Select Committee on Foreign Affairs Written Evidence

Submission from the Foreign and Commonwealth Office

I.  INTRODUCTION

  1.  We welcome this inquiry. North East Asia is of vital importance, both politically and economically, to the UK and EU and key strategic priorities are at stake in the region. Some of the largest and fastest growing economies are here. It is a major source of trade and investment for the UK and wider EU, as well as being important for climate security, counter-proliferation, regional and international security. Within the region, Japan and South Korea are major "like-minded" partners for the UK: free-market economies and democracies, with shared values and a number of common objectives in international issues. We have shared interests in combating key global challenges, including in the areas of international security, counter-proliferation, climate change and poverty reduction.

  2.  Japan and South Korea will play a crucial role in ensuring stability in East Asia, which is vital to the security and prosperity of the UK and EU. Their success in achieving this will depend on their close relations with the US and involvement in the Six Party Talks on North Korean denuclearisation, and through bilateral relations with the Democratic People's Republic of Korea (DPRK). Key to this too will be Japan's improving relationship with China. A confident, outward looking Japan which enjoys good relations with China is essential for regional security and beneficial to both the UK and the EU. The EU's economic and security interests in the region are set out clearly in the Council's East Asia Policy Guidelines, published at the end of 2007. These recognise the region as being one of especially dynamic change in which the EU has substantial interests.

  3.  The DPRK nuclear and missile issues, and the fragility of its economic and political systems are a major threat to international peace and security in the region. We already work closely with South Korea and Japan and will support them where possible to ensure a peaceful and sustainable resolution to the DPRK question. We also continue to have a role in upholding peace and security on the Korean peninsula as a member of the UN Military Armistice Commission.

  4.  Trade and investment is the dominant side of our relationship with both countries with the Japanese and South Korean economies being respectively the second and eleventh largest in the world. Japan is the UK's largest trading partner outside the US and the EU with £4 billion each in goods and services. Japan is also the leading source of FDI into the UK after the US and the largest in Europe with about 20% of the total. There are huge benefits to be gained for the UK in deepening UK-Japan co-operation in R&D. South Korea is a similarly significant trade partner being the UK's eighth largest export market. Major Korean companies are also choosing the UK as the base for their European operations.

  5.  Internationally both countries are committed members of the UN being in the top 15 largest contributors to the UN Regular budget, though with Japan paying significantly more as the second largest contributor after the US. On peacekeeping, Japan's actions are limited by its constitution. In contrast, South Korea has been able to contribute troops to Afghanistan, Iraq and Lebanon and is keen to do more. Japan took over the Presidency of the G8 in 2008. The UK is working hard with Japan for ambitious outcomes on climate change and Africa and development, which are Japanese priorities.

  6.  Our relationships with Japan and South Korea are well established, though in some ways receive less public attention than the emerging relationship with China. In order to ensure that our relationships with both countries can achieve their full potential the FCO has formulated cross-Whitehall strategies to guide our engagement. These identify our key priorities for both countries: top priorities for the Japan relationship were also embodied in the joint statement issued by then Prime Ministers Blair and Abe when they met in London in January 2007. At the same time, there are senior level advisory bodies feeding into the work of Government. The UK/Korea Forum for the Future headed by Lord Kerr of Kinlochard and the UK/Japan 21st Century Group headed by the Rt Hon Lord Cunningham of Felling meet regularly in both countries to discuss the state of the relationships.

  7.  During former-President Roh's 2004 State Visit to the UK it was agreed that both countries would hold campaigns celebrating our bilateral relationship and raising awareness of each other's strengths. The South Koreans held their campaign in 2006, while the UK campaign took place in 2007, partly to mark the 50th anniversary of our raising a diplomatic presence in South Korea. In January 2008, the British Embassy in Tokyo launched a major public diplomacy campaign to mark 150 years of UK/Japan diplomatic relations entitled UK-Japan 2008. The programme focuses on highlighting UK/Japan achievements in the creative industries, science and innovation and the arts, all of which are areas for strong potential for future UK and Japanese economic growth. The Japanese Embassy is launching a reciprocal campaign in the UK, to start this autumn.

II.  JAPAN

Political situation

  8.  The conservative Liberal Democratic Party (LDP) has ruled Japan for almost all of its post-war history. In power continuously from 1955-93, they were toppled by a loose opposition coalition in 1993. But they returned to power in 1994 as part of a coalition and all governments since then have been led by the LDP. The current coalition was formed in April 2000 between the LDP and New Komeito, a small party with close ties to the lay Buddhist organisation, Soka Gakkai. The main Opposition party is the nominally "centrist" Democratic Party of Japan (DPJ)—in reality an amalgam of former members of the Socialist Party, LDP rebels and others.

  9.  After a succession of short-lived leaders in the late 1990s, Junichiro Koizumi became Prime Minister in April 2001. His fresh approach was popular with the public allowing him to pursue difficult structural reforms and tackle vested interests within the party. Koizumi was succeeded as Prime Minister by Shinzo Abe on 26 September 2006. Abe was Japan's youngest Prime Minister since WWII and the first to be born after it. He pledged to continue Koizumi's domestic reforms and to break with the post-war foreign policy consensus by amending the Constitution and promoting a proactive foreign policy. But his position was weakened when the LDP and New Komeito lost their Upper House majority in the election in July 2007 following a major pensions scandal. In theory, this allows the Opposition to block or delay most legislation. Abe resigned due to ill health on 12 September 2007 after just one year as Prime Minister.

  10.  Yasuo Fukuda succeeded Abe as Prime Minister on 25 September 2007. He is 71 and is respected for his experience, especially as Chief Cabinet Secretary under Prime Ministers Mori and Koizumi. Known for his moderate, consensual approach, Fukuda has sought to cooperate with the Opposition where possible but has shown himself willing to force legislation through the Diet using the government's two thirds majority in the Lower House. A general election is not due until September 2009, but Fukuda might be forced to go to the country before then to break the political impasse. His current poll ratings are not healthy and he has said that he would prefer to wait until at least after the G8 Summit in July.

International security and peacekeeping

  11.  Japan has become an increasingly co-operative partner on a wide range of issues including Iraq, Iran, Indonesia/East Timor, the Middle East Peace Process, Afghanistan, and in counter-proliferation and the fight against terrorism. Since 9/11 Japan has provided welcome political, economic and logistical support to the international coalition against terrorism and has extended strong civil and military support to reconstruction efforts in Iraq.

