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The finance and central bank chiefs of Japan, China and South Korea gather in Yokohama on May 5 on the sidelines of the ADB's annual meeting. (Photo by Kosaku Mimura)
ADB Annual Meeting 2017

Japan, China, South Korea decry protectionism in rare show of unity

Finance and central bank chiefs meet to discuss financial safeguards for Asia

MITSURU OBE, Nikkei staff writer | China

YOKOHAMA -- The finance ministers and central bank chiefs of Japan, China and South Korea issued a joint statement Friday opposing protectionism and promoting currency cooperation among Asian countries.

"We will resist all forms of protectionism," the officials said in a joint message issued after an hour-long meeting the same morning. "We agree that trade is one of the most important engines of economic growth and development, and contributes to improving productivity and creating jobs," the message read.

Japanese officials say it is the first time the finance chiefs of the three countries have jointly pledged to fight protectionism. The language was borrowed from past statements of the Group of 20 finance ministers, which typically pledged their commitment against any form of protectionism but were unable to do so in Germany in March due to U.S. opposition.

The officials met on the sidelines of the Asian Development Bank's annual meeting, which kicked off Thursday in Yokohama.

It was a rare display of unity among three countries that are often fierce economic rivals and have long-running disputes over territorial matters and issues related to Japan's aggression during World War II. The mere fact that they met, let alone agreed on anything substantive, is noteworthy.

Their statement comes amid a rising tide of protectionism in the U.S. under President Donald Trump.

On Thursday, the U.S. Department of Commerce issued a statement calling the country's trade deficits with Japan and Mexico "unsustainable." The message followed the release of trade data for March showing a sharp month-on-month increase in the U.S. trade deficit with Japan for March.

"The United States can no longer sustain this inflated trade deficit with our closest trading partners," Commerce Secretary Wilbur Ross said.

In pulling the U.S. out of the Trans-Pacific Partnership free trade deal, the Trump administration has delivered a blow to efforts to promote free trade in the world's fastest-growing region. Japan is leading a push among the remaining TPP members to forge a new agreement.

Japan is also seeking free trade with China, South Korea and other Asian countries under the so-called Regional Comprehensive Economic Partnership initiative, but a senior Japanese official said Friday that the negotiations for RCEP are likely to be protracted. "We are trying to translate the high-standard rules and principles agreed upon within the context of the TPP into the RCEP negotiations," the official said. Tokyo is not interested in just picking "low-hanging fruit," the official added.

The finance and central bank chiefs of the three countries also welcomed efforts among Asian countries to help each other in the event of currency crises, and agreed to work toward supporting the use of local currencies for regional trade.

"We will promote the further use of local currencies" by developing local currency bond markets, the joint statement said.

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