June 29 (UPI) — Japan and South Korea have agreed to reestablish currency exchanges as the frayed allies emerge from a nearly decade-long breakdown in relations due to unresolved political tensions and territorial disputes.
Japanese Finance Minister Shunichi Suzuki reached terms with his South Korean counterpart Choo Kyung Ho during the first economic summit between the Asian powers since 2016.
The deal signals a reconciliation between the allies following Japan’s announcement earlier in the week to reinstate South Korea to its “white list” of preferred trade partners after a four-year absence.
Japan’s Ministry of Economy, Trade and Industry stated that the revised status, effective from July 21, will simplify export procedures for Japanese companies to South Korea.
The leaders also agreed to a multilateral framework with G7 partners, including the United States, Britain, Canada, France, Germany, Italy, and the European Union, aimed at expanding supply chains.
As part of the agreement, the Japan Bank for International Cooperation and the Export-Import Bank of Korea will finance new infrastructure projects to counter China’s influence in the Indo-Pacific region.
In addition, the deal ensures continuous access to the U.S. dollar for Japan and South Korea and allows for the free exchange of Asian currencies during national emergencies.
A previous currency exchange agreement was terminated in 2015 due to tensions arising from Japan’s claim to several South Korean-controlled islands and the historical issues of forced labor during World War II.
However, both finance ministers expressed a willingness to set aside those differences in the face of increased Chinese aggression and the threat of North Korea’s nuclear arsenal.
“Japan and South Korea are neighbors, and we should cooperate in various fields,” said Minister Suzuki, emphasizing the benefits of the revived deal for the yen and the won.
The talks for the new agreement began in May, opening up discussions on mutual economic concerns between the two nations.
“The resumption of the finance dialogue symbolizes that normalization of ties, prompted by our leaders’ summit, is spreading fully” in both nations, said Minister Choo.
Japan and South Korea, both possessing strong foreign reserves, established currency exchanges in 2001 following the Asian financial crisis.
Though some economists believe the new agreement will benefit South Korea more, it will contribute to stability in the region and provide significant advantages for Tokyo.
Relations between Seoul and Tokyo have improved as South Korean President Yoon Suk-yeol seeks reparations to address the longstanding scars of war.
In response to China’s aggressive claims in Taiwan, the United States has reaffirmed its defense commitments in Southeast Asia.
An agreement signed earlier this year will strengthen the U.S. military presence in the Philippines with four new naval installations in the South China Sea.
In January, Japanese Prime Minister Fumio Kishida signed a new security agreement with the U.S., and a meeting between President Yoon and President Joe Biden in April resulted in an agreement to dock U.S. nuclear-armed submarines in South Korea after a hiatus of over 40 years.
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