Until South Korean President Lee Myung-bak's Aug. 10 visit to the disputed Takeshima islands, relations between Japan and South Korea had been moving noticeably—if somewhat fitfully—in a more promising direction.
Diplomatic relations between Japan and South Korea had stumbled at times even before Lee's trip, largely over the issue of compensation for former "comfort women," who were forced to provide sex for wartime Imperial Japanese Army soldiers, but in many other areas, the outlook was promising.
The two countries had reached an unprecedented level of cooperation in dealing with North Korea, and large-scale investment by Japanese companies in South Korea helped strengthen economic ties. They had even planned to hold a bilateral summit meeting during the Asia-Pacific Economic Cooperation forum, to be held September in Vladivostok, Russia.
Lee's visit to Takeshima has put an almost certain end to any hope for those talks, and has proved an undeniable set-back for much of the progress made between the two countries.
Japan and South Korea's so-called shuttle diplomacy, in which top leaders take it in turn to visit each other, is another likely casualty of deteriorating ties.
In December 2011, Lee visited Kyoto, in western Japan, and now it is the Japanese prime minister's turn to visit South Korea, but it is hard to imagine such a trip will happen any time soon.
In a news conference on Aug. 10, Japan's economy minister Yukio Edano gave his opinion that Lee's landing on Takeshima will further delay the resumption of talks to conclude a bilateral economic partnership agreement (EPA).
"It is certain that his visit (to Takeshima) will have grave, far-reaching influences," Edano said.
The breakdown of bilateral talks could have broader regional and global repercussions as well. Often in trade negotiations, when talks progress between certain countries, other countries seek to join in, fearful of being placed at a disadvantage. But the opposite also occurs, with a collapse in negotiations dragging down any attempt at broader alliances.
If the Japan-South Korea EPA talks stall, the deadlock could hinder negotiations among Japan, China and South Korea to conclude a trilateral free trade agreement which the three countries agreed to begin discussing within the year.
The deadlock could also negatively impact the Japan-European Union EPA talks and Japan's participation in the talks for the Trans-Pacific Partnership agreement.
Growing political tension could also threaten the growing economic ties that have been springing up between Japan and South Korea in recent years.
According to South Korea’s Ministry of Knowledge Economy, Japan's investment in South Korea jumped from $990 million (about 78 billion yen) in 2007 to $2.28 billion in 2011.
The sharp rise is partly attributable to a steadily growing number of Japanese companies building factories in South Korea, anticipating demand from Samsung Electronics Co. and other firms.
For example, Toray Industries Inc. established a carbon fiber factory in Gumi, Asahi Kasei Corp. built a large-sized plant in Ulsan, and Sumitomo Chemical Co. set up a touchscreen manufacturing facility in a suburb of Seoul.
Those Japanese firms say that, as of now, they have yet to be adversely affected by Lee's visit to Takeshima.
However, a major material maker said, "If the situation (concerning the Japan-South Korea relations) deteriorates, it could have negative influences on the operation of our factory."
(This article was written by Takeshi Kamiya and Daisuke Ikuta.)
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