Japan, South Korea business leaders call for economic ties that survive politics

South Korean protesters spray fake money on a picture of Japan's Prime Minister Shinzo Abe during an anti-Japan rally denouncing a Bill on Japan's wartime forced labour in Seoul on Dec 5, 2019. PHOTO: AFP

TOKYO - Japanese and South Korean business leaders lamented on Friday (Dec 6) the worsening state of economic ties amid bilateral tensions.

Speaking at the first Tokyo Forum, jointly organised by Japan's University of Tokyo and South Korea's Chey Institute for Advanced Studies, they called for political will to overcome historical issues.

They said the future not only included rebuilding trust to restore existing trade ties, but also to find new answers to common challenges like ageing and to collaborate on third-country projects.

"The Japan-South Korea relationship today is probably the worst in all the history that we have," said Mr Akio Mimura, chairman of the Japan Chamber of Commerce and Industry.

Mr Kim Yoon, chairman of the Korea-Japan Economic Association, added that ties were at a "tipping point", noting that economic cooperation has never been hurt even amid political tensions in the past.

But a string of issues, including a South Korean Supreme Court wartime labour ruling last year and Japan's removal of South Korea from a fast-track trade process this year, have led to increased antipathy towards Japan in South Korea.

Japanese beer exports to South Korea fell to zero in October compared to a year earlier amid an ongoing boycott movement. Total visitor arrivals also fell 5.5 per cent, dragged down by a 65.5 per cent plunge in arrivals from South Korea, which had previously been the second-largest source of tourists behind China.

Still, both sides appear keen to find a way out of the quagmire. Japanese Prime Minister Shinzo Abe is set to meet South Korean President Moon Jae-in in China this month for their first summit in over a year.

The two countries will also convene director general-level trade talks for the first time since 2016 in Tokyo on Dec 16.

Japan has blamed South Korea's reluctance to hold such high-level talks despite having raised security concerns over the slipshod management of strategic exports as as the reason for Tokyo to strike Seoul off the white-list of trusted trade partners.

Still, there will be no quick fix to this impasse. Japanese Trade Minister Hiroshi Kajiyama stressed on Friday that any removal of the tightened trade export controls to South Korea will not be on the discussion agenda until Tokyo's concerns are sufficiently assuaged.

"We plan to exchange views on the export controls of Japan and South Korea and their implementation," he told a news conference. "I'm sure South Korea will make its arguments and requests, but we will make a decision."

Regardless of what happens on the political front, Mr Hiroaki Nakanishi of the Japan Business Federation and Mr Kim warned that global supply chains will suffer if their business leaders do not work together given their intricate trade links.

The speakers noted a string of common issues from rapid ageing to climate change and 5G technology to the energy sector where the two high-tech democracies in North-east Asia can work together.

They also added that there are potentially complementary solutions to their pressing issues: Japan has a severe labour shortage, while South Korea's youth are struggling to find jobs.

Rebuilding cultural ties may be the first step, said Mr Huh Yong-soo, the chief executive officer of South Korea's GS Energy. He said that while growing up he was a fan of veteran Japanese singer Seiko Matsuda, and cited such platforms as Nintendo as symbols of Japanese soft power.

Added Mr Yasuhiro Sato, chairman of Mizuho Financial Group: "With time we can nurture our ability to overcome the past through culture and exchanges in schools, so as to gain mutual trust for future projects (instead of) thinking of the other party as a liar."

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