Chey Tae-won's Korea-Japan economic community proposal draws attention in Japanese media

A proposal by SK Group Chairman Chey Tae-won for a Korea-Japan economic community has drawn renewed attention in the Japanese press, as US-China tensions and a reshaping of global supply chains have put a spotlight on the need for closer bilateral economic cooperation. The idea envisions the two countries deepening ties in energy and semiconductor supply chains to cut costs and raise their collective standing in the international arena — though Japan's practical gains and unresolved historical grievances have been flagged as obstacles.

Nikkei, the Japanese financial daily, revisited Chey's 2024 proposal on Friday, examining its feasibility and the challenges it faces. The paper said that if the two countries — both grappling with population decline, economic stagnation and low energy self-sufficiency — formed a single economic bloc, they could speak with greater weight in global affairs through coordinated responses.

The proposal is modeled on the EU, which allows the free movement of people, goods, capital and services. If realized, the combined GDP of the two countries would exceed $6 trillion, forming the world's fourth-largest economic bloc after the United States, the EU and China, Nikkei said.

Among the specific areas of cooperation, the proposal calls for joint purchasing and stockpiling of crude oil and LNG to lower energy procurement costs. It also envisions combining South Korea's semiconductor manufacturing capabilities with Japan's strengths in materials and equipment to reinforce supply chains and reduce dependence on other countries. Easing border procedures along the lines of the EU's Schengen Agreement to expand the movement of people and goods was also mentioned.

While Japan's business community has responded positively to the idea, Nikkei noted that the economic benefits for each side may not be equal. If the proposal were realized, South Korea would gain access to the Japanese domestic market — more than three times the size of its own — while Japan's market expansion effect would be comparatively modest.

Historical issues and public sentiment also stand in the way. A Japanese government official told Nikkei that "we need to be mindful of public sentiment" and that it was "hard to see the advantages for Japan." South Korea's potential accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership was also cited as a step that could advance economic liberalization between the two countries. "South Korea joining the CPTPP alone would mark a significant step forward in liberalizing the two economies," Nikkei said.