Contemporary Issues in East Asian Studies

ETAS 500.01 – Winter 2012

Undergraduate Research Paper:

Analysis of the South Korea*-Chile FTA** and Japan-Chile EPA*** Negotiation Processes:

New Insights on the Contrasting Korean and Japanese Communication and Negotiation Styles

Student: David Sandoz (dsandoz@ucalgary.ca)

Professor: Mark Baron

April 12, 2012

*Hereinafter referred to as Korea
** Free Trade Agreement
*** Economic Partnership Agreement

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 Table of Contents

1) Introduction

a. Elaboration of Title and Thesis Statement 4

b. Practical Policy and Academic Significance of Research Project 5

2) Research Methods

a. Shaping of Argument by Personal Experiences and Exposure to Debates 5-7

b. Selection of Theoretical Framework and Methods Used to Analyze Research Problem 7-9

c. Main Issues Encountered and their Resolutions 9-10

3) Introduction and Background Information 10-12

4) Findings

a. Korea-Japan: Contemporary History and Background 12-13

b. Korea-Chile FTA and Japan-Chile EPA: Fundamental Differences 13-14

c. Framework of Analysis: Negotiation Theories and Cultural Approaches 14-16

d. FTAs and EPAs: Prospects for Chile, Korea, Japan 16-19

e. Content of Agreements: Overview 19-20

f. Negotiation Process : Chronological Comparative Analysis

i. Korea-Chile FTA and Japan-Chile EPA: Origin 20-22

ii. Opening Stage (Paik and Tung) 22-25

iii. Resolution Stage (Paik and Tung) / Level I (Putnam) 25-26

1. Analysis of Korea-Chile FTA Negotiation Process 26-28

2. Analysis of Japan-Chile EPA Negotiation Process 29-30

iv. Final Stage (Paik and Tung) / Level II (Putnam) 30-33

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 v. Post-Agreement: Additional Perspectives

1. Declarations by Korea and Japan on the OECD Accession of the Republic of Chile 33-35

2. Korean and Japanese Behavior at the 2010 World Economic Forum: 35-36
Towards an East Asian Community

5) Conclusion 37-38

6) References 39-43

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 1) Introduction

a. Elaboration of Title and Thesis Statement

Originally this research study’s aim was to compare the Korea-Chile FTA (Free Trade

Agreement, hereinafter referred to as KCFTA) and the Japan-Chile EPA (Economic Partnership

Agreement, hereinafter referred to as JCEPA) in terms of these agreements’ origins as well as

their post-agreement effects and draw new conclusions on the differences between the Korean

and Japanese communication styles

As the KCFTA was ratified in 2004 there is more post-agreement literature available on it

than for the more recent JCEPA (ratified in 2007). Thus the title of this research has been

tweaked to include only the agreements’ negotiation processes (making historical references

when appropriate). The new and final title is the following:

Analysis of the South Korea-Chile FTA and Japan-Chile EPA Negotiation Processes:

New Insights on the Contrasting Korean and Japanese Communication and Negotiation Styles

Therefore, the comparison of the negotiation processes of each agreements form an

integral part of this paper, while making reference to economic and cultural concepts pertaining

to each country and using as a common denominator the lack of natural resources of Korea and

Japan. Indeed, as these two East Asian countries have shifted to the mass production of high tech

products they increasingly rely on importing raw material and copper-rich Chile is proving to be

an important partner.

Also, the timeframe that will be the focus of this research is 1998 to 2007, since these

agreements’ negotiations took place between 1998 and 2007.

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The thesis statement has also been modified accordingly and can be found in the second

paragraph of the introduction.

b. Practical Policy and Academic Significance of Research Project

Although there has been a varying degree of research conducted on the Korea-Chile and

Japan-Chile economic and trade relations as well as on how the Koreans and Japanese negotiate

and behave in trade and business situations, there is yet to be research that contrasts the way in

which Korea and Chile communicate and negotiate in the KCFTA and JCEPA. Based on these

countries’ trade relations, the aim of this research paper is to provide unique insights into how

differently the Koreans and Japanese communicate, negotiate, and compromise.

The findings of this research – in terms of practical policy significance – are intended to (1)

help simplify and improve the trade or economic negotiation process with the Koreans and

Japanese, including their businesses and individuals, (2) assist East Asian and Latin American

economies better understand and deal with one another (3), as well as, more generally, provide a

thorough and multivariate case study from which any trading or rising economy can learn.

2) Research Methods

a. Shaping of Argument by Personal Experiences and Exposure to Debates

I have decided to analyze the differences in terms of how the Koreans and Japanese

communicate and negotiate through their trade relations with Chile for several reasons. First, I

have an interest in these cultures as I have personal and professional experiences interacting with

Koreans, Japanese, and Chileans in Canada, as well as in Korea and Japan. Second, I have often

noticed the lack of knowledge many westerners (or non-easterners, including Latin Americans

and Africans) have of the particular cultures of Korea and Japan, in many cases perceiving them

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as widely similar to or the same as China. Thus, I decided to embark on a research project in

which the aim was to look at how the Koreans and Japanese differ by looking at each highly

developed – in terms of technology – country’s particular trade relations with a third party – that

is, Chile.

Such aspirations, my experiences as an exchange student in Korea, as well as my ultimate

goal of working in an international setting acting as a communication specialist or cultural

liaison have allowed me to gain more knowledge on the functioning of the Korean and Japanese

societies as well as international trade. In addition, I have previously investigated Canada’s trade

relations with Latin American countries for a Spanish class and compared the East Asian Values

of Japan and Korea at the workplace to those in Canada for an anthropology class. Such research

encouraged me to take a holistic and comparative approach.

The argument that there is more than an (East) Asian approach to dealing with the

Koreans and Japanese has been reinforced by a literature review of the topic in question. Also

noteworthy is the fact that both countries have changed tremendously and one deals differently

today with a Korean or Japanese than twenty years ago. Indeed, in a study comparing Confucian

values in China, Korea, Japan, and Taiwan (2005), Zhang, Lin, Nonaka and Beom conclude that

even in the recent past “Western accounts of East Asian communication tended to paint all Asian

cultures with the same broad brush (i.e.: collectivism)” despite the fact that they have each

evolved differently and possess distinctive characteristics. Challenging such beliefs seem

imperative in a world where cross-cultural communication with East Asians has become

commonplace.

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 Generally, it appears that non-Westerners make more accurate assumptions about how

Westerners act while Westerners know little about non-Westerners. Such phenomena may find

its roots in the dominant position of the West – and affluence of Western popular culture – as

well as its ethnocentric approach to communicating with the non-Western world. Indeed, it is not

uncommon for Westerners to be unable to distinguish Korean, Japanese or even Vietnamese

cultures from Chinese culture or to view them as basically part of a blended Asian culture.