  12.  Japan's security policy has been constrained by its American-authored post-war constitution, in particular by Article 9 which renounced war, disallowed the possession of armed forces, and denied the right of belligerence. Although Japan has interpreted the constitution in a way that allows for the right to maintain self-defence forces (SDF), the current cabinet interpretation of Article 9 judges that Japan should not exercise its inherent right of collective self-defence. This has implications for Japan's participation both in Ballistic Missile Defence with the US and in UN peacekeeping operations. In practice, it also inhibits military co-operation or combined exercises with countries other than the US. Under Prime Minister Abe there was a drive to revise Article 9 to make it easier for Japan to contribute to UN peacekeeping operations. However, Fukuda has had to concentrate—at least initially—on domestic issues, and appears less inclined to take this issue forward.

  13.  In January 2004, Koizumi overcame strong domestic opposition and secured authorisation for the deployment of of approximately 550 Ground SDF personnel to southern Iraq. The forces were withdrawn at the mission's end in the summer of 2006. Japan maintains an intra-theatre airlift mission in Iraq, which has recently been extended until July 2009.

  14.  Since 2001, the Japanese Maritime Self Defence Forces (MSDF) have provided fuel to coalition vessels conducting maritime interdiction operations in the Indian Ocean in support of Afghanistan Operation Enduring Freedom. There was a short break between November 2007 and January this year when the DPJ used its Upper House majority to block renewal of the enabling legislation. This led to the temporary withdrawal of the MSDF from the Indian Ocean. The Government, using their two thirds majority in the Lower House, eventually forced through new legislation on 11 January and the MSDF have now returned to the Indian Ocean. The UK has welcomed the resumption of the mission, not least as an important symbol of Tokyo's commitment to a wider international security role.

  15.  On international peacekeeping, Japan has incrementally increased its global contributions (particularly in Asia), recently dispatching a small observation team to the UN mission in Nepal and a small policing team to East Timor. The UK Government would like to see Japan doing more despite the constitutional constraints and has lobbied for a greater contribution in Afghanistan and Africa among other places.

UK/Japan Defence Relations

  16.  In the wake of close co-operation on the ground in Iraq, the bilateral defence relationship is stronger than it has ever been. The Japanese have made clear their wish to continue regular dialogue with the UK across a wide range of defence matters, with a particular focus on, joint operational planning, defence procurement reform, the higher level management of defence, and the UK's "comprehensive approach" to Peace Support Operations (PSO). The Japanese place great emphasis on the close relationship between our two Navies—co-operation which dates back to the end of the 19th Century. There is scope to deepen our relationship still further with the two other Services.

  17.  The UK's primary security co-operation objective is to help build Japan's capacity for joint operations, particularly in the area of peace support activities combining civil and military effects. The desire is for Japan to become an effective contributor to global PSO in the medium-term. The UK also seeks to maintain Japan's commitment to its remaining mission in Iraq (airlift). Defence sales remain an important aspect of the bilateral relationship, with Japan seen as a possible market for the Typhoon.

  18.  Japan and the UK hold regular Defence Staff Talks, and single Service Staff Talks. In June 2007, Political-Military Talks were held for the first time in Tokyo jointly with the MOD, FCO,and the Japanese MOD and MOFA. Japan regularly takes up places in the UK's Royal College of Defence Studies and Advanced Command and Staff Course, with a Japanese RCDS graduate seconding to the MOD in alternate years for eight weeks (next in 2009).

US/Japan relations

  19.  The US remains Japan's principal partner in foreign and defence policy as well as trade. The US has guaranteed Japan's security since 1960 under the terms of the US-Japan Security Treaty. Like the UK, the US would like to see Japan play a more active role in international security and supports Japan's bid for permanent membership of the Security Council. Fukuda reaffirmed the importance of the alliance by making his first overseas visit as Prime Minister to the US in November 2007. The Japan and US share similar views on most security issues, including on DPRK (but see below). They also agree on a policy of engagement towards China. Prime Minister Fukuda took this approach further at the East Asian Summit in November last year stating that the alliance should be used to leverage an enhanced Japanese role in Asia to boost relations with China and the Republic of Korea. The Japan and US have begun co-operation on a ballistic missile defence programme in response to the DPRK and terrorist threats. The base realignment agreement in May 2006, which should be implemented by 2013, should lead to a substantially more integrated and regionally focused US defence posture. However, there remain difficulties with local communities in the areas surrounding the bases.

  20.  DPRK featured prominently in Fukuda's visit to the US on 17 November 2007. He emphasised that Japan was concerned by DPRK's nuclear and missile programmes, as well as the Japanese abductees issue (see below), and feared that DPRK would not keep its promises on denuclearisation. President Bush reassured Fukuda that the US would not jeopardise the US-Japan relationship as it sought to normalise relations with the DPRK, and that the Japanese abductees would not be forgotten.

EU/Japan relations

  21.  Japan's bilateral relationship with the EU is anchored in two documents: the Joint Declaration of 1991 and the Action Plan for EU-Japan Co-operation of 2001. The Joint Declaration established common principles and shared objectives in the political, economic, co-operation and cultural areas and established a consultation framework for annual meetings between Japan and the EU. The Action Plan has four basic objectives: promoting peace and security; strengthening the economic and trade partnership; coping with global and societal challenges; and bringing people and cultures together. An EU-Japan summit takes place annually at the level of the President of the European Council, the President of the European Commission and the Japanese Prime Minister. The next Summit is due to take place in Tokyo in April.

  22.  At the last EU-Japan Summit in June in Berlin in June 2007, it was agreed to deepen Science and Technology co-operation as part of the shared drive to a knowledge-based society and the promotion of innovation. This drive was also reflected in the adoption of an IPR Protection and Enforcement plan to further encourage co-operation in this area. A new high level dialogue on trade issues was launched last year, as well as the Industrial Co-operation Dialogue. There was also an initialling of an Agreement on Customs Co-operation and Mutual assistance.

  23.  The EU has recently started to realise its interests in the preservation of peace and security in East Asia and the need for effective and consistent EU diplomacy in the region to affect this. Furthermore, regional countries have made clear their desire for the EU to play a greater, more strategic role in the region. The endorsement of the East Asia Policy Guidelines in Council and subsequent publication on 20 December 2007 are a step forward in our efforts to achieve a coherent and strategic EU approach to East Asia. The guidelines are based on the assessment that East Asia is a region of especially dynamic change in which the EU has substantial interests and set the parameters for pursuing the EU's broad foreign and security objectives in the region (Attached at Annex 1).

Japan regional relations

China

  24.  Japan normalised relations with China in 1972 and the two countries have strong, and growing, economic links. But there are underlying tensions in the relationship. Japan is concerned about the implications of China's rapid economic growth for regional security and is particularly concerned about the growth in, and lack of transparency of, China's defence spending. In China, there are still bitter memories of Japanese actions in the 1930s and 1940s, which the Chinese Government has occasionally fanned for its own domestic reasons.

