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Japan, China, South Korea Eye Trade Pact

Wall Street Journal

Japan, China, South Korea Eye Trade Pact

By Andrew Monahan And Owen Fletcher

22 May 2011

TOKYO—The leaders of Japan, China and South Korea pledged Sunday to speed up laying the ground work for a possible three-way free trade pact, in a step to revitalize discussions in light of the economic damage from the massive earthquake and tsunami that struck Japan on March 11.

"We decided to complete joint studies among industry representatives, officials and academics on a Japan-China-South Korea free-trade agreement this year, and to follow up by accelerating other joint studies after that," Japanese Prime Minister Naoto Kan, Chinese Premier Wen Jiabao and South Korean President Lee Myung-bak said in a joint statement after a summit in Tokyo.

While the path to any actual agreement on a trade pact remains fraught with difficulties, the agreement among the leaders reflects a renewed willingness to mull closer economic ties despite recent diplomatic spats. China temporarily curbed exports to Japan of rare-earths—a key material in many high-tech products—late in 2010 following a flare-up in the countries’ longstanding territorial dispute over the islands known as Diaoyu in China and Senkaku in Japan.

The leaders said they are now pushing to step up talks toward a trade agreement given a shared desire to "strengthen cooperation to boost the region’s vibrancy and dynamism and lead Asia’s strong growth."

China, Japan and South Korea account for around 20% of the world’s total economic output, a fact major business and trade lobbies from the countries cited in asking the leaders to conclude a free-trade agreement as soon as possible.

The business communities in each country will work together to promote "industrial and regional recovery in Japan" following the devastating 9.0-magnitude quake and tsunami, the Japan Business Federation (Keidanren), China Council for the Promotion of International Trade and the Federation of Korean Industries said in a joint statement issued to the countries’ leaders at a business summit in Tokyo on Sunday afternoon.

"We reaffirm the importance of Northeast Asian supply chains to the global economy and collaborate to restore and maintain their smooth functioning," the statement added.

Speaking at a joint press conference after the summit Sunday morning, South Korea’s president alluded to the challenges of pursuing closer economic ties despite long-standing historical issues and despite the countries often vying as economic and political rivals.

"There have been some inconvenient situations," Mr. Lee said. "However, overcoming these inconvenient situations we are showing an attitude of cooperation to move forward."

Mr. Lee said he expects progress toward a pact to speed up, while Mr. Wen said he supports launching negotiations on an agreement next year.

The leaders also called for greater cooperation on nuclear safety and disaster preparedness and reaffirmed the importance of nuclear energy, after the March 11 earthquake and tsunami set off the worst nuclear disaster since Chernobyl at the Fukushima Daiichi nuclear plant northeast of Tokyo.

China and South Korea will apply lessons learned from Japan’s nuclear accident and the three countries will discuss how to quickly exchange information and analysis of air currents when nuclear accidents occur, they said. While affirming the continued importance of nuclear energy, they also called for cooperation on renewable energy and energy efficiency.

Mr. Wen and Mr. Lee arrived in Japan on Saturday, paying their respects to victims of the March 11 quake, tsunami and nuclear disaster in the country’s northeast before meeting Mr. Kan for talks.

In Fukishima City, around 60 kilometers from the Fukushima Daiichi reactor complex, the leaders ate local farm products, in what Mr. Kan billed as "the most effective way to demonstrate to the world that Japan is safe and that Japanese food is safe."

Japan won some concessions on what it sees as overly stringent restrictions imposed on its food products due to radioactive contamination concerns.

Mr. Wen said Sunday that China will reduce the number of Japanese prefectures from which it bans food imports from 12 to 10, and will stop requiring radiation inspection certificates for some products, according to the Japanese Foreign Ministry. China will still require certificates for vegetables, dairy, fishery and other products.

Noriyuki Shikata, a spokesman for Mr. Kan, said late Sunday that more needs to be done to protect Japanese exports from damage inflicted by what he called "unscientific reasons."

While primary industries—the segment of the economy that includes agriculture, fishery, forestry and mining—represent just 1.5% of Japan’s economy, the government is eager to burnish Japan’s tarnished image as a producer of high-quality, safe food products.

Meanwhile, Mr. Kan said he expressed concerns during the summit about North Korea’s uranium enrichment. The three leaders agreed it’s important for North Korea to show sincerity before six-country talks on its nuclear program can resume and agreed to induce North Korea to take appropriate action on the nuclear issue, Mr. Kan said.

Mr. Wen said he was happy to see the situation on the Korean Peninsula has eased somewhat. Tension between North and South Korea ran high late last year after North Korea attacked the South’s Yeonpyeong Island with artillery fire that killed two South Korean soldiers and two civilians.

The leaders also called for cooperation to root out terrorism and said they will boost efforts to combat common threats, such as piracy near Somalia.