The mere existence of the journal article used in my first seminar presentation (Paik &

Tung, 1999) on how to negotiate with East Asians indicate a lack of a culture- or country-

specific approach to international communications. Despite recognizing that there exists previous

research revealing distinctive Japanese features in terms of communication and negotiation styles

(Doi, 1973; Graham, 1993), this research’s argument pertains to the importance of taking a fresh

and novel approach to explore how these Japanese features have evolved and how they contrast

to the evolving Korean ones. This analysis will be undertaken by investigating the particular

trade relations dealings these two East Asian neighbors have experienced with the same Latin

American country of Chile.

b. Selection of Theoretical Framework to Analyze Research Problem

 Comparative, Multi-Source and Holistic Approach

By making the assumption that learning about the differences between Korea’s and Japan’s

trade relations with Chile will not only reveal known differences but also draw new ones, I

emphasize the importance of analyzing these parties’ communication styles using a fresh,

comparative, multi-source and holistic approach. Indeed, the very nature of such cross-cultural

comparative research requires an approach which looks at the subject matter from various angles

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and using various theories. This method is used to ensure that each party benefits from the

generated findings in its future negotiation and communication patterns. Thus, The literature

used in this research not only includes journal articles, working papers and books originally

written in English, Japanese, Korean or Spanish but also government sources, newspaper articles

as well as audio-visual material and statistical information. Such documents were primarily

uncovered using the University of Calgary Library Search Tools, Google Scholar, Youtube, as

well as government websites.

Although drawing differences between how the Koreans and the Japanese behave from

trade relations with Chile is an important part of this study, it is equally necessary to use a wide

array of primary and secondary sources.

In order to provide additional and supportive information pertaining to the Korean and

Japanese communication styles several comparisons will be undertaken in addition to the

KCFTA versus JCEPA negotiation processes; among these the behavior of the Korean and

Japanese representatives at the 2010 World International Forum and the declaration of Korean

and Japanese officials on the OECD accession of the Republic of Chile in 2009; also, the cultural

aspects of Korean and Japanese communication styles and trade perspectives based on scholarly

journal articles and books.

To provide supplementary cultural and economic background a number of themes

relevant to both Korea and Japan, will be assessed and analyzed. For instance, information

pertaining to the recent historical trade and cultural relations between Korea and Japan as well as

literature contrasting each culture’s negotiation styles will be used.

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 To evaluate how the Korean and Japanese communicate in an international setting,

various journal articles relevant to the KCFTA and JCEPA will be discussed; including the

MOFA (Ministry of Foreign Affairs of Japan) as well as the JSB (Japan Statistics Bureau) and

JIL (Japanese Institute of Labor) websites and the MOFAT (Ministry of Foreign Affairs and

Trade, Republic of Korea) and KNSO (Korea National Statistics Office) websites for statistical

data; also included is Chile’s General Office of International Economic Relations website

(DIRECON).

Finally, in an effort to make the most critical and holistic comparisons, various (inter-)

cultural communications theories and concepts will be used. Examples include Hofstede’s

Cultural Dimension to provide further explanation as to the behavior of the Korean, Japanese and

Chileans as well as cultural concepts (Confucianism, Collectivism, as well as Korean, Japanese,

and Chilean cultural concepts).

c. Main Issues Encountered and their Resolutions

Issue:  Limited Data available on Japan-Chile EPA

Resolution:  Changed focus to the negotiation process until ratification (using Paik and
Tung’s three-stage negotiation theory and Putnam’s two-level negotiation
framework.
 Also decided to use other case studies to provide supporting details of the
Korean and Japanese behavior
 Suggesting that there is more info on the Korea-Chile FTA not only
because the FTA is older but also because there were significant challenges
in the process while the Japan-Chile EPA was relatively swift.
Issue: Topic too broad / Lack of Focus
Resolution  After considering dealing with cultural aspects from sports, business,
agriculture and the wine industry I decided to put these elements in the
background while focusing primarily on comparing the negotiation
processes of the Korea-Chile FTA and the Japan-Chile EPA.
 Feedback from professor and classmates allowed me to narrow down my
topic in order to make an in-depth analysis rather than looking at many
topics in a more superficial manner.
 Also, reviewing the journal periodically allowed me to tie each part of my

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 paper together in an effort to make a smoother and more logical argument.
Issue: No Translation Available
Resolution  For Spanish texts I was able to translate the material needed, however
when documents found where in Korean or Japanese, I was unable to use
them.
 I therefore may be missing some non-western perspectives in my research,
however, I was able to review dozens of articles written in English (or
translated) by Korean and Japanese scholars.
Issue: Unavailable, Classified, or Pay-Per-View Documents
Resolution  At times a query provided promising results, however, it happened more
than once that the link was either broken, the document restricted to a
certain audience or a fee being associated with it.
 In such cases, I attempted to make use of documents that would parallel the
original ones

Also, I used the journal (see Appendix H) to help me keep track of the big picture.

3) Introduction and Background Information

The twentieth century has been the theater of events that have redefined the world, such

as the two World Wars and the Cold War. Also, breakthroughs in technology and improvements

to transportation systems have made the world increasingly interconnected – whether physically,

culturally, politically, or economically. Notably, bilateral and multilateral trade agreements have

proliferated extensively and Asian countries have greatly contributed to this trend, playing an

important role in the first decade of the twenty-first century. As clashes between cultures have

become inevitable, it is now paramount for world actors to better understand each other not only

in broad terms but specifically taking into consideration distinctive cultural values and norms.

The purpose of this research paper is to provide a contemporary and illustrative example of the

benefits of using a culture- or country-specific rather than regional approach when conducting

international or cross-cultural negotiations.

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 Since the Asian continent has become a more influential actor on the world market, and

because non-easterners often group Asian countries uniformly, the aim of this research paper is

to contrast two cultures whose economies have shown tremendous growth rates in the second

part of the twentieth century, making them leaders in the high-tech industry: the Korean and the

Japanese. Despite the growing circulation of people around the world, there is a debate between

those who suggest that there is an (East) Asian way to deal with the Koreans and the Japanese

and those who see both cultures distinctively. Even though Korea and Japan share many cultural,

historical, and political attributes, their different approaches to international trade illustrated by

their trade relations with Chile demonstrate the importance of not solely relying on an (East)

Asian approach when dealing with them but also carefully considering each country’s distinctive

characteristics. From such nuances arise new insights on how to simplify and improve the global

trade negotiation process not only when dealing with the Koreans or Japanese but also in any

world trade negotiation.

As a consequence of the nature of this subject requiring a multi-source and holistic

approach, literature dealing with the effects of modernization, regionalism, negotiation styles, as

well as the Korean, Japanese and Chilean cultures and economies and their relations and distinct

cultural traits will be examined. First, background information on contemporary Korean and

Japanese history will be provided followed by a discussion of the main differences between the

KCFTA and the JCEPA. Then, the negotiation and cultural frameworks will be introduced and

the FTA/EPA prospects for Korea, Japan, and Chile will be discussed. Finally, the actual

negotiation processes will be chronologically assessed – including the agreements’ main content

– from initial contact to ratification of the trade agreements. The conclusion will include a brief

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summary of cultural differences displayed through the negotiation processes as well as

guidelines on how to make the negotiation process as efficient as possible.

4) Findings

a. Korea-Japan: Contemporary History and Background

In order to establish a solid foundation for this study it is essential to first define the

framework of analysis that will be used throughout this research project. To conduct a viable

comparison, each object should share similarities, which is not an issue as Korea and Japan are

East Asian neighbors and have much to share in terms of history and culture – such as

Confucianism. In the last century, however, these countries had a more tumultuous relationship.

Indeed, following the victory in the Japanese-Russo War, Japan occupied Korea from 1910 to

1945 (Sakaedani, 2005, p. 235). During that time, the Japanese “exercised a strict integration

policy” by preventing the Koreans from learning their language and history as well as holding

Korean names (p. 235). The mental and physical abuses the Japanese perpetrated on the Koreans

“left irreversible scars on both Japanese and [especially] Korean people’s minds and hearts (p.