  25.  Prime Minister Fukuda's premiership holds out the prospect that Japan's relations with China will continue to improve. Fukuda sent out a strong signal to Beijing by ruling out making visits to the Yasukuni Shrine immediately after he became prime minister. Fukuda's relations with Prime Minister Wen are markedly more relaxed than those of his predecessors. His lunch with Wen at the East Asian Summit was the first time a Japanese prime minister had had lunch with his Chinese counterpart in a third country; and a recent phone call was reportedly the first ever between Japanese and Chinese leaders. This was followed by a successful visit by Fukuda to China in December 2007.

  26.  A key objective in bilateral relations is to increase China's efforts in reducing GHG emissions and other pollutants. During Fukuda's visit to China the two sides committed to pilot projects in emissions reduction, to strengthen intellectual property in the area of energy efficient technologies, and to co-operate on clean production in heavy industry. They also agreed to step up joint research and training programmes on environmental issues, with a target of 10,000 participants over three years. China is Japan's top priority for strengthening international collaboration (with South Korea a close second) and in many areas of science and technology appears to have overtaken individual EU countries in terms of numbers of scientific exchanges and research projects (the US remains top partner). Leading Japanese Universities and research agencies have opened offices in Beijing.

  27.  On the East China Sea dispute (over territorial limits relating to exploration rights for gas reserves), it was agreed that the negotiation teams would be upgraded to Vice-Ministerial level. However, territorial delineation efforts remain deadlocked and China continues its development of some gas fields near the disputed boundary. The next target for progress is Hu Jintao's visit to Japan scheduled for spring 2008.

South Korea

  28.  Although the history of the colonial period remains a sensitive issue, links between Japan and South Korea have been expanding in the economic and cultural areas. Relations with the South were normalised under the Basic Treaty in 1965 and had shown signs of warming after President Kim Dae-jung, during his visit to Japan in September 1998, stated publicly that the relationship should look forwards, not back. President Roh Moo-hyun visited Japan for a regular summit meeting in June 2003 but, after he clashed with Prime Minister Koizumi over a variety of what he saw as "inappropriate" Japanese actions (including visits to Yasukuni), these Summits were suspended. Relations improved after Prime Minister Abe's visit to Seoul in October 2006. South Korea's new President, Lee Myung Bak, has said that he is keen to strengthen the relationship further, moving on from the past, and there are signs that this is receiving a warm response in Tokyo.

North Korea

  29.  Japan's relations with DPRK been overshadowed by the latter's nuclear and missile programmes. They have been further complicated by the DPRK's unwillingness to give a full account of its abduction of an unknown number of Japanese citizens in the 1970s and 1980s, Koizumi's bold decision to visit Pyongyang and meet Kim Jong II in September 2002 was supposed to pave the way for normalisation of relations. But Kim's confirmation that the DPRK had abducted Japanese citizens provoked a backlash in Japan. The Japanese Government responded by cutting off the humanitarian aid that it had been providing to the DPRK. This temporarily resumed in May 2004 when Prime Minister Koizumi made his second visit to Pyongyang and secured the release of the immediate families of those abductees who had been allowed to return to Japan. The UK has repeatedly expressed its support for Japan's efforts to resolve the abductees issue.

  30.  Japan is a participant in the Six Party Talks, which address the DPRK nuclear issue. It has adopted a sceptical position on the prospects of DPRK giving up its nuclear weapons and has consistently insisted on a resolution of the abductees issue. Japan does not contribute to the 1 million tonnes of heavy fuel oil (or equivalent) energy aid that the DPRK is entitled to receive under the Six Party Talks's 13 February Agreement if it fulfills its side of the bargain. A Six Party Talks working group established to work towards the normalisation of Japan-DPRK relations has failed to make substantive progress.

Wider political relations with Asia

  31.  Japan is by far the largest investor and bilateral aid donor in the ASEAN region. Prime Minister Fukuda used his first East Asian Summit to develop his greater focus on Asia. He held a series of meetings with regional leaders at which he discussed bilateral and regional topics. These included Premier Wen of China, President Roh Moo-Hyun of the Republic of Korea and Prime Minister Manmohan Singh of India, and others. He also met the Burmese Prime Minister and called on him to re-double his efforts to bring about democratisation and to open negotiations with Aung San Suu Kyi. Japan has been negotiating a series of Free Trade Agreements and Economic Partnership Agreements with its ASEAN partners.

Relations with international organisations

  32.  Japan is a reliable member of the international system and contributes 19.5% of the UN regular budget. Japan is supportive of UN administrative reform. Securing permanent membership of the Security Council is a long-standing aim for Japan. The UK supports wider representation, including a permanent seat for Japan. It joined the International Criminal Court in 2007. As President of the G8 and an active player in the IFIs, Japan takes seriously the need for effective international institutions and shares a number of our objectives on institutional reform, eg on the UN and the IFIs.

UK/Japan relationship

  33.  Japan is one of the UK's most important global partners. It is a strong ally on nuclear non-proliferation, the third largest aid donor in the world and shares with the West similar values and approaches to major foreign policy issues. Engagement with Japan is crucial on these issues and on climate change, conflict prevention and reform of international institutions. This does not prevent the UK Government making it clear where it differs from Japan on such issues as whaling and the death penalty.

  34.  In order to make more of the close working relationship with Japan, the FCO, with other Whitehall departments, formulated a UK/Japan strategy in September 2006 with the aim of deriving benefit for both countries' international priorities.

  35.  In January 2007, former Prime Minister Abe visited the UK and signed an agreement with former Prime Minister Blair on promoting bilateral relations. The agreement endorsed joint objectives in four areas: international security, climate change, international development and science, technology and innovation and has formed the basis for developing relations in 2007. (The agreement is attached at Annex 2).

  36.  In January 2008, the HMG took stock of developments over the past 18 months recognising that the political climate in Japan since the strategy was written had changed significantly. Japan's key role in counter-proliferation and conflict prevention, its importance to the UK for trade and investment and its central role in discussions on development and climate change was underlined. We are now looking at ways to develop the EU/Japan relationship and improve further the UK image as a place for future direct investment.

  37.  In 2008, the British Embassy launched UK-Japan 2008 to mark 150 years of UK/Japan diplomatic relations. UK-Japan 2008 is a major public diplomacy campaign running throughout the year, organised jointly by the British Embassy and British Council. It focuses specifically on highlighting UK/Japan achievements which are contemporary, creative and collaborative in the creative industries, science and innovation and the arts—all areas with strong potential for future UK and Japanese economic growth. There will be well over 100 events in total as part of UK-Japan 2008, ranging from major public events, performances and exhibitions through to science and business workshops. (A list of highlight events is attached at Annex 3).

