
A challenging dispute in the East China Sea has focused international attention on the dangerous twist in Sino-Japanese relations. The island row, despite Washington’s best efforts to stay out of it, has also drawn in the United States and prompted some Chinese analysts to point to this as a prima facie indication that Obama’s rebalance is aimed at containing China. The U.S.-China relationship has also been scrutinized as a result of North Korea’s latest nuclear test and series of provocative threats following the new UNSC sanctions placed on Pyongyang.

But amid these tensions there is another bilateral relationship in Northeast Asia that has been largely sidelined – Japan and South Korea. One of the reasons why Tokyo’s relations with Seoul have been downplayed is that both sides, with newly-minted leaders, are playing a delicate political game of “no news is good news” in hopes of burying their vitriolic exchange of diplomatic barbs during previous administrations. The strategic partnership between Japan and South Korea has deteriorated to the point where several U.S. officials were at one point questioning whether trilateral engagement with Seoul and Tokyo was even worth the effort.

The roots of the distrust and fractures are well known. South Korea accuses Japan of not coming to terms with its actions during World War II. This is mostly voiced in terms of South Korea’s belief that Japan has not adequately apologized and compensated for the issue of “comfort women.” Further inflaming this issue is South Korea’s concern, whether grounded or not, that Japan’s Prime Minister Shinzo Abe will amend the Kono and Murayama statements, which are widely seen in Japan as sufficient expressions of guilt for the Imperial Army’s crimes during the war.

Indeed, Abe did float this idea during his political campaign before he was elected as prime minister in December of last year. However, Abe has stepped back from this position since he recognizes–at least temporarily– the realities of governing and seeks better ties with Seoul. In fact, in early January Abe sent an envoy to South Korea to begin the process of mending ties. The follow month Japan's deputy prime minister led a delegation of Japanese officials on a trip to South Korea to attend President Park Geun-Hye's inauguration. Dialogue between the two sides has quietly continued albeit, only among lower level officials.

The second main strain in relations is the territorial dispute over Dokdo/Takeshima. The rhetoric on the island row has ebbed and flowed over the past several years but reached its peak last year when former South Korean President Lee Myung Bak made his unprecedented visit to the atoll. This was largely an act of political posturing aimed at silencing critics at home but the result was a further deterioration in the bilateral relationship – dooming efforts to reach an accommodation on the comfort women issue or conclude the important General Security of Military Information Agreement (GSOMIA), which would have allowed for greater information sharing on the common threat Seoul and Tokyo face from North Korea.

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The third important factor that has halted a bilateral rapprochement is Seoul’s tacit hedging between China and the United States. South Korea has become increasingly integrated with the Chinese economy and is – understandably – playing a shrewd game to ensure that it is not seen by Beijing as a security pawn in the U.S. rebalance. This is one of the key strategic reasons that South Korea continues to be hesitant towards the idea of forming a trilateral security engagement with the U.S. and Japan.

But what does all this mean for the future of Japan-Korea ties? The reality is that Seoul and Tokyo depend on each other – and their relationship with China – which forms the heart of Asia’s supply chain. China and South Korea’s economies are primarily based on manufacturing and, despite their sparring with Japan, they rely on foreign direct investment (FDI) from Tokyo and Japan’s niche technological products to complete their exports. In fact, Japan’s FDI in South Korea more than doubled in 2012 to US$4.54 billion, which was more than the US$4.01 billion that Korea received from the China, Taiwan, Hong Kong, Singapore and Malaysia combined. This sharp increase in Japanese FDI occurred despite the weakening of the yen and the deterioration in Tokyo’s bilateral relationship with Seoul.


South Korea’s President Park Geun-Hye has had a rough first month in office and currently faces a host of pressing policy questions, including economic challenges like stubbornly high household debt, social welfare and income disparity. Abe meanwhile will need to show quick economic returns from his bold three arrows strategy – coined “Abenomics” – in order to secure the desired result in the upper house election this summer.

On the trade side, South Korea should follow Japan’s lead and express interest in joining the Trans-Pacific Partnership (TPP) talks. This economic pact would further integrate the economies of Japan and South Korea and would be seen as a sign of serious commitment to the economic side of Obama’s rebalance to Asia.

However, Seoul and Tokyo were wise to join Beijing in reopening trilateral free trade talks despite lingering tensions and should look to make up for lost time. The China-Japan-Korea FTA would combine the region’s two biggest economies along with South Korea’s growing market. A trilateral FTA is particularly important for Japan which is in trouble of being left out all together as the long stalled China-Korea FTA has now entered into formal negotiations.

On the foreign policy front, both Park and Abe are left dealing with an intransigent regime in Pyongyang. This presents an opportunity for them to put aside politics in order to cooperate more closely on North Korea. The situation in the Korean peninsula is becoming more volatile by the day and cannot be dismissed as a mere continuation of Pyongyang’s great chess game. There is no better time for GSOMIA to be dusted off and quickly implemented.

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The coming months in the region will continue to be tense but it is important and encouraging that the two sides are engaged in sustained— even if low-level— dialogue. Rational and prudent policies of enhanced economic – and political – engagement will help this train stay on course. Abe must tread carefully (if at all) on history and should amplify recent sound bites that support the Kono and Murayama statements. Park meanwhile needs to reign in the strong political temptation to publicly lecture Japan on history and Tokyo’s shortcomings on making amends. But most importantly, both sides should regroup and focus their attention to the dangerous situation in North Korea.