235). Ever since, these two countries have come closer but tensions have not fully disappeared.

Indeed, the Japanese did not initially express regrets for the 1910-1945 colonial period, only

negotiating a cooperation fund to help Korea rebuild rather than creating a reparation fund. Such

attitude, Sakaedani notes, “reflects avoidance, which is the typical Japanese cultural approach to

handling conflict” (p. 236). Only in the 1980s and again in the mid-1990s did Japan express

regrets and remorse (pp. 237-238). Also, as per Sakaedani, the co-hosting of the 2002 South

Korea–Japan World Cup helped each country feel more affinity towards one another (p. 239; p.

247). The year 2002 was also marked by the “Year of Japan-ROK [Republic of Korea] National

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Exchange” (pp. 245-246) with both countries taking part in exchange activities whether physical

(e.g.: sports), artistic (e.g.: music), life (e.g.: Buddhism), or academic (e.g.: history) (p. 245).

Also, what Korea and Japan have in common is a high density of population in countries

that lack natural resources. Thus, as they continue to produce high-tech products in the auto-

industry (KIA or Hyundai for Korea and Toyota or Honda for Japan) or electronics (Samsung or

LG for Korea and Sony or Canon for Japan) the need for semi-conductors – and thus copper –

necessary to make these products continues to grow. As a result, as Chile produces important

amounts of copper with Theodore H. Moran dedicating a book to such industry, titled “Copper in

Chile” already in 1974, the two bilateral economic agreements between Korea and Chile (FTA

ratified in 2004) and Japan and Chile (EPA ratified in 2007) seem to provide all parties with a

“win-win” solution. Indeed, As per Inkyo Cheong (2004), “Korea chose Chile . . . because its

trade structure is highly complementary . . . [while] Chile chose Korea because it highly valued

Korea’s close linkage with neighboring Asian countries” (p. 234). Moreover, after Korea and

Japan import Chilean copper to produce their high-tech goods Chile will gladly purchase them.

Also, Japan, and especially Korea, have both taken advantage of Chilean wine with Chile now

being Korea’s leading wine supplier (Vinexpo, 2011). Last but certainly not least, the KCFTA

works as a prototypical agreement for further agreement opportunities for Korea in Latin

America and Chile in East Asia – the same can be said about the JCEPA.

b. Korea-Chile FTA and Japan-Chile EPA: Fundamental Differences

The central definitions pertaining to this research project also need to be outlined and

contrasted to clarify how they can be utilized in comparing these economic relations. First,

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although there are similarities between FTA and EPA, in a 2008 pamphlet (p. 4) the Ministry of

Economy, Trade and Industry (METI) of Japan clarifies how these economic relations differ:

 FTA: an international treaty to eliminate tariffs imposed between countries or regions

and to abolish regulation in the field of foreign investments in trade in services

 EPA: international treaty to deregulate regulations for investments and for immigration

control in addition to the contents of an FTA

Thus from the above definitions it can be said that an EPA has the attributes of an FTA as

it lowers or eliminates tariffs, but it is more comprehensive since it also facilitate the exchange of

humans and encourages cooperation and the formation of common policy (METI, p. 4, 2008). In

terms of FTA and EPA proliferation, Masahiro Kawai and Ganeshan Wignaraja note that “East

Asia is a latecomer in the move towards FTAs” in comparison to other regions but recognize that

in the past two decades FTAs and EPAs have bourgeoned in that region (2007, p. 3). Similarly to

METI’s definition, Kawai and Wignaraja explain that – in contrast to Korea which uses FTAs to

establish or reinforce its worldwide economic relations – Japan seeks “deeper integration with its

trading partners“ (p. 4).

c. Framework of Analysis: Negotiation Theories and Cultural Approaches

To be able to analyze the dissimilarities in terms of interaction between the Koreans and

Japanese with the Chileans, it is essential to consider each culture’s particular set of values,

distinct cultural concepts, and also to have a framework to analyze their trade negotiations and

relations.

One of the tools that can be used to analyze the process leading to the ratifications of

these economic agreements aims at explaining how to successfully negotiate with East Asians

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and was written by Yongsun Paik and Rosalie L. Tung (1999). These authors not only provide

cultural aspects of the Korean and Japanese cultures but also discuss three stages of the

negotiation process and define it as “special communication tasks that take place in order to

reach agreement about how to handle both common and conflicting interests between two parties

or more” (1999, p. 104). In the opening stage each party learns about the other; in the resolution

stage a compromise is made; and in the final stage the bargain is made to reach a mutual

agreement (contract).

In accordance to Soomin Lee who analyzed the Korea-Chile and the Korea-Singapore

FTAs noting that it is essential to look at the “dynamics between domestic politics and

international cooperation” (2009, p. 21), but in contrast Paik’s and Tung’s three-stage

negotiation process, Robert D. Putnam (1988) views negotiation in two levels. The first one is

the bargaining level which occurs between negotiators who come to a tentative agreement. The

second is the ratification level, in which each party first considers the agreement separately and

then needs to decide whether it wants to ratify the agreement.

Not in terms of negotiation but rather in the fields of organizational culture as well as

cultural economics and management, Geert Hofstede (1991; 2010) views culture using five

dimensions: Power distance index (PDI), Individualism (IDV), Masculinity (MAS), Uncertainty

Avoidance Index (UAI), and Long-Term Orientation (LTO). These dimensions will be explained

through the analysis of the differences between Korean and Japanese behavior (see Appendix A

for a table with a full summary of Hofstede’s cultural dimensions). Despite the fact that critics

(McSweeney, 2002; Gerhart and Fang, n.d.) noted that the system was flawed as national

differences only explain a small part of human behavior, the cultural dimensions concept can be

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 useful if not solely relied upon. Therefore, literature on the cultural values of the countries in

question has been used as a complement.

d. FTAs and EPAs: Prospects for Chile, Korea, Japan

FTAs and EPAs, also referred to as RPAs – Regional Trade Agreements – have been on

the rise since the end of the twentieth century as shown in Figure 1. Korea, Japan, and Chile,

however, only started to follow the RPA trend just at the turn of the century. Chile started in

1999 with Mexico and now has nine FTAs, while Japan started in 2002 with Singapore and

Korea in 2004 with Chile. Japan and Korea have 11 EPAs and 8 FTAs respectively (see

Appendix B for complete list).

Thus, each country has been

adding approximately one new

RPA per year, which is a

remarkable trend that is likely to

continue. Such paradigm is

explained, for Korea and Japan,

but also Chile, by each

Adapted from Urata, S. (2009). Japan’s Free Trade Agreement strategy. economy’s rapid modernization
The Japanese Economy, 36(2), 46-7

and liberalization and speaking of Korea and Japan, by their focus on the mass production of

high-tech products. Also, in an article published in 2004, Cheong notes that “Korea ha[d] been

studying the feasibility of . . . FTAs . . . since the 1980s “but did not join immediately as it was

concerned about opening its market” (p. 221). After a special committee was formed in the mid-

1990s, in 1998 the Office of the Minister for Trade was created to counter the 1997 Asian

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 Financial Crisis. Indeed, after suffering of massive deficits during the crisis, the Korean

government realized that forming formal trade relations would increase foreign investments

(Cheong, 2004).