Trade relations

  38.  Japan is the UK's largest trading partner outside the US and EU. It offers export and technology opportunities in key business sectors such as aerospace, automotive, IT, health care, nanotech, pharmaceuticals and financial services. Japanese companies are generally open to buying products, services and technology from the UK, but competition is getting tougher. Japan is a major trading and foreign direct investor in the Asia/Pacific region. There are strong prospects for UK companies to establish closer business links with Japanese partners ie joint ventures, investing in Japan to target the region as well as the large Japanese domestic market. The market can be confusing, expensive and time-consuming: large and small UK companies value UKTI help with introductions, market research, events and PR.

  39.  Japan is the leading source of FDI into the UK after the US. Some 1445 Japanese-owned companies have invested in the UK, which is host to over a quarter of all Japanese investment in Europe. Japanese-owned companies employ over 100,000 in the UK, far more than in any other European country. Of the Japanese companies operating in the UK, over 230 own manufacturing facilities and over 150 have their own R&D operations. In 2004-05, UKTI recorded 57 investment projects from Japan, creating over 3,000 new jobs. The number of projects for 2005-06 totalled 84. In 2005, Japan invested more through acquisition in the UK than in any other market, and more than at any time since 1988. Many of these are strategic investments for the global market, expected to benefit the UK operations acquired as well as the acquiring companies. There are strong prospects for investment from Japan in the pharmaceutical and life science sectors and in ICT (services and software as well as equipment), with opportunities in sectors as diverse as environmental technology, aerospace and medical equipment. Japanese-owned car plants account for over 50% of UK car production, three quarters of it exported. Over 70 Japanese companies manufacture automotive components in the UK. Automotive R&D, not least Environmentally Friendly Vehicle technology, is a major target, both for collaborative R&D and for independent facilities.

Science and Technology Relations

  40.  Japan is the UK's second biggest partner for research collaboration. Our priorities are aligned, focusing on climate change, sustainable energy, healthcare and innovation, as set out in the PMs' joint statement in January 2007. The Japanese government aims to invest 1% of GDP in science and technology over the five year period (2006-11), with an annual budget in FY 2008-09 of 15.5 billion pounds. There is increasing focus on investment in strategic priorities. Under the Cool Earth initiative for example Japan aims to invest approximately USD 30 billion in developing innovative low carbon technologies over the next five years. It is in our interest to ensure that this investment is effectively aligned with our own investment in energy R&D, both to support development of UK needs and capabilities and to ensure effective international co-operation in this arena—as recommended in the Stern Review.

  41.  Overall, Japan accounts for about 20% of the world's R&D, 80% of which is conducted by the private sector. The top 10 Japanese companies invest more in R&D than the UK public and private sectors combined. Access to Japanese R&D strengthens the UK science base, supports technology development by UK business and helps build a common agenda around the key challenges facing the UK and Japan—security, climate change, energy supply, an ageing population and infectious disease. It has an important role to play in delivery of a low carbon, high growth economy.

  42.  UK scientists stand to gain from access to Japanese funding and support for collaborative research, particularly in those areas perceived to be less strong. The International Strategy recently published by the Research Councils sets out more clearly the importance of international collaboration in maintaining UK scientific capabilities. Informally, the Research Councils estimate that around 220 million pounds of research funding supports projects with some form of Japanese involvement (second to the US). There is strong evidence to suggest that internationally co-authored research papers have a higher impact than those resulting from non-collaborative research. The relationship is of mutual benefit, with Japan particularly interested in developing links to UK expertise in the life sciences (the most striking example being a GBP 8 million grant to Imperial College to establish a joint programme on structural biology) and the UK focused on developing links in advanced materials, physics and ICT.

  43.  Access to Japanese research facilities and data is also important to maintaining the strength of the UK science base, particularly as Japan has invested heavily in advanced research facilities and is a participant in major international projects (such as ITER—the experimental nuclear fusion reactor). Access to the Earth Simulator supercomputer in Yokohama helped secure continued UK leadership in the field of climate modelling, with UK researchers estimating that this put their research one to two years ahead of where it would otherwise have been. Output from the collaboration contributed to the fourth IPCC report and the skills can be transferred to the UK's own supercomputer (HECToR) through continued partnership with the Japanese. The Japanese contribute around GBP 4 million to run a muon research facility at the Rutherford Appleton Laboratory in Oxford and have just agreed to extend that facility by another five years. An MOU between next generation synchrotrons in the UK and Japan (Diamond and SPring8 respectively) ensures that both countries remain at the forefront of global research and maximises scientific output. Other benefits include the opportunity to work with Japan in complex data heavy areas, such as systems biology and structural biology (eg access to large amounts of structural biology data).

Development Relations

  44.  The UK has good relations with Japan on development: development was one of four priority areas for the bilateral relationship going forward in the statement signed by PMs Abe and Blair in January 2007. During 2007, the Department For International Development has made substantial investments its relationship with Japanese counterparts, particularly through visits to Japan and contribution to G8 papers, as part of wider efforts to increase engagement with major donor countries.

  45.  Current signs indicate that the investment is paying off. The Japanese have confirmed that together with Climate Change, Development and Africa will be one of the key themes of their G8 Presidency. Japanese priorities on development fit well with UK government priorities for the G8 Summit: the primacy of the MDGs; the importance of making progress on health systems and education; economic growth; and the fundamental connections between climate change and development.

  46.  Bilateral cooperation in country is also increasing. Discussions are underway in Ethiopia, Kenya, Rwanda, Tanzania and Uganda to identify areas where the UK and Japan can collaborate more. The UK and Japan have different complementary strengths: Japanese strengths of particular interest are growth, infrastructure and investment and bringing lessons from Asia to Africa. These discussions are important in view of current Japanese ODA reform process—from October 2008 DFID and the Japan International Co-operation Agency (JICA) will be two of the largest bilateral aid organisations in the world.

  47.  The UK is working closely with Japan on development both within the G8 Presidency and in preparations for the fourth Tokyo International Conference on Africa (TICAD IV) which is being held in May 2008. The results of this will feed into the G8 Summit.

  48.  Overall despite the fact that the Japanese ODA budget is falling due to its tight fiscal situation and low public support for development, Japan is an important and complementary partner to the UK on development with whom the UK's relationship is closer than ever before.

