Korean business leaders urge closer economic ties with Japan amid U.S.-China rivalry

President Lee Jae Myung and Japanese Prime Minister Shigeru Ishiba shake hands during a Korea-Japan summit on June 17 on the sidelines of the Group of 7 (G7) summit in Kananaskis, Alberta, Canada. [JOINT PRESS CORPS]

 
As Korea marks the 60th anniversary of diplomatic normalization with Japan, Korea’s business leaders are urging closer economic cooperation with Tokyo, backing President Lee Jae Myung’s push for a renewed bilateral partnership amid mounting U.S.-China tensions and a sluggish domestic economy.
 
A recent survey by the Federation of Korean Industries (FKI) conducted on 101 of Korea's top 1,000 nonfinancial firms by revenue found that 62.4 percent of respondents support continued economic partnership with Japan. Just 3 percent dismissed the idea as unnecessary. The most promising fields for collaboration were semiconductors with 91 points, artificial intelligence with 57 and automobiles with 39. The survey, conducted from May 30 to June 30, highlighted semiconductors, artificial intelligence and automobiles as the most promising sectors for collaboration. 
 

Related Article

• Korea, Japan leaders reaffirm commitment to future-oriented ties on 60th anniversary of normalized relations

• Korea, Japan leaders meet ahead of 60th anniversary of diplomatic ties

• Korea, U.S. and Japan carry out first trilateral air drill since President Lee took office

The Korea International Trade Association (KITA) echoed that view, emphasizing the need for joint development in high-tech materials, components and equipment, as the countries’ trade structures shift from vertical integration to more equal footing. 
 
According to its report on the current state and future of Korea-Japan corporate cooperation, 47.4 percent of Korean companies and 59.2 percent of Japanese companies operating in Korea identified cooperation on materials, components and equipment supply chains as their top policy priority.
 

Kim Yoon, chairman of the Korea-Japan Economic Association, fourth from left in front row, and Aso Yutaka, vice chairman of the Japan-Korea Economic Association, fifth from left in front row, join other guests in chanting “Fighting!” during the opening ceremony of the 57th Korea-Japan Business Conference at the Lotte Hotel in Jung District, central Seoul, on May 27. [YONHAP]

 
According to the report, trade between Korea and Japan has surged from $200 million in 1965 to $77.2 billion in 2024 — a 352-fold increase. The report notes that prior to 2000, Korea primarily imported textiles and chemical machinery from Japan and exported apparel in a vertically integrated structure. Since 2000, however, trade in intermediate goods like semiconductors, petroleum products and steel has expanded, reinforcing a more horizontal partnership.
 
At last month’s Korea-Japan business conference in Seoul, business leaders warned that “the environment surrounding both countries is becoming increasingly severe, with rising protectionism deepening divisions,” and urged for Korea’s entry into the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
 

Korean Ambassador to Japan Park Cheol-hee, Japanese Prime Minister Shigeru Ishiba, former Prime Minister Fumio Kishida and other attendees pose for a commemorative photo at a reception hosted by the Korean Embassy in Tokyo to mark the 60th anniversary of Korea-Japan diplomatic normalization at the New Otani Hotel on June 19. [YONHAP]

 
The CPTPP is a large-scale trade pact led by Japan and includes 12 member states, such as Australia, Canada, the Britain, Mexico and Vietnam. Notably, neither the Britain nor China are members. The agreement aims to eliminate tariffs on goods within the bloc. Although the Yoon Suk Yeol administration pushed to join, the effort stalled due to opposition from farmers and fishers and political instability.
 
Calls for deeper economic integration — including CPTPP accession, a Korea-Japan FTA, and even a joint economic community — are also gaining traction in political circles.  
 
During a recent meeting with business leaders from Korea’s five major economic groups, Chairman Chey Tae-won of the Korea Chamber of Commerce and Industry proposed a Korea-Japan economic union similar to the European Union. President Lee responded positively, saying he “empathized.”
 
Lee added, “The U.S. trade diplomacy strategy tends to isolate and conquer individual countries, industries or companies. It is therefore essential to coordinate responses with countries that share similar interests, such as Japan.”
 

Korean and Japanese business leaders join a group photo session during the opening ceremony of the 57th South Korea-Japan Business Conference at a hotel in Seoul on May 27, 2025. [YONHAP]

 
Some lawmakers from the ruling party have reportedly requested a feasibility study on a Korea-Japan FTA from the Korea Institute for International Economic Policy (KIEP). Although first proposed by the Kim Dae-jung administration in 1998 and actively pursued under President Roh Moo-hyun, FTA talks were halted in 2004 over concerns from the manufacturing sector about widening trade deficits.
 
Experts say CPTPP membership is the most feasible path forward.  
 
“In an era where multilateral trade frameworks are virtually defunct, CPTPP offers a practical and suitable platform for mid-sized nations with shared interests,” Kim Yang-hee, an economics professor at Daegu University and cohead of President Lee’s policy advisory group Growth and Integration, told the JoongAng Ilbo. “While agricultural issues remain, the rise of protectionism and upheaval in the global order make joining CPTPP imperative.”
 
“CPTPP membership will significantly boost GDP through trade and investment liberalization,” said Kim Gyu-pan, a senior researcher at KIEP. “Yet, it’s often misunderstood as a one-sided concession to Japan.”
 


Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY KIM SU-MIN [kim.minyoung5@joongang.co.kr]