Japan followed a similar path and as discussed previously the two countries lack natural

resources – and notably in the auto industry – hugely depend on copper-rich Chile inter alia.

Indeed, in 2007 when the JCEPA was signed, an article titled “Cars in Exchange for Copper”

was published by The Economist Intelligence Unit. Looking at the Korean and Japanese yearly

car production provides an insightful explanation about the extent to which these two economies

rely on copper. As indicated in Figure 2, Korea and Japan together produce more than 11 million

cars, and assuming that 20 kilos of copper is needed per car, the estimated dollar value for Chile

(and other copper-rich countries) would approach the staggering amount of two billion dollars

per year. It is no wonder then, that the three countries are ideal partners.

Figure 2: Car Production and Estimated Copper Requirement

World Cars produced (2011) (does not Estimated Copper Estimated Price**
Rank include commercial vehicles) Required (tons)*
Korea 4th 4,221,617 84,432.34 USD $ 0.64 B
Japan 2nd 7,158,525 143,170.5 USD $ 1,09 B
Adapted from International Organization of Motor Vehicle Manufacturer website, 2010, (www.oica.net)
* As per Copper Development Association website (http://www.copperinfo.co.uk/automotive) between 15 to 28 kg of copper are
needed to make a car depending on the level of luxury. The above calculations are made using a 20 kg copper per car requireme nt.
** USD $3.79 USD / 1 lb of copper (=USD $7.58/ 1 kg of copper as per http://www.kitcometals.com on April 9, 2012

The battle for copper is intense as seen by Korean electronics giant LG which in 2003

took part “in a gold copper mine development project” in the Philippines and its Japanese

counterpart Sumitomo “achieved constant earning by important huge amounts of copper” (Jun,

2009, p. 70, p.408). These companies are among Korea’s and Japan’s conglomerates – referred

to as Chaebols in Korea and Keiretsu in Japan – and because of their size have a strong influence

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on their country’s economy. Indeed, S. J. Lee notes that “Chaebols are Korea’s . . . integrated

conglomerates controlled by a founding family” with Zaibatsus being the Japanese equivalent as

per D. Flath (as cited in Tucker, 2010) and being defined as “sizeable and industrial groupings

[with] centralized control through a single family” (Tucker, 2010, p. 78). These entities deal with

products “ranging from airlines, automobiles, consumer electronics, shipbuilding” and more

(Chung and Hak, 1997, p. 83).

These conglomerates used to play a major role in their respective economies and

represented a large share of their countries’ GDP. For instance, in the mid-1990s, “the combined

sales of the top four Chaebols (Hyundai, Samsung, LG, and Daewoo) represent[ed] a colossal

84% of Korea’s GDP . . . and their exports . . . 60% of Korea’s total exports” (Chung and Hak,

1997, p. 83). The large sizes of the unmanageable Chaebols and Zaibatsus (replaced today by

Keiretsu, still large but not necessarily family-owned) are in part responsible for the 1997 Asian

Financial as despite their large revenues they were part of a “debt-based capital structure”

(Chung and Hak, 1997, p. 63).

In spite of playing a smaller role today, but still with a 2004 GDP share of over 20% for

the top 15 Japanese companies (Toyota leading the way with 3.7%) and Samsung itself

representing more than 10% of Korea’s 2004 GDP (as a comparison, Wal-Mart Stores

represented “only” 2.5% of the USA’s 2004 GDP*), it can be safely assumed that these

conglomerates certainly played a major role in the Chile-Korea and Chile-Japan RTA

negotiations as their economic power gave – and still gives – them an evident political influence;

*Source: World Development Indicators database, World Bank, 15 July 2005 and Total Revenue , July 25,
2005 Issue of Fortune Magazine. Figures tabulated by Rhett A. Butler of mongabay.com.

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in such circumstances, it may be impossible to separate business from politics. Therefore, for

Korea and Japan the business-politics link may be even stronger than for other countries.

The major size of Samsung, being comparatively about three times more powerful than

Toyota in terms of national GDP, may suggest that Samsung played an important role in the

making of the KCFTA. It is not surprising then, to note that in 2010 Toyota Chile was listed as

third in terms of companies that import the most from Japan to Chile. The same can be expected

from Hyundai Chile, only second to Chevrolet in terms of auto market share in Chile in 2010 –

with Toyota being fourth (BBVA Research, 2011).

e. Content of Agreements: Overview

In order to efficiently analyze the negotiation processes that led to the economic

agreements between Korea-Chile and Japan-Chile – and understanding that such procedures

normally take several years – it is important to look both at the complexity of each agreement

and its general content – which add to the cultural communication challenges of trade

negotiations. The agreement’s least technical features, the preambles and objectives, which are

more subjective and therefore culturally affected, will be analyzed in part iv of the next section.

As a result of long years of negotiations, the end-result is that each agreement contains

over 100 pages – 122 for the JCEPA and 178 (including some annexes) for the KCFTA (see

appendix D for details). Within each agreement there are about 200 articles divided in about 20

chapters. In terms of content, and aside from the preamble and objectives, both agreements

contain 10 chapters which are titled the same or similarly – see Figure 3 below

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 Figure 3: Identical or Similar Chapters in Agreement
Initial Provisions General Definitions Rules of Origin
Sanitary and Phytosanitary Measures Investment Cross-Border Trade in Services
Government Procurement Intellectual Property Rights Dispute Settlement
Exceptions
Adapted from Foreign Trade and Information System (http://www.sice.oas.org/trade/Chi-SKorea_e/ChiKoreaind_e.asp)
Adapted from Ministry of Foreign Affairs of Japan website (http://www.mofa.go.jp/region/latin/chile/joint0703/agreement.pdf)

Thus, dealing with some of the above issues – such as such as Rules of Origin – used to

establish a product’s country of origin – Investment, Intellectual Property Rights, or Dispute

Settlement requires a wide array of experts (discussed in the following section). It is interesting

to note that in the case of Rules of Origin, the JCEPA is almost twice as long and contains nearly

twice as many articles as the KCFTA. This lengthy chapter may confirm the higher methodology

of the Japanese, as noted by Paik and Tung earlier.

In their full versions, complete with each country’s schedule – that is, the list of

regulations for each product or service to be traded – each agreement approaches 1000 pages.

Again, the enormous amount of data that needs to be verified makes the negotiating process this

much more challenging.

As far as the products traded, in 2010, of all their imports from each Korea and Japan,

Chile imported about one third of gasoline and one third of automobiles from each country

(slightly more from Korea) (DIRECON, 2011). Of its total imports from Chile, Japan imported

about 50% of copper and 10% of seafood from Chile while Korea imported a colossal amount

80% of copper from Chile.

f. Negotiation Process : Chronological Comparative Analysis

i. Korea-Chile FTA and Japan-Chile EPA: Origin

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 Korea, as noted earlier, was pressured to follow the FTA movement not only to recover

from the 1997 Asian Financial Crisis but also in an effort to counter the trade share lost to other

countries due to its isolationist strategy. Chile came to be the first ideal partner – as seen

previously – due to the two economies complementing each other and the low threat posed by

Chile in terms of agricultural trade (Cheong, 2004). Also, starting with Chile, a relatively small

economy, would also provide Korea with a gateway (Lee, 2009) to further FTAs which was seen

when they concluded the Peru (2011) and the US (2012) FTAs.

