesong industrial complex that the two Koreas have set up in the North, saying that low-cost and high-quality labor is available there.

The Kaesong complex is one of the showcase inter-Korean projects launched after the landmark 2000 summit between then South Korean President Kim Dae Jung and North Korean leader Kim Jong Il. Currently, 15 South Korean companies operate in the complex, where about 6,000 North Korean workers are employed at the factories.

The panelists gave a generally positive assessment of the Japanese economy. Some of them said they would keep watch on how long the strong performance will last -- or whether the current strength will survive major shocks like a sharp appreciation of the yen and a fall in Chinese demand, one of the key factors that have propped up Japan's recovery.

Growing consensus

Lee Jun, an editorial writer for The Chosun Ilbo, said he was optimistic that Japan would successfully tackle fiscal reform -- with public debt mushrooming to roughly 150 percent of GDP -- because there is a growing consensus both in the government and the public that they can no longer depend on fiscal stimulus like public works spending to sustain the economy.

Once there is a wide recognition about what lies behind the problem, the problem is already half resolved, he said.

Administrative reform and the pursuit of "small government" are challenges that also confront South Korea, Lee said, adding that he hopes Tokyo's efforts will bear fruit so that his country can learn from the lessons of Japan.

Hwang Bong Hyun, science and technology editor at Maeil Business Newspaper, said that both Japan and South Korea -- as countries lacking in natural resources -- rely on technological innovations to sustain economic growth.

Keeping in mind that Japan has invested trillions of yen in recent years to boost the nation's science and technological capabilities, Roh realizes the importance of technology as the driving engine of economy more than any of his predecessors, he noted.

Although the amount of investments is smaller than in Japan and the U.S., South Korea's official spending on science and technology is rising about 20 percent annually in the past couple of years, and the increase in research and development expenditure as a state policy will no doubt bear fruit in the not-so-distant future, Hwang told the audience.

South Korea and Japan also face the common challenge of the aging of the population -- and the subsequent future depletion of the workforce, Hwang said.

While population aging in South Korea is still not so rapid as in Japan, its number of people aged 65 years or older is estimated to reach 10 million in 2020, he said. And like in Japan, South Korea's baby-boom generation is soon reaching the retirement age of 60, he added.

The problem threatens to have more serious repercussions in South Korea, because elderly people there are not as rich as their Japanese counterparts and feel more uncertain about postretirement life, Hwang said. The South Korean government has just begun to tackle the issue, he said.

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