Environment relations

Climate Change

  49.  Prime Minister Fukuda has confirmed that climate change will be the priority theme for the G8 summit, and has pledged to continue "Cool Earth 50", former PM Abe's personal climate change initiative. Although other Ministries favour a more ambitious approach, the Japanese approach to climate change has been strongly influenced by the Ministry of Economy, Trade and Industry (METI) which favours a stance based on voluntary agreements and a sectoral approach. They co-ordinated their position very closely with the US throughout COP 13 in Bali in December 2007, and were consistently among the back markers (along with the US, Canada and Australia) in resisting further mention of short-term emissions reduction targets for developed countries.

  50.  Prime Minister Fukuda moved Japanese policy forward when he launched Japan's G8 agenda at the World Economic Forum at Davos on 26 January 2008. In his speech, Prime Minister Fukuda proposed:

—  Japan would agree, together with other major emitters, to set a post-Kyoto "quantified national target". This "could be" based on a bottom-up sectoral methodology.

—  The 1990 base year and other issues "must" be reviewed to ensure fairness.

—  A global target of 30% improvement in energy efficiency by 2020.

—  Japan's "Cool Earth Partnership" would offer $10 billion to work with developing countries in tackling climate change.

—  Japan would aim to create with the US and UK a new multilateral fund, and called on other donors to participate.

—  Japan would invest US $30 billion in energy R&D over the next five years and set up an "international framework" in order to work closely with international organisations like the IEA.

  51.  A further agreement along the lines of Kyoto is opposed by the Keidanren, and especially by a group of energy intensive industries (steel, electric power, cement). Their view is that the Kyoto Protocol, with its 1990 baseline and "6, 7, 8" (Japan 6%, USA 7%, EU 8%) target setting was deeply unfair to Japan, which had considerably better energy efficiency in 1990 than its competitors. This group is resisting any further mandatory target setting, and has instead set itself tough voluntary targets, promising to buy CDM credits if it fails to meet them.

  52.  The British Government has been active on this issue with Japan. As well as discussions with the government, we have been in contact with business, the media and civil society. With business we have been arguing that the global move to low carbon presents a business opportunity for Japan, with its world class, energy efficient companies. Among our public facing events, we held a joint symposium with the Keidanren in May at which former Foreign Secretary Margaret Beckett spoke; and arranged public presentations by BERR Secretary of State John Hutton MP, the former Chief Scientific Adviser Sir David King and the former Head of the Government Economic Service, Lord Stern.

Whaling

  53.  Whaling remains a point of contention. This will continue to be the case so long as Japan insists on its right under the Convention for the Regulation of Whaling, to carry out "scientific" whaling. Japan carries out large-scale lethal scientific whaling programmes in the Antarctic and North Pacific. Under JARPA II, (in the Antarctic) Japan announced its intention to take 935 minke whales, 50 Fin whales and 50 humpback whales annually (though the humpback programme was later suspended). The UK is strongly opposed to all lethal whaling, except for some limited subsistence whaling, and works with allies within the International Whaling Commission (IWC) to maintain a majority of the current membership in favour of the international moratorium on commercial whaling. The UK and its allies regained the simple majority at the IWC Annual Meeting in 2007, but continued Japanese recruitment of developing countries puts this at risk.

Death penalty

  54.  Japan continues to apply the death penalty. There was a de facto moratorium in place during most of 2006, but Japan did not hold de facto abolitionist status. Execution is by hanging and is carried out in secret, with little notification to prisoners and none to their families. Recently however Justice Minister Kunio Hatoyama decided to announce the names of three prisoners executed on 7 December 2007, the first time such details have been disclosed. The UK usually lobbies on the death penalty as part of the EU. The EU raises the death penalty during Human Rights Troika meetings and through démarches.

  55.  There is an active "Parliamentary League against the death penalty". The league is planning to submit an abolition bill to the forthcoming ordinary session of the Diet, one of the main points of which will be that life sentences should be introduced as an alternative to the death penalty. The Japanese government justifies its position in favour of the death penalty by reference to strong public support and a rise in violent crimes, although the standard of public safety in Japan is higher and reported crime rates are far lower than in most industrialised countries.

III.  REPUBLIC OF KOREA (SOUTH KOREA)

Political Situation

  56.  The end of the Second World War freed Korea from 35 years of Japanese rule but the country divided into US and Soviet occupation zones along the 38th Parallel. This then acquired semi-permanent status with the onset of the Cold War. The Republic of Korea was founded in the south on 15 August 1948 and the Democratic People's Republic of Korea (DPRK) in the north on 9 September the same year. On 25 June 1950 the DPRK invaded the South Korea and overran most of the country. A UN Command (UNC) led by the USA was established to defend the South. The war devastated the peninsula. An armistice was signed between the DPRK/China and UNC on 27 July 1953. South Korea's early Presidents established authoritarian dictatorships but waves of civil unrest eventually led to the first truly democratic elections in 1987.

  57.  Lee Myung-bak from the centre-right Grand National Party decisively won the December 2007 Presidential election and succeeded Roh Moo-hyun on 25 February, ending 10 years of progressive government. Lee Myung-bak nominated former Finance and Foreign Minister Han Seung-soo (who has close links to the UK) as his Prime Minister.

  58.  After the last National Assembly elections in April 2004, the progressive Uri Party was the largest party with 152 seats, followed by the conservative Grand National Party (GNP) with 121 seats. In the run up to the latest presidential election the competition between potential candidates led to a major restructuring of progressive political groups with the United New Democratic Party (UNDP) replacing the Uri Party at the centre. Despite the party's efforts, the UNDP's candidate was beaten by the GNP's in the election. Further regrouping of political parties can be expected before the National Assembly elections scheduled for April with the UNDP now merged with the Democratic Party to form the United Democratic Party (UDP).

INTERNATIONAL SECURITY AND PEACEKEEPING

  59.  The 1953 Mutual Defence Treaty between South Korea and the US forms the basis of its alliance with the USA, which ensures security on the Korean Peninsula. The US is re-configuring its presence to a smaller, but more potent force of 25,000 stationed within South Korea. South Korea's largely conscript army supports this with over 600,000 troops, the sixth largest in the world. The US has other forces in the region on which it could call if necessary. South Korea will assume operational wartime control of its forces in 2012.