For Japan, the KCFTA signified that were Japan to stay out of an agreement despite its

long-standing relationship with Chile since the end of the nineteenth century, it would potentially

lose some ground. Also, complementarities played a major role as well as the fact that Japan

already had EPA experience (with Singapore in 2002) including regional and cultural experience

through the Mexico EPA of 2005. Finally, similarly to Korea’s case, Japan’s EPA with Chile

would serve as a gateway with Japan concluding another FTA with Peru in 2012.

For Chile, similar reasons apply for entering into FTA negotiations with Korea; that is, to

be able to export its minerals – including copper and molybdenum – and import high-tech

products at advantageous rates. Also, this FTA would work as a platform for expansion and so

would the 2007 Chile-India and Chile-Japan RTAs which would all eventually help in

attempting more complex FTA negotiations with the larger economy of China.

It can also be noted that on the “Ease of Doing Business Index” both Korea and Japan

were ranked fairly well in 2007, being 19th and 28th respectively, with few documents

(paperwork) to import or export while Chile was ranked 44th with a more tedious trading process

(The World Bank). It is also interesting to see that, despite improvements to each economy,

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 Korea is now a top leader with a 4th worldwide rank and even less paperwork – 3 documents to

each export or import – while Japan, possibly due to its more thorough and methodical approach,

is still “only” ranked 16th. Since it is easier to export in Japan (three documents needed) than

import (five documents needed) it may be said that by slowing down the import process Japan is

protecting its economy.

ii. Opening Stage (Paik and Tung)

As noted before, according to Paik and Tung, the opening stage is the one in which each

side learns more about the other’s position and willingness to compromise. The main events of

this stage include the initial joint interest in the pursuing of an agreement as well as any other

preparatory meeting necessary until each side is ready to move on to negotiation rounds. As

indicated in Figure 4, which includes each event chronologically for Both Korea and Japan, this

stage lasted just over one year for each agreement.

Figure 4: Stage I: Opening Stage

Korea-Chile FTA (KCFTA) Japan-Chile EPA (JCEPA)
Duration: 1 year 2 months Duration: 1 year 3 months
Nov Korea’s External Economic Coordination Nov. 22, Chile and Japan announce new study aimed at the
1998 Committee to pursue an FTA; selecting Chile 2004 implementation of an FTA
Nov Korea and Chile agree to push forward an FTA Feb 01, Tokyo, Japan. First meeting of Chile-Japan Joint Study
1998 at the APEC summit meeting in Malaysia 2005 Group (JSG)
Apr & High-level talks in Seoul and Santiago Santiago, Chile. Second meeting of Chile-Japan Joint
Apr. 21,
Jun Study Group (JSG)
2005
1999
Sep Korea and Chile agree to launch the Korea- Jul., 25 Los Angeles, USA. Third meeting of Chile-Japan Joint
1999 Chile FTA negotiations on the occasion of 2005 Study Group (JSG)
APEC summit meeting Sep. 23, Miami, USA. Fourth meeting of Chile-Japan Joint Study
2005 Group (JSG)
Nov. 02, Report of the Joint Study Group on Japan-Chile Economic
2005 Partnership Agreement/Free Trade Agreement
Joint Press Release of Japan and the Republic of Chile
Nov.
on the Initiation of Negotiations for establishing the
2005
Japan-Chile Economic Partnership Agreement
See Appendix E for Details

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 In the literature, even including government sources, there does not appear to be any

available study Korea did or joint study Korea and Chile did prior to their FTA negotiations –

perhaps due to Korea’s desire not to publish any such study. However, in terms of the JCEPA,

there are two studies available: one done in 2001 by Japan and one done jointly in 2005.

The first study was done by the Japan External Trade Organization and is available in

English (JETRO, 2001). Interestingly, the document includes the names of all the study group

members; these include a chairman, vice-chairman, members, non-member lecturers, as well as

observers and even the secretariat. The names of 20 members and their full titles are also

mentioned, which include not only JETRO members, but also economics or Latin America

professors and experts, as well as businesspeople from Keiretsus such as Mitsubishi, Mitsui, and

Honda. The fact that all are males strengthens both Paik and Tung’s claim that males hold most

or all positions on the negotiation team as well as Hofstede’s very high masculinity score of 92

for the Japanese – meaning that males control society in the power structure.

Although it is possible that the Koreans may have followed a similar structure – the

information is not publically disclosed (at least not in English) – the claim by Paik and Tung that

the Japanese are very methodical and more consensus than the Koreans holds true. Also, when

navigating on the MOFA (Ministry of Foreign Affairs Japan) website one is provided with more

details than the MOFAT (Ministry of Foreign Affairs and Trade, Korea) website.

Such exposure by the Japanese also displays more transparency, which is only reinforced

by the publication of a joint study conducted by the Japanese and Chileans in 2005. In this study

as well, the list of all members is provided. The list includes members of the private, public, and

academic sectors and lists 30 Chileans and “only” 20 (male) Japanese from similar backgrounds

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to the previous study. There are three women among the Chileans, which confirms the trend for

women today in Chile – with a low score of 28 on the masculinity index for Chile – to hold more

positions of power that before.

Interestingly, when looking at the current “list of Senior Officials of the Ministry of

Foreign Affairs” on the MOFA website, there are 262 men listed but also 20 women. Even

though the female representation is less than ten percent, the female presence contradicts the

Paik and Tung study as well as Hofstede’s high masculinity score. In contrast, there are no

women on the MOFTA Korea website, although the published list is significantly shorter. Such

underrepresentation of the Korean members does not confirm the “medium-high” power distance

value of Korea of 60; perhaps the score should be higher since only male senior officials are

listed. Because the Japanese list their full team of almost 300 members, they once again display

that consensus and transparency is important to them.

In a 2003 joint study on the potential for a Korea-Japan FTA – with still no agreement –

both the Japanese and the Koreans list their team members. In total, the Koreans have 17

individuals while the Japanese have 15 from government, business, and academia sectors and

each country has a female, which seem to suggest, once again, that female presence on Korean

and Japanese teams, even in 2003, was starting to rise. Noteworthy is the fact that among

business sector members, no representatives of Chaebols nor Keiretsus are present – which may

indicate that, unlike in the past, both Koreans and Japanese are using dedicated groups (e.g.:

representing an agricultural group or a specific industry) rather than business leaders from

Samsung or Mitsui. Alternatively, it may be that, as seen in the extensive negotiation processes,

both Koreans and Japanese are more sensitive to having a free trade agreement, which despite

appearing to be complimentary and straightforward with a partner like Chile, has encouraged the

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 Japanese and Koreans to further recognize domestic groups and obtain greater domestic

consensus.

Through their methodical approach, the Japanese confirm their high uncertainty

avoidance index score of 92, which means that they behave in a clear and concise manner. The

Koreans’ somewhat secretive attitude – with Paik and Tung noting that they “operate with broad

generalities” (1999, pp. 112-115) – may have roots in stronger Confucian values the Japanese do

not showcase as much. Indeed, in such a culture, no one – except a superior individual who has

more rights – “wants to be spotlighted in public [or] break the group harmony” (Cultural

Detective, 2004-2006). It is also true that because of their long history dealing with the Chileans

but also with the rest of the world, the Japanese may therefore be less suspicious than the

Koreans who in comparison have only recently made strides to open their economy and country.

iii. Resolution Stage (Paik and Tung) / Level I (Putnam)

After a fairly smooth opening stage for each party, the transition to what Paik and Tung

call the resolution stage or what is referred to as level 1 – name the bargaining level and designed

to come to a tentative agreement – provided the Koreans and Japanese with mixed results.

