Island visit may threaten trade; Officials fear effects of Takeshima trip on partnership talks with S. Korea
The Yomiuri Shimbun | 13 Aug 2012
Island visit may threaten trade; Officials fear effects of Takeshima trip on partnership talks with S. Korea
Fears have risen over the future of Japan-South Korea economic relations in the wake of South Korean President Lee Myung Bak’s visit Friday to the Takeshima islands.
There are concerns that talks will cool on such bilateral matters as concluding a Tokyo-Seoul economic partnership agreement and a free trade agreement between Japan, South Korea and China, according to government officials. Repercussions were also feared regarding talks on Japan-South Korea joint procurement of liquefied natural gas, the officials said.
In a news conference after the Cabinet meeting Friday, Economy, Trade and Industry Minister Yukio Edano expressed strong concern, saying Lee’s visit to the islands "is bound to have a huge adverse impact" on future prospects for bilateral economic ties.
Talks between the two countries on concluding an EPA were interrupted in 2004 mainly because of South Korean protests against then Prime Minister Junichiro Koizumi’s visit to Yasukuni Shrine. Negotiations have since been held on resuming the EPA talks, between section chief-class officials of related ministries from both sides.
An accord was reached in May to launch talks on the envisioned Japan-South Korea-China FTA before the end of the year.
South Korea is Japan’s fourth-largest trade partner after China, the United States and the European Union.
High on the agenda in the Japan-South Korea trade negotiations is lowering tariffs levied on about 60 percent of Japan’s export items, including electronic parts and petrochemical products, the officials said.
In addition to the EPA talks between Japan and South Korea, plans are being studied for the two countries to jointly purchase LNG.
As almost all of its nuclear power plants have been halted, Japan is deeply dependent on thermal power generation and lowering the import costs of LNG is of grave significance to the nation, the officials said.
Expectations are high that joint Japan-South Korea imports of LNG may enhance the two countries’ ability to negotiate prices with exporting countries, the officials noted.
Lee’s trip to the Takeshima islands, however, "could have a chilling impact on moves to boost economic cooperation between the two countries," a senior official of the Economy, Trade and Industry Ministry said.
Regarding the impact the president’s visit may have on business activities between private-sector companies, however, an official involved with bilateral trade at a trading house said it was unlikely there would be adverse effects immediately.
"But we have to watch future developments in Japan-South Korea trade relations closely," he added.
Trade between the two countries has been steadily increasing, even though the value of bilateral trade fell temporarily in 2009 after the 2008 Lehman Brothers collapse.
According to trade statistics compiled by the Finance Ministry, the combined value of imports and exports in the two countries’ trade soared to about 8.5 trillion yen in 2011, 1.5 times the 5.5 trillion yen seen in 2000.
Japanese capital investments in South Korea have also been increasing, with the number of investment projects standing at 422 in 2010, according to the Japan External Trade Organization.
