Japan, South Korea agree to swap visits, talk trade

By Teruaki Ueno

SEOUL (Reuters) - Japanese and South Korean leaders, keen to repair relations long haunted by their wartime history, agreed on Monday to revive stalled "shuttle diplomacy" and promote talks on a free trade agreement.

South Korea's new President Lee Myung-bak will visit Japan in the first half of 2008 and Japanese Prime Minister Yasuo Fukuda will reciprocate by the end of the year, Japanese officials said.

"We agreed to begin top-level 'shuttle diplomacy' to have comfortable and frank talks," Fukuda told reporters after talks with Lee at the Blue House presidential palace.

An earlier round of mutual visits was halted after former Japanese Prime Minister Junichiro Koizumi visited a war shrine seen by critics as a symbol of Tokyo's past militarism.

Fukuda's predecessor, Shinzo Abe, tried to repair ties on a visit to Seoul in 2006, but then South Korean President Roh Moo-hyun did not reciprocate the visit.

Fukuda and Lee acknowledged the need to lay the groundwork to resume talks on a free trade agreement (FTA), but stopped short of agreeing to resume the politically sensitive negotiations.

Tokyo and Seoul launched FTA negotiations in December 2003 but the talks stalled a year later due mainly to Japan's rejection of South Korea's demand that Tokyo open its farm product market.

Japan and South Korea are each other's third biggest trading partners after the United States and China.

Analysts said Monday's summit opened the door to warmer, less volatile ties. "Fukuda's visit paves the way for the two countries to forge a pragmatic relationship with economic ties at the core, while minimizing the impact of history issues," said Masao Okonogi, a Korea specialist at Tokyo's Keio University.

"The bilateral summit has given the two countries a good chance to elevate ties to a new dimension."

PRAGMATIC AND FLEXIBLE

Fukuda, 71, shares a similar policy outlook with the 66-year-old Lee, who was born in the Japanese city of Osaka in 1941 and lived in Japan until 1946, analysts said.

"The two leaders are pragmatic and intent on pursuing flexible diplomacy," said Lee Jong-won, professor at Tokyo's Rikkyo University. "Both Lee and Fukuda place a special emphasis on Asia diplomacy. So it is easier for them to mend fences."

But they remain rivals in the marketplace for a wide range of manufactured goods,

"Japan and South Korea will remain rivals and therefore they will compete in the Chinese market and elsewhere in Southeast Asia," said Yasuhiko Yoshida, a professor at Osaka University of Economics and Law.