Indeed, as per Figure 5, this stage lasted an unpredictably long three years for the Koreans and a

fairly short one year for the Japanese.

Figure 5: Stage II: Resolution Stage OR Putnam’s Level I

Korea-Chile FTA (KCFTA) Japan-Chile EPA (JCEPA)
Duration: ~ 3 years 2 months Duration: 1 year 1 month
Dec 14-17, 1st round of Korea-Chile FTA negotiations Feb Tokyo, Japan. First round of negotiations
1999 (Chile) 23-24 2006
Feb 29- May 18, Santiago, Chile. Second round of negotiations
2nd round of Korea-Chile FTA negotiations
Mar. 3, 2006
(Korea)
2000
May 16-19, 3rd round of Korea-Chile FTA negotiations Jul 10-14, Tokyo, Japan. Third round of negotiations

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2000 (Chile) 2006
Dec 12-15, 4th round of Korea-Chile FTA negotiations Sep 4, 2006 Santiago, Chile. Fourth round of negotiations
2000 (Seoul, Korea)
Aug 20-23, 5th round of Korea-Chile FTA negotiations Sep, 2006
2002 (Chile)
Oct. 18-20, 6th round of Korea-Chile FTA negotiations Comments by Prime Minister Junichiro
2002 (Switzerland) Koizumi on the Agreement in principle on
Oct. 24, Conclusion of the negotiations between Chile major elements of the Japan-Chile
2002 and Korea for an FTA Economic Partnership Agreement
Oct 25, Joint announcement on the conclusion of the
2002 negotiations (Chile and Korea)
See Appendix E for Details

As far as rounds of negotiation it appears that the Japanese – and Chileans – were able to

follow a very predictable four-round process, with each round separated at by only a few months.

On the other hand, the Koreans – and Chileans – went through an endless six-round negotiating

battle in which the gap between each round grew progressively to, in order, two, three, six, and a

long 20 months between the fourth and fifth round. Finally, the last round occurred two months

later, but neither in Korea, nor Chile, but in Switzerland.

1. Analysis of Korea-Chile FTA Negotiation Process

Apparently en route towards a smooth series of rounds as they completed three rounds

within six months, both Korea and Chile were disillusioned. Indeed, despite Korea’s careful

consideration of choosing Chile for its first FTA based on aforementioned factors such as

complimentarily, between the fourth (December 2000) and fifth (August 2002) rounds as shown

in Figures 5 and 6, resulting in “the bilateral FTA negotiations [being] tumultuous and protracted

for more than five years” (Bong and Jung, 2004).

As per Yu these issues originated in domestic issues within Korea, to do with agricultural

interest groups’ “disproportional empowerment” which made the FTA negotiation a national

issue (as cited in Bong and Jung, 2004). These groups’ progressively stronger complaints

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throughout the negotiation process were caused by the FTA negotiators failing to reassure early

on the Korean farmers that they would be protected and compensated for any future side effects

of the FTA.

Thus, Korea’s Ministry of Foreign Affairs and Trade used a less-than-methodical

approach to undertaking its first FTA as they failed to satisfy either the Korean concept of wuri,

which focuses on the benefits of the larger group, as well as the one of chaemyon, which refers to

“avoiding volatile [and risky] behavior that could shake” the group (Saphiere and Kipnis, 2004-

2006).

Such incident highlights the fact that cultural values may clash with globalization.

Indeed, as pressure to recover from the 1997 Asian Financial Crisis increased, the Korean

government made the FTA with Chile a national interest topic – gaining popular support through

the process. Although it is true that the FTA was intended to be a milestone for Korea’s future

FTA proliferation, and even though the economy improved regardless of the FTA results, the

general public, including many agricultural interest groups, showed concern for its future.

Such attitude by the Korean government proves to be more the product of emotions rather

than a carefully conceived plan. Thus, despite the fact that the Koreans score high on

collectivism as per Hofstede, their emotions may hinder the well-being of the group as their

usually long-term orientation falters.

In extreme circumstances such as the financial crisis, therefore, the common cultural

values of the Koreans – but likely of anyone – may be altered – or revealed. For instance, even

though national pride in Korea has historically been high due to frequent foreign invasions, it

reached levels rarely seen before as despite regional, political, and ideological differences,

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Korean people as “one” celebrated the unexpected “miracle” of their national football team

reaching the semi-final of the 2002 World Cup hosted in Korea and Japan. Consequently,

cultural values should be understood not only in relation to the specific culture in question, but

also to the particular world context and the effects of globalization – such as free trade and

liberal policies as well as a the growing importance of materialism in cultures which did not

originally strive on such values.

Even if, as of today, there are no severe world financial crises, health outbreaks,

controversial summits, or world-wide sports competitions, each culture engaging in further trade

relations is mystifying its national culture.

In addition to the dissident with interest groups, it was also revealed that the Korean

government chose an FTA route that was not the most popular. As per a 2000 survey by FKI (as

cited in Bong and Jung, 2004) done among businesses, most saw a partner other than Chile as

preferable for a first FTA: China, the U.S., followed by Japan and Mexico were all selected over

Chile. The KCFTA now appears to be a solid case study from which there is much to learn and

considering Korea’s widely successful trade proliferation the Korean government could be said

to have achieved its long-term goals – validating its score of 75 on the Hofstede index – despite

its negligence.

2. Analysis of Japan-Chile EPA Negotiation Process

Opposite to lengthy Korea-Chile negotiations, Japan and Chile were able to capitalize on

several factors despite initial concerns. Indeed, as per Leslie Wehner, both countries were first

preoccupied by the other’s comparative advantages (2007). Chile was worried about Japan’s

metal products; and Japan was seriously concerned about Chile’s agricultural products (2007).

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Thus, unlike Korea, Japan addressed their farmers’ concerns from the onset and was a major

player in the deal.

Using a “mixed strategy in the FTA negotiation” simplified the procedure, notes Wehner.

For low-key issues such as removing tariffs on Chilean copper and Japanese autos, the Japanese

made progress by jointly working with the Chileans; however, for high-key issues such as

agriculture, they initially “exclude[d] a broad range of products from the deal” to reassure the

Japanese farmers, notes Wehner. Such attitude was welcomed by the Chileans who felt respected

in terms of their priorities; in a sense, they showed the Chilean concept of pilleria, which is to

“appreciate people who can create alternative ways to achieve an objective” (Bahamondez, Toro,

and Zerio, 2004-2006).

For their part, the Japanese applied the concept of rikai – which is about understanding

the other party – while at the same time showing doryoku, meaning “dedication to work for the

success of the [entire] group” (Saphiere and Kipnis, 2004-2006). Using both concepts

simultaneously supports Paik’s and Tung’s argument that “East Asians have a holistic approach

and are comfortable with multitasking and long negotiations” (1999).

