China, Japan, SKorea to consider free trade pact

BEIJING—Their economies enmeshed as never before, leaders from China, Japan and South Korea said Saturday that they would explore the idea of a free trade pact, inching closer toward deeper regional integration.

Premier Wen Jiabao and his Japanese and South Korean counterparts declared they were "committed to the development of an East Asian community," agreeing to expand cooperation across a wide range of issues, including climate change and sustainable growth.

While officials emphasized that the vision for a regional community is a long-term and inclusive one, the shift toward a sharper focus on Asia was clear.

"Until now, we have tended to be too reliant on the United States," Japanese Prime Minister Yukio Hatoyama told reporters after a summit meeting with Wen and South Korean President Lee Myung-bak.

"The Japan-U.S. alliance remains important, but as a member of Asia, I would like to develop policies that focus more on Asia," Hatoyama said.

Since taking office last month, Hatoyama has been floating the idea of creating an East Asian Community, although he has been vague about its goals and how it would work. China, Japan and South Korea -- the region's biggest economies with roughly 16 percent of global GDP -- would form the core of the envisioned community, he said.

Foreign Minister Katsuya Okada said this past week that with the region's differing political systems and varying stages of growth, a European Union-like integration with a common currency was unlikely any time soon. Okada has said the idea would be to group Japan, China, South Korea, India, Australia, New Zealand as well as the 10 members the Association of Southeast Asian Nations, or ASEAN -- though it wasn't meant to exclude other nations.

Wen and Hatoyama also said the three leaders agreed on the need to continue their economic stimulus efforts, to avoid prematurely derailing the still feeble recovery from the global financial crisis.

Hatoyama, who took office last month, appeared to have won favor with Japan's closest neighbors by emphasizing his desire to assuage sensitivities over Tokyo's history of invasion and occupation in the region before and during World War II.

"We have agreed we will seek common ground and shelve our differences," Wen said after their three-way meeting Saturday morning.

But plenty of issues remain, and meanwhile the region is moving toward wider economic integration through bilateral and other, broader free-trade pacts.

Before considering a free-trade agreement or other economic partnerships, the three countries need to sign an agreement on investment promoting a "business friendly environment," said Kazuo Kodama, press secretary to Japanese Foreign Minister Katsuya Okada.

Such efforts are hindered by differences over the exact conditions each country would extend to the others, he noted. Even Japan's talks with South Korea on a two-country pact have "somewhat stalled for the time being," Kodama said.