  60.  With a per capita defence expenditure exceeding that of the UK, together with modern and capable defence forces, South Korea has considerable potential as a substantial contributor to international peace keeping operations. Its desire to play a greater role on the international stage and to maintain its alliance with the US has led to South Korean soldiers being sent overseas to play a valuable and important role in the last six years, albeit rarely on the front line. The transition team for the new Administration recently recommended the creation of a 1,000 strong standing force available for Peace Support Operation (PSO) with the UN by the end of 2008, increasing to a 2,000 strong force by the end of 2012. Currently, under the South Korean Constitution, all deployments of soldiers overseas require the annual approval of the National Assembly. However, it is also likely that new legislation will be proposed during the next twelve or so months that will allow Korea to deploy forces on UN mandated operations without the specific approval of the National Assembly. The success of this legislative change, which will facilitate rapid deployment of Korean forces on UN PSO and which has been attempted three times previously, will very much depend on the size of the government majority after the National Assembly elections in April.

  61.  Despite its a modern well-equipped military, the potential PSO contribution by South Korea can be over-estimated primarily because her regional security responsibilities take precedence. In addition, South Korea's forces are largely conscripted and, as a result, are much more closely linked to the civilian population than volunteer professional forces such as exist in the UK. Not only does this result in a higher level of public, and therefore political interest in any potential deployment of the armed forces, but also results in a reduced ability to accept casualties.

Afghanistan

  62.  In December 2007 all bar one of the last South Korean troops serving in Afghanistan returned home, ending their six-year mission during which they had suffered one fatality. About 50 South Korean army medics and 150 engineers had been stationed in Afghanistan since 2002 to help with reconstruction and rehabilitation efforts, including paving the runway at Bagram airport, expanding major roads and providing medical services to about 259,000 people. The mandate of the deployment had been extended several times. It was due to end at the end of 2008. However, the kidnapping of 23 Korean missionaries/"aid" workers in July and subsequent murder of two of the group by Afghan militants who demanded the withdrawal of the deployment was followed by a South Korean decision to end the deployment early.

  63.  South Korea remains involved, however, in a small Provincial Reconstruction Team (PRT)in Afghanistan. A group of 20-30 government officials, civilian medical staff and vocational training experts were sent to Bagram airbase in January 2008. The PRT also includes a group of five soldiers formed of two doctors, one chemist, one administrator and one "manager" (a Lieutenant Colonel who will act as the Vice Chief of the PRT). The PRT will provide medical services and vocational training.

Iraq

  64.  By late 2004 South Korea's 3,000 troops in the Zaytun Unit made it the third largest contributor of troops to the Multinational Force (MNF) behind the US and the UK. Numbers have steadily dropped since then, with annual cuts the price for gaining three rounds of National Assembly approval for this somewhat unpopular and controversial deployment. In December 2007, the National Assembly agreed to extend the deployment of the Zaytun Unit to Iraq until the end of 2008, cutting the number of troops from 1,008 to approximately 650.

Lebanon/Middle East

  65.  358 South Korean troops have been serving as UN peacekeepers in Lebanon since July 2007. The deployment consists of a formed unit of infantry combat troops with some support elements. The deployment is relatively uncontroversial.

Elsewhere

  66.  There is a possibility that the South Korean Navy may contribute to Combined Task Force (CTF) 150 operations in Indian Ocean. CTF 150, currently commanded by the UK, is a combined naval force employed in counter piracy and anti-terrorist operations in the Middle East. In addition, the Transition Team working for the new administration recently recommended the deployment of Korean forces to assist in the UN mission in Darfur "within the early part of this year". The expected creation of a 1,000 strong force for UN operations by the end of 2008 (increasing further to 2,000 by the end of 2012) and attendant changes to the legislative procedures necessary to allow these forces to deploy rapidly, will greatly enhance Korea's ability to contribute to global PSO.

UK/South Korea Defence relations

  67.  Defence relations between South Korea and the UK are good but our influence is limited, as South Korea's security remains dependent on the US military presence and security umbrella. The UK retains a role through its membership of the UN Military Armistice Commission (UNCMAC), thereby contributing directly to peace and stability within the region. The UK provides the senior Commonwealth officer to UNCMAC (a Brigadier) and a National Liaison Officer (a diplomat)

  68.  The UK's primary defence relations objective is to persuade South Korea to contribute more to global PSO and at least to a level commensurate with her world economic ranking. The UK and South Korea hold biennial Defence Staff Talks and share similar views on many security issues, such as counter-proliferation, counter-terrorism, and regional/global security. There is a growing relationship between the Navies, cultivated through high-level contact, Naval Staff Talks, and regular ship visits. South Korea sends students to the UK's Royal College of Defence Studies and Advanced Command and Staff Course, and there is a developing relationship between our respective defence and security academic institutions. The UK and South Korea have established an ongoing Air Force Cadet exchange programme and a midshipman's exchange programme is under development.

  69.  Defence sales remain a significant area of UK interest. The South Korean armed forces—the 6th largest in the world—are in the process of modernising and are likely to offer an increasingly competitive, and potentially lucrative, defence market for UK industry. Specifically, the UK hopes to encourage greater transparency within South Korean defence procurement procedures. Areas of potential for British defence business include maritime surface and sub-surface sub-systems and integration expertise; helicopters and rotary wing sub-systems; aircraft sub-systems, unmanned aerial vehicles; as well as force protection technology for all environments.

  70.  South Korea has an energetic high-tech defence industry that is keen to grow to become a net exporter. Particular strengths include shipbuilding and armoured vehicle production. It is keen to have its own fifth generation fighter, as well as blue-water submarine and aircraft carrier capabilities, aiming to develop a domestic capability for these by 2020. A key factor in all defence-related contracts is the ability to transfer IPR and ensure domestic Korean production capacity. South Korea is a possible future partner in the TYPHOON project (although EADS and Spain rather than the UK have the responsibility for pursuing this).

US/South Korea relations

  71.  President Roh came to power vowing to loosen the historic ties between the US and South Korea. Nevertheless, at the end of his presidency, the US still maintains nearly 30,000 troops in South Korea and South Korea's ground forces have a very strong relationship with the US Army. President Lee, however, recognises the importance of the US-South Korea special relationship and has pledged to take steps to strengthen it, although a desire for independence from the US will still remain in some quarters.

  72.  In April 2007, US and South Korean trade negotiators in Seoul concluded a bilateral free trade agreement (FTA). The trade deal was Washington's largest since NAFTA, agreed over 10 years ago, and South Korea's largest ever. The FTA is expected to boost two-way trade, currently over $70 billion a year, by up to 20%. The deal is predicted to add up to 1.99% to Korean GDP and up to 0.2% to US GDP. It has yet to be ratified in either capital.

EU/South Korea relations

  73.  In 2006, the EU became South Korea's second largest trade partner (with the UK its largest recipient of Korean investment for three out of the last four years) and its largest foreign investor. The EU, therefore, has major direct economic interest at stake in South Korea and is currently negotiating a Free Trade Agreement (FTA) and considering whether to negotiate an updated Framework Agreement, which would demonstrate how its relationship has grown with South Korea. Of particular interest to the UK is the liberalisation of the Korean financial and legal services markets, the lifting of indirect ownership restrictions on telecomms companies and the elimination of whisky tariffs. The issue of whether to include a clause covering Kaesong Industrial Complex (see below) as part of the overall EU/South Korea FTA is under discussion.