A critical reason for Japan to have had a good amount of leverage in the negotiations was

that “Chile needed the FTA . . . more than Japan” as the economic impact would be larger on

Chile, notes Wehner. Indeed, Japan has been a dominant economy for decades and in 2006 was

ranked three in the world with a GDP over twenty times higher than Chile (CIA World

Factbooks, 2011). The largeness of Japan’s economy gives it an advantage in most trade

negotiations and allow Japan to continue being as meticulous as they have been by setting the

tone early – in terms of ensuring that the long term goals – the agreements – are met by

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 following a planned procedure. In the end, and as seen earlier, Japan was ready to make

concessions as long as it could benefit from the trade either in copper import or auto export, adds

Wehner.

Another factor – external – which simplified the negotiation process is the fact that Japan

already had FTA experience – and had just observed the struggles Korea had concluding an FTA

with Chile. Furthermore, the 2005 Chile-Mexico EPA provided general guidelines for the

JCEPA and the 2002 Chile-Singapore EPA set a blueprint in that it indicated that Japan intended

to protect its agricultural industry and thus maintain group harmony within the country as it also

satisfied business groups, such as Toyota, selling their products in Chile. As noted by Richard

Baldwin in 2006, once a few bilateral FTAs are concluded, the domino effect of trade

liberalization occurs (as cited in Wehner, 2007). This phenomenon was previously illustrated by

the similarities of many chapters of both the KCFTA and the JCEPA.

iv. Final Stage (Paik and Tung) / Level II (Putnam)

The last is what Paik and Tung call the final stage, in which the contract – or agreement –

is signed and ratified. For Putnam, Level II is when each party considers the agreement

separately and then decides whether it wants to ratify it – which is what happened successfully

for the KCFTA and the JCEPA (see Figure 6 for details). However, the process was faster for

Japan, which had a surprisingly smooth negotiation process. For Korea and Chile, mainly

exposed to internal frictions within Korea, the ratification process was not plain paperwork.

Figure 6: Stage III: Final Stage OR Putnam’s Level II

Korea-Chile FTA (KCFTA) Japan-Chile EPA (JCEPA)
Duration: ~ 1 year 2 months Duration: JCEPA: ~ 6 months
Feb 15, Korea and Chile sign the Korea-Chile Mar 27, Agreement between Japan and the Republic of Chile for a
2003 FTA (Seoul, Korea) 2007 Strategic Economic Partnership

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 Agreement, Attachments, Implementing Agreement
Jul 08, Meeting between Mr. Taro Aso, Minister for Foreign Affairs,
Korea-Chile FTA submitted to Mar 27,
2003 and Dr. Alejandro Foxley, Minister for Foreign Affairs of the
national assembly for ratification 2007
Republic of Chile (March 2007)
22 Jan, Chilean Senate approves FTA, Jun 15, Japanese Parliament approves Chile-Japan Strategic Economic
2004 completes legislative procedures 2007 Partnership Agreement
Feb 16, South Korean parliament approves Jul 12, Chamber of Deputies approves Chile- Japan FTA
2004 FTA 2007,
Feb 25, Exchange of Diplomatic Notes concerning the Entry into Force
Korea-Chile FTA to enter into force Aug.
2004 of the Agreement between Japan and the Republic of Chile for a
on 01 April 2004 2007
Strategic Economic Partnership
Apr 1, Korea-Chile FTA enters into force Agreement between Japan and the Republic of Chile for a
2004 Strategic Economic Partnership: OPERATIONAL
Sep. 2007
PROCEDURES referred to in Chapter 3 (Trade in Goods)
and Chapter 4 (Rules of Origin)

Joint Statement on the Entry into Force of the Agreement

Sep. 2007 between Japan and the Republic of Chile for a Strategic
Economic Partnership

Paik and Tung Putnam’s Paik and Tung Putnam’s

Total ~ 4 years 5 Total
~ 5 years 7 months ~ 2 year 10 months ~ 1 year 7 months
Duration months Duration
See Appendix E for Details

As noted by Bong and Jung, “the ratification process was severely dragged on and was

disrupted by violent protests and confusion in the National Assembly” (2004). The farmers’

protest grew larger throughout Korea while Chile easily passed the FTA bill. What saved the bill

in Korea was the government’s creation of an 8.3 million-dollar fund to compensate the farmers

for the following ten years and a preferential interest rate of mutual funds loaned to farmers

(Bong and Jung, 2004). The authors also note that in Korea “with the end of authoritarian

regimes . . . party leaders” can no longer rely on “charisma, physical violence and election

financing … to maintain party discipline” (2004), which means that Hofstede’s power distance

index should be reduced – or updated to a lower score.

In regards to viewing the negotiation process, both frameworks have their benefits. Paik’s

and Tung’s three-stage negotiation model is useful as it considers each event from the moment

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that a mutual interest is displayed. Putnam, however, by starting at level one only when

negotiation rounds begin, seem to suggest that the exchanges prior to formal negotiations do not

per se count as negotiations, which may be a more compelling approach. Indeed, two parties may

be interested in a trade agreement but not start negotiating for many years if at all. Thus

Putnam’s negotiation approach may be more useful as it captures an exchange that matters and

that is not just preliminary.

As far as the main features of the agreements, it can be insightful to compare both the

preambles and the objectives of the KCFTA and JCEPA by looking at the language used in them

and the order in which each statement is presented. In terms of format, it appears that each party

uses a careful seven-statement preamble.

Since each of the three countries is more geared towards collectivism than individualism,

it is not surprising to see them both start by discussing relationship aspects and also using strong

language such as “strengthening the special bonds of friendship” for Korea and Chile and

“longstanding friendship” for Japan and Chile.

Next, Korea and Chile discuss their mutual benefits but also the world benefits and each

party’s rights and obligations in the international trade system while Japan and Chile use a more

wordy statement to solely talk about their mutual benefits. Japan and Chile also discuss about

intellectual property which shows that it is a topic about which they are not indifferent (more

info about it in next section).

Also, each party uses language pertaining to the improvement of the standards of living

and the creation of new employment opportunities while Japan and Chile also note the positive

effects the EPA can have on the Asia-Pacific region. Furthermore, Japan and Chile discuss about

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the protection of the environment as well as sustainable development, which shows their long-

term orientation confirming Japan’s high LTO index.

In their objectives, each party discusses procedures to resolve disputes and talks about the

promotion of fair competition; Japan and Chile also mention the new investment opportunities

that will be available. Also, Korea and Chile mention intellectual property rights while Japan and

Chile do the same thus reinforcing their preamble statement

v. Post-Agreement: Additional Perspectives

1. Declarations by Korea and Japan on the

OECD Accession of the Republic of Chile

In order to better understand the Korean and Japanese communication styles in their

dealings with Chile – and therefore their international relations and trade strategies – looking at

official statements by each country towards Chile’s 2009 OECD accession (see Appendix F for

details) may provide some insights.

The first difference is the length of each declaration, with the Korean one being more

than twice as long as the Japanese one, which appears to contrast with Paik’s and Tung’s claim

that the Japanese are more methodical since this time the Koreans are more thorough. Also, it is

noteworthy that the Koreans start by congratulating Chile on its OECD accession while Japan

dedicates its first paragraph to focus on the long-standing relationship between Chile and Japan.

Indeed, Japan initially stresses the long history it has with Chile, “a century-old friend.”

