[KOREA-JAPAN 100 YEARS ON ] Korea, Japan remain poles apart on FTA

This is the seventh in a series of articles that look over the relationship between Korea and Japan over the past century since Japan’s annexation of Korea and look into ways for leveling up their ties to full partnership in the coming century. ― Ed.

Korea and Japan have made little progress in their six-year-old talks on a bilateral free trade agreement due largely to differences over agriculture and automobiles.

Discussions have been conducted at various levels since negotiations were launched in 2003. Despite promises of sizable increase in trade volume and mutual benefits, the two countries still remain poles apart over a range of issues.

Korea has run a deficit on its trade with Japan since the two recovered diplomatic ties in 1965.

The government said last week that the nation’s deficit with Japan has widened to a record high of $18 billion in trade in the first half of this year.

Exports totaled $12.8 billion while imports stood at $30.9 billion, marking the biggest half-year deficit since the government started collecting official tradedata in the mid-1940s.

Korea’s trade shortfall with Japan grew steadily to $17.1 billion in the first half of 2008, however, the deficit curved up in the first half of 2009 due to the global economic turndown.

“Both countries could take the first step to solve the imbalance in trade investment through establishing a comprehensive form of FTA,” Park June, a senior research at the Samsung Economics Research Institute, said in a report released last week. “We could improve the environment for Korean products to more easily enter the Japanese market and also ease up the situation in Korea for Japanese component-producing firms to make biggest investments here.”

Park also said Korea should maintain its stance of signing a high-class FTA and that Japan must focus on protecting its farming market and improving the investment environment in Korea.

“The possibility of reaching the trade agreement could get higher by sharing the FTA contents, the level of policy establishment and the time plan between the two nations,” Park said.

Going a step further, Korea and Japan could find a solution for their high number of unemployed youth and seniors by opening the labor market, said Park, adding that it would also contribute to strengthening the competitiveness of technology for each other.

The FTA negotiations between Korea and Japan started a while back in December 2003. 

The talks, however, came to a halt less than a year after in November 2004 following six rounds of negotiations held in Seoul, Tokyo and Gyeongju, North Gyeongsang Province.

Although both sides realize that a free trade pact would help promote their economic relationship, there were differences on automobiles, manufacturing and agriculture which could not be narrowed down.

Japan refused to liberalize its agriculture and fisheries market while Korea insisted on protecting local small and medium-sized firms, turning down the request to open the automobile market.

As a result, the talks were stalled for about three years until they resumed in the form of working-level meetings following the Korea-Japan summit in April 2008.