China, South Korea, Japan Revive Dialog: Six Reasons It Matters

  • North Korean threat, slowing economies spur trilateral talks
  • Summit could help advance three-way free-trade agreement

South Korean President Park Geun Hye will host Japanese Prime Minister Shinzo Abe and Chinese Premier Li Keqiang on Sunday in Seoul for the first three-way summit between the countries in more than three years.

The restart of the annual summit process signals that the growing threat of a nuclear-armed North Korea and the need for increased economic cooperation are beginning to trump the territorial disputes and historical animosities that led the dialogue to break down.

Here’s a look at the main issues facing Northeast Asia’s three-biggest economies as their leaders huddle.

North Korea

China, Japan and South Korea all have their capitals within reach of North Korean missiles, which the Kim Jong Un administration claims can now carry nuclear warheads, and have a shared interest in forging a common strategy to convince the government in Pyongyang to stop developing nuclear arms. A regime collapse in the North could potentially wreak havoc in the region and require the neighbors to seek consensus on how to handle such a contingency.

Free Trade

China, Japan and South Korea have struggled to complete a free trade agreement since they began talks in early 2013. The three countries together account for a fifth of the world economy and a deal could provide a boost to the region at a time of slowing growth and complement a broader trade deal this month that didn’t include China and South Korea. The U.S.-led Trans Pacific Partnership trade agreement will link a dozen countries making up about 40 percent of the global economy.

Territory and History

Relations between China and Japan have been marred by disagreements over the sovereignty of islands in the East China Sea, while South Korea and Japan remain deadlocked over a set of islets. Animosity over Japan’s wartime wrongdoing also runs deep among South Koreans and Chinese. Meetings among the leaders could demonstrate the countries are intent on improving ties despite these issues.

Investment

An investment protection treaty signed at the last three-nation summit in 2012 took two years to take effect as tensions escalated between China and Japan. Efforts to facilitate investment among the countries are gaining importance as the nations seek new engines of economic growth.

Currency Swaps

Strained relations between South Korea and Japan led to the expiration of their currency swap, in contrast to an extension of the arrangement between China and South Korea in the past year. A separate Park-Abe meeting Monday increases hope for reviving the swap between their countries. Huh Chang Soo, GS Group chairman who heads South Korea’s biggest business association, called on Oct. 26 for renewing the swap with Japan to cushion the impact of a potential Federal Reserve interest rate hike.

Natural Disasters

Seismic activity near Mount Paektu, an active volcano on the border between China and North Korea, has been increasing in recent years, raising concerns of an eruption that could disrupt regional economic activity. Climate change, air pollution and food security are other topics that are increasingly becoming areas of collaboration between scientific agencies of the three countries.

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