Thus Japan’s focus on Chile in terms of both emphasizing the importance of the

relationship and reiterating its long-term commitment through the EPA is in line with its

relatively high score of 80 on Hofstede’s LTO index. That is not to say that Korea – with an also

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high LTO score of 75 – values its relationship with Chile any less. In fact, Korea stresses the

importance of Chile being the first country with which it ever had an FTA. Also, Korea notes

that thanks to the FTA trade between the two partners has flourished. Moreover, Korea pinpoints

the similar “success stories [Korea and Chile are] on the Asian and American continents,” which

denotes a mutual understanding of each party, but also the Korean pride in having successfully

modernized.

Indeed, Korea often uses its own story of success – while Japan does not seem to be as

virulent, as shown in its declaration which does not focus on its country or at least not directly.

However, and as observed in the JCEPA preamble, the Japanese, make it clear that Chile still

needs to progress in terms of International Property Rights. They even go as far as asking Chile

to make further reforms in a very specific area: “protection of Intellectual Property Rights.” Such

request, although it may appear that the Japanese simply try to advise Chile by saying that these

reforms will help Chile “to elevate its economy to an even higher level,” demonstrates that

despite its long-standing relationship with Chile, Japan puts itself in the favorably superior (as a

leading world economy) position as being the teacher or master and thus commanding Chile, the

newly accepted OECD member – or student. Such precision in the Japanese attitude also

showcases and confirms Paik’s and Tung’s view as the Japanese are using a highly methodical

and detailed approach to express themselves.

While the Japanese focused on Chile’s weaknesses, the Koreans appear to be cautious

about the functioning of the OECD, saying that “new members inject new blood into OECD to

revitalize a half-century old organization.” In other words, the Koreans indirectly suggest that

there needs to be changes in the OECD, but they do not indicate which ones these would be –

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thus not being as specific as the Japanese. The Koreans also warn about the potential challenges

of a growing OECD where reaching consensus would become more difficult.

Overall, both Korea and Japan are trying to forecast future issues and thus reduce the

level of uncertainty they are experiencing, which seems to be in line with their respective UAI

scores of 85 and 92.

2. Korean and Japanese Behavior at the 2010 World

Economic Forum, “Towards an East Asian Community”

Another situation in which it is interesting to analyze the behavior of the Koreans and the

Japanese, and which also provides verbal cues, was taken from the 2010 World Economic

Forum. The theme of the one-hour event was “Towards an East Asian Community” and

members of Korea, Japan, Australia, Vietnam, Indonesia, Thailand, and Singapore took part in it.

The moderator is Singaporean Kishore Mahbubani and starts the meeting by noting that western

analysts claim that “Europe’s past is Asia’s future” and that Asia will be convulsed with conflict

as each country emerges. However, Mahbubani notes that rather than conflict a sense of

community is growing in (East) Asia.

When looking at the speeches made by Deputy Minister for Trade of the Republic of

Korea Ahn Ho Young and Minister of Economy, Trade and Industry of Japan Masayuki

Naoshima, paying attention to their non-verbal communication styles or to aspects unrelated to

the actual content of the speeches provide some insights. First, it is interesting to see that

Naoshima expresses himself in Japanese and uses a female interpreter, despite being from one of

the countries that scores the highest on Hofstede’s masculinity index with a score of 95. Such

phenomenon, in addition to – as seen before – the female presence on MOFA’s “list of Senior

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Officials,” might indicate that in Japanese society women are today given more opportunities.

Indeed, although interpreters are not to be active participants in a conversation, the female

interpreter has a large responsibility, as after all, she is the voice the English-speaking world

understands.

Also, despite being instructed to only spend about three minutes for each speech,

Naoshima actually spends a full six minutes making his speech – the most among all panelists.

One may wonder why every other participant sticks to the three-minute limit while Naoshima

goes twice as long. A hypothesis might be that the Japanese are very methodical and detailed, as

per Paik and Tung note, and thus spend more time expressing themselves. However, even though

Naoshima’s counterpart, Ahn, spoke for only about four minutes, he actually uttered about 100

more words than Naoshima. In other words, Naoshima spoke at a much slower pace (~120 words

per minute) than Ahn (~208 wpm) – which is largely due to accommodating the interpreter. In

this time-constrained situation, the Japanese are handicapped by using an interpreter and not

fully able to express their message as the moderator has to intervene.

Ahn, contrarily to Naoshima, is speaking in a more natural manner, without looking at

any notes – unlike Naoshima, whose speech seems to be followed by the letter. In that sense, the

Japanese methodical approach is respected. However, such method poses limits as Naoshima

does not make any references to the other panelists’ speeches. On the other hand, Ahn makes

several references to other speeches and is thus more directly involved in a dialogue, showing

flexibility and adaptation. Ahn also moves his hands quite a bit, unlike Naoshima. Moreover,

Ahn seems comfortable improvising which confirms Paik and Tung’s rationale that the Koreans

are less structured and more expressive.

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 5) Conclusion

The Koreans and Japanese share many similarities in terms of historical and cultural

backgrounds but also have their own characteristics affected by context – as shown through this

research paper. When extraordinary circumstances take place, such as the 1997 Asian Financial

Crisis or the World Cup 2002, the Koreans may have behaved in a Korean way – that is, in

pursuit of their national interests and according to Confucian values – but at the same time they

were pressed to use a type of value that is not innate to their culture. Indeed, and this applies to

the Japanese as well as any other culture coming into intercultural communication relationships

in a progressive, day by day, immersion – such as trade relations – and as noted by Pollay, Tse,

and Wang “Western scholars tend to conclude that globalization may have fostered a global

materialist fever and jeopardized traditional values” (1990).

However, it is evident that the Japanese values, for instance, despite contextual and

situational changes, remain true to a certain extent; that is, overall in this study the Japanese have

been showcased as methodical and aspired by long-term orientation, while the Koreans have

been seen to be more unpredictable, although group consensus is important. Also, for the

Koreans power distance between senior officials and subordinate may be higher than suggested

by Hofstede.

There is no permanent way to describe how a Korean or Japanese behaves, or anyone for

that matter. An attempt to understand how Korean and Japanese behavior has evolved is through

looking at various contemporary case studies such as the FTA/EPA relations of Korea and Japan

with Chile.

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 Merely providing a list of cultural differences does not suffice as the behavior of an

individual does not solely depend on its culture, but in great part on its context in terms of

economic, political, as well as time dimensions.

As one is able to grasp the differences displayed by a Korean and a Japanese through

actual situations, and does it on a regular basis, a better understanding of cultural differences

may be formed. Therefore, the reader is left to utilize various lenses – such as the cultural

approaches and concepts pertaining to Korean and Japanese behavior, as well as Hofstede’s

Cultural Dimensions, Paik’s and Tung’s and Putnam’s negotiation frameworks – and through

these form his or her own malleable perception of how a Korean and a Japanese differ.

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 6) References

Ahn, H. Y. (Deputy Minister for Trade of the Republic of Korea), Crean, S. (Minister of Trade

of Australia), Naoshima, M. (Minister of Economy, Trade and Industry of Japan),

Nguyen, T. D. (Prime Minister of Vietnam; Chair, 2010 ASEAN), Pangestu, M. E.

(Minister of Trade of Indonesia), Vejjajiva, A. (Prime Minister of Thailand), & Yong-

Boon, G. Y (Minister of Foreign Affairs of Singapore). (2010). Towards an East Asian

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