  74.  President Lee is expected to seek to improve and expand relations with the EU, focussing on: maximising economic cooperation (through the conclusion of EU-Korea FTA); improving Korea's investment environment for the EU (as part of a global policy designed to attract more foreign investors); strengthening cooperation with the EU on key 21st century challenges (energy, environment, fight against terrorism); expanding cultural and education exchanges and cooperating with the EU for a post-nuclear North Korea.

South Korea regional relations

China

  75.  South Korea's relations with China are driven by trade worth over $120 billion a year. The political relationship after 15 years of diplomatic relations, however, is becoming more mature and President Lee intends to develop that relationship further. Soon after his election in January, he sent a number of special envoys to key countries, including China.

DPRK

  76.  Hostilities between the DPRK and the UN ended under the 1953 Armistice, but there is no Peace Treaty. A heavily guarded De-Militarised Zone (DMZ), supervised by the UN Command Military Armistice Commission under the Armistice Agreement, still separates the DPRK and South Korea. A war between the two Koreas, while unlikely, would have disastrous consequences for the Korean peninsula. This scenario is perhaps made less likely as both sides have committed to work for the reunification of Korea. President Kim Dae-jung's Sunshine Policy from 1998 to 2003 led to the first ever Inter-Korean Summit in 2000. It aimed to reduce tension on the peninsula and encourage inter-Korean co-operation. President Roh pursued a similar approach, with great emphasis on economic and tourism co-operation.

  77.  Over the past 10 years, South Korea has invested more than US $1 bn into infrastructure projects and provided other humanitarian assistance to the North. South Korea hopes that by exposing the DPRK to outside influences, and improving basic infrastructure, the regime will see the benefits of engagement and becoming a responsible member of the global community.

  78.  President Lee has pledged to take a more cautious but pragmatic stance concerning inter-Korean relations. The key political difference will be Lee's determination to coordinate his DPRK policy more closely with that of the United States. Consequently, the new government will attempt to link any expansion of existing inter-Korean projects with progress at the Six Party Talks and agreements reached at the 2-4 October 2007 inter-Korean summit will be "re-examined in regard to feasibility, fiscal burdens and public opinion in the south". Inter-Korean related issues have been categorised by the new South Korean administration into three "baskets": projects that should be implemented as planned; those dependent on the progress of the denuclearisation process in North Korea (likely to constitute the majority); and finally plans that will be momentarily suspended. Projects with substantial benefit to South Korea will be continued (such as Kaesong Industrial Complex and the tourist resort at Mt. Kumgang). As yet, Lee has shown no particular rush towards the negotiation of a Peace Treaty with his northern counterpart and other interested parties.

  79.  Lee also proposed, as part of a wider package of government restructuring, that the Ministry of Unification (MOU) be merged with the Ministry of Foreign Affairs and Trade, ending its 40 year history. Lee's proposals need to be approved by the National Assembly, but he has found resistance from the United Democratic Party, which opposes the abolition.

Kaesong Industrial Complex (KIC)

  80.  Most assistance from the South has gone into the development of initiatives such as the Kaesong Industrial Complex or the Mt Kumgang Special tourism zone. Many more initiatives—both economic and tourist—were agreed at the Second Inter-Korean Summit 2-4 October 2007, which was followed by numerous official level meetings and several high level visits by Prime Ministers and intelligence chiefs.

  81.  KIC is located 12km north of the DMZ in the DPRK. It was opened in 2004 under the management of the South Korean company Hyundai Asan to allow South Korean (and other) businesses to manufacture goods using North Korean cheap labour. Currently 22 companies are operating in the complex employing 11,803 North Koreans and 709 South Koreans. By 2020, the plans are to have 2,000 companies employing 350,000 North Korean workers and turning over 20bn USD. There are plans too to include a tourism complex and a zone for biotech and hi tech enterprises eg semi conductors.

  82.  Working conditions at the KIC have been the subject of much debate from a human rights perspective. Although conditions are much better than those elsewhere in the DPRK, concerns have been raised by a number of human rights organisations about the absence of basic worker's rights. These include the right to freedom of association and collective bargaining, the right to strike, the prohibition on sex discrimination and sexual harassment, and restrictions on child labour. The DPRK is not a signatory to the International Labour Organisation (ILO). The nominal salary for DPRK workers in Kaesong is US$68 a month—considerably more than they would normally be paid. The problem is that only a part of this gets to the workers with the DPRK government siphoning off the rest. Kaesong is a source of foreign currency income for the DPRK regime and although this may not contravene UNSCR 1718, the lack of transparency is problematic.

DPRK Human Rights

  83.  To date, South Korea has been hesitant to openly criticise the human rights situation in the DPRK, and has abstained from all UN DPRK human rights resolutions, with the exception of the 2006 related UNGA resolution. Our Embassy in Seoul is working hard to raise the profile of DPRK human rights issues and is sponsoring a South Korean NGO working on North Korean human rights to produce a report on children's rights in the DPRK, based on refugee testimony. Some 10,000 refugees have settled in South Korea, as South Korea is committed by its constitution to accepting all refugees from the DPRK. These numbers are growing at a rate of around 2000 a year.

Relations with International Organisations

United Nations

  84.  The appointment of former South Korean Foreign Minister, Ban Ki Moon, as UN Secretary General was viewed by many as heralding South Korea's arrival on the world stage. South Korea is fully committed to the UN reform agenda, and the need to shape a more efficient, effective and responsive UN, headed by a Secretary-General empowered to run it. South Korea was admitted to the Geneva Group (15 largest contributors to the UN Regular Budget) in 2006 in recognition of its financial contribution (2.2%, UK 6.6%) and its reform credentials.

UK/South Korea relationship

  85.  The UK's bilateral relationship with South Korea goes back over a century and 2008 is the 125th Anniversary of the signing of the Treaty of Friendship, Commerce and Navigation between the UK and Korea. The UK recognised the Republic of Korea when it was founded in 1948 and was quick to support UN actions on the peninsula during the Korean War. The UK also played a full part in South Korea's reconstruction and British know-how helped in the development of the shipbuilding and automotive industries. HM The Queen made a State Visit to South Korea in April 1999 and President Roh paid a State Visit to the UK in December 2004.

