At Kimpo airport outside Seoul, a so-called Japan Express counter was opened recently to handle the growing number of Japanese travelers. Last year the number of Japanese visitors to the Republic of Korea (South Korea) exceeded two million for the first time. At this rate, Seoul will likely surpass Hawaii as the favorite destination for Japanese tourists.

　The majority of the visitors are young women looking for shopping bargains and Korean beauty therapies. Contributing to this is a Korean tourism promotion campaign that targets Japanese women. These Korea tours, once dominated by men, have changed conspicuously.

　South Korea was once described here as a "close yet distant'' nation. Now, however, the "distance'' is rapidly narrowing. This is creating conditions that contribute to improved bilateral relations, including economic ties.

　Japan's economic relations with other Asian nations have developed on the back of investment by Japanese companies and development aid from Tokyo. The basic pattern of relations has been a one-way street, with Japan always supporting Asia under the "top to bottom'' concept.

　In the 21st century, however, Japan, with its aging population, will further lose economic vitality unless it gets its act together. The economic crises of the past have brought home to us once again the "give-and-take'' relationship between Japan and other Asian nations. It is time to start building a "win-win'' relationship of mutual benefit−a relationship in which Japan will also revitalize its economy with Asian help.

　Concluding a Japan-South Korea free trade agreement can be the first step in this direction. Such an agreement, if signed, would go a long way toward expanding markets and invigorating trade and investment between the two nations.

　South Korea, which has long pursued Japanese-style economic development, has built in the process a comprehensive industrial structure that is similar to Japan's. However, the economic crisis and subsequent reforms changed the South Korean mind-set.

　The proposed free trade agreement with Japan, broached by South Korea in 1998, reflects that change. It has been studied in detail by experts from both nations.

　The South Koreans are concerned that liberalization would widen the bilateral trade gap. According to a report released last August by the Korea Institute for International Economies and Trade, a think tank affiliated with the Seoul government, South Korea's exports to Japan will increase an estimated 23 percent in value if both nations abolish their import tariffs and non-tariff barriers.

　On a sectoral basis, apparel exports will increase most, by 60 percent, while exports of other types of products−foods and beverages, electric machinery and electronics, and agricultural and fishery products−will rise by 22 to 39 percent.

　Imports from Japan, which already exceed exports by a wide margin, will also rise, pushing the current account deficit with Japan up to $7.2 billion. The report estimates that South Korea's global current account balance will improve by about the same margin. However, it is not necessarily clear how much of this would be due to free trade.

　The above estimates do not take into account the dynamic changes that are likely to occur in the two nations' economies. If a bilateral investment agreement now under discussion is concluded, cooperation between Japanese and South Korean companies will gain momentum, giving further impetus to the international division of work. That would create more favorable conditions for a free trade agreement.

　Since the economic crisis, the South Korean automaker Hyundai Motor Company has increased imports of parts and supplies to about 300 billion won so as to boost its ability to compete in the world market. With 60 percent of these imports coming from Japan, the company stands to gain substantially from liberalization.

　Japan also has much to gain because it will be able to buy South Korean apparel and foods, among other things, at lower prices. In service industries such as construction, competitive principles will be introduced through the entry of South Korean firms.

　However, South Korean steel products, for instance, currently must undergo import inspections even if they meet the Japanese Industrial Standard. Seaweed imports from South Korea are controlled under a strict quota system. These and other non-tariff barriers must be removed.

　Liberalization, of course, involves painful adjustments. To succeed it must be supported by the public. To that end, preliminary measures should be taken prior to liberalization, such as promoting cooperation in the automotive sector. As for farm products, a certain grace period should be set for market liberalization.

　South Korea has a weak agricultural sector, but it is considering liberalizing bilateral trade with other countries such as Thailand and Chile. Moreover, it has long-term plans to expand free trade with Japan to include China in the 21st century.

　"There is a deep-rooted notion both in South Korea and Japan that they should try to produce everything they need,'' a government official in Seoul said. "We won't be able to survive in the global economy if we shut ourselves up in the one-nation outlook.'' In fact, the mood for change is stronger in South Korea than in Japan.

　Singapore has also proposed a free trade agreement with Japan. The Association of Southeast Asian Nations (ASEAN), meanwhile, is considering plans to integrate the ASEAN Free Trade Area (AFTA), set for 2002, with the Closer Economic Relations (CER), which is an Australia-New Zealand free trade agreement.

　It is not that Japan should hurry so it will not "miss the bus.'' The challenge is not that simple or easy. For one thing, Japan needs to take into account relations with the United States, which provides the largest market for Asian nations, including Japan.

　As a nation that depends critically on international trade, Japan should appreciate the value of multilateral relations. On that basis, it should respond positively to proposals from other Asian nations and develop new economic relations with an open mind.

A free trade agreement
　It is concluded to eliminate tariffs and other trade barriers when a bilateral or multilateral free trade area is created. Under the rules of the General Agreement on Tariffs and Trade (GATT), a free trade agreement is approved on the condition that it covers all sectors, not just selected items. Examples include the North America Free Trade Agreement (NAFTA) and the ASEAN Free Trade Area (AFTA).