S. Korea Says Japan Free Trade Talks ‘Difficult’ Due to Tensions

South Korea said resuming negotiations with Japan over a free trade agreement will be difficult given a maritime territorial spat.

“Soured relations between Korea and Japan pose a difficulty for us,” head trade negotiator Choi Kyung Lim said at a briefing today in Seoul. “It is difficult for us to decide whether we will resume the talks unless these problems are resolved.”

Choi’s comments were the latest indication economic ties between Asia’s second and fourth-biggest economies have soured since South Korean President Lee Myung Bak’s Aug. 10 visit to rocky islets claimed by both nations. Japan last week said the spat threatens a bond purchase deal that was aimed to strengthen regional cooperation in the face of global uncertainty.

“The deal won’t progress for years with the relationship between the two sides this bad,” said Kim Hyung Joo, an economist at the LG Economics Research Institute in Seoul. “There may be working-level discussions, but it will be all- talk, no-action in this climate.”

Japan is South Korea’s second-biggest trading partner, and commerce between the two rose 16.8 percent to $108 billion in 2011, according to the Korea International Trade Association website.

The two countries played diplomatic ping-pong last week over a letter Japanese Prime Minister Yoshihiko Noda wrote to Lee protesting the visit to the rocks, known as Takeshima in Japanese and Dokdo in Korean. South Korea returned the letter without response because it referred to the islets by the Japanese name. Japan’s foreign ministry initially refused to accept the returned letter.

Noda on Aug. 24 said Japan will increase security around its outlying islands given separate disputes with South Korea and China. He called South Korea’s occupation of the islets “illegal.”

The islets are 87 kilometers (54 miles) east of the closest South Korean territory and 158 kilometers from the nearest Japanese land. Sovereignty over the area means control of fishing grounds and natural gas reserves, and South Korea has bolstered its claims by stationing coast guard personnel there year-round.

To contact the reporter on this story: Cynthia Kim in Seoul at ckim170@bloomberg.net

To contact the editor responsible for this story: Paul Panckhurst at ppanckhurst@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.