  86.  Cultural and education links with the UK are also thriving. The number of Korean students currently studying in the UK is approximately 20,000. The British Council has been in Seoul since 1973, and now receives over 700 visitors a day, with unprecedented interest in its services. Its English language teaching programme is one of the largest in the world and is set to expand, as the new South Korean government places greater emphasis on English skills.

Trade

  87.  South Korea is a significant trade and investment partner and is one of 16 countries in UKTI's High Growth Markets Programme. But it is not an easy place to do business and there is a degree of anti-foreign business sentiment in the country. UKTI's services are therefore highly valued by the British business community and the team in Seoul is one of UKTI's top performers world wide.

  88.  In 2006 (the latest full year for which statistics are available) the UK was Korea's eighth largest export market and Korea was the UK's twentyfifth. UK exports to Korea were valued at US$2.976 billion and Korean exports to the UK US$5.635 billion. Major UK exports in 2006 included whisky at US$222 million (by far the most important—in value terms—export from the UK to Korea since 2003 and in the top three for the past 15 years) and medicinal products (US$162 million). In the other direction, mobile phones (US$1.2 billion); ships (ferries, cruise ships and tankers) (US$688 million); and motor vehicles (US$609 million) were the most significant contributor to Korea's favourable balance of trade with the UK.

Year	UK Exports of Services to Korea (£ million)	UK Exports of Goods to Korea (£ million)	UK Imports of Services from Korea (£ million)	UK Imports of Goods from Korea (£ million)
2006	784	1,702	265	3,116
2005	712	1,640	254	3,084
2004	903	1,451	248	3,128
2003	462	1,462	186	2,616
2002	495	1,464	185	2,869
Source: DTI Statistics. [Note: In 2005 the UK accounted for about 1.2% of Korea's import market. Biggest exporters to Korea were: Japan (16.5%); China (15.7%) and the USA (10.9%). Korea's biggest export markets were: China (21%); USA (13.3%); and Japan (8.2%).]

  89.  UK companies are present in a range of sectors in Korea. We are particularly strong in banking where Standard Chartered (the largest single foreign direct investor in Korea) and HSBC (currently attempting to get a majority share in the Korea Exchange Bank valued at around US$6.3 billion), are particularly high profile. Prudential and Barclays are others in the financial services sector with a strong presence. In retail, Tesco in its collaboration with Samsung is the nation's second largest supermarket chain and derives around 40% of its overseas profits from its Korean operation. Other notables include Diageo (Korea is the fourth largest market for Scotch Whisky by value), Burberry, Unilever, BAT, AMEC, Rolls Royce, Astra Zeneca, GSK, Shell and BP.

  90.  In 2006 there were a number of high level official trade-related visitors to Korea from the UK including the Lord Mayor of the City of London, John Hutton (SoS BERR) and Susan Haird (Deputy Chief Executive of UKTI). Korea also receives a large number of senior business figures with Sir David Wright, Sir Thomas Harris, Stephen Green and Sir John Rose all regular visitors.

  91.  On the investment side, many Korean companies are choosing the UK as the base for their high value European operations. Samsung and LG have long been major investors in the UK and during 2006, LG Electronics relocated their European Headquarters from Amsterdam to Slough. The UK is also the centre for Samsung Electronics' European operations as well as headquarters and a large R&D facility. In addition, Samsung has a product design centre in Clerkenwell, London. At the end of 2006, Doosan Heavy Industries made a very large investment in the UK (acquiring Mitsui Babcock for US$160m and renaming it Doosan Babcock) and has over 1000 employees across Britain and is Doosan's technology centre for boiler design and engineering.

Science and Innovation

  92.  Research links have become an important part of the bilateral relationship and are becoming more so. Korea's rise from one of the poorer countries in the world to 11th or 12th largest economy in just a few decades has been brought about, in a large part, by the growth and development of a number of technology based industries—semiconductors, steel, shipbuilding, automotive, construction, electronics, nuclear energy. Korea regards further technological developments and innovation as key to future prosperity and both the government and industry invest heavily in R&D.

  93.  The UK stands to benefit from Korean funding for collaborative research, access to Korea state-of-the-art facilities and working with the best Korean scientists. The UK offers in-depth strengths in most areas of science and a willingness to collaborate on a mutually beneficial basis. The bilateral S&I relationship is based on a UK-Korea Science & Technology Agreement dating from 1985 and a Science & Technology Joint Commission held every two years led by Ministers. The broader umbrella of the UK-Korea Science, Technology and Innovation Partnership (first agreed in 2004) brings industry into the mix and attracts support funding from the trade Ministry (the Ministry of the Knowledge Economy).

  94.  Korea signed a Science & Technology Agreement with the EU in 2007 and is looking to increase its participation in EU programmes. The relationship with the US is strong and many leading Korean scientists have spent time US, either for their studies or subsequent research. Korea is keen to play a role on the global stage and has joined international projects such as ITER.

  95.  Korean strengths include nuclear physics, electronics, telecommunications, manufacturing processes and nanotechnology. Biotechnology is a growth area with government and industry treating it as a priority. Korea has an indigenous Space programme and is due to complete its own launch facilities this year and launch vehicle in 2009-10.

Climate Change

  96.  South Korea is the world's 11th largest economy and is ranked as one of the OECD's highest per capita emitters. It is the world's 10th largest energy consumer—4th largest importer of oil and 2nd largest importer of LNG, and has a key role in the global debate on climate change.

  97.  It is in the anomalous position of being an OECD member that is non-Annex 1 to the Kyoto Protocol. Thus, if it shows more ambition there is a potential role to play in bridging the gap between developed and developing countries. Whilst not a developing country in the traditional sense of the phrase, it is widely seen amongst the +5 countries as setting a benchmark for development and has a per capita GDP rate comparable to some EU member states. Some South Korean officials have expressed strong interest in carbon pricing and trading as a mechanism to reduce emissions levels globally, although widespread scepticism remains. The South Korean government and business are increasingly preparing for a potential domestic trading scheme as well as the possibility of taking on board a commitment post 2012—although concerns over negative impacts on competitiveness pose a considerable obstacle. They are strong proponents of the Clean Development Mechanism and are becoming more vocal in the formal UNFCCC processes.

  98.  In December 2007, South Korea unveiled a plan to increase the use of new and renewable energy to 9% of the nation's total energy supply by 2030 (from the current level of 2%). The South Korean government also announced a plan to drastically increase its renewable energy budget in 2006 as part of an effort to adapt to high oil prices and to encourage the use of environmentally friendly energy sources. Discussions are underway with South Korea on an MoU with the UK on benchmarking climate technologies and carbon pricing and mechanisms.

  99.  The new President has not yet set a specific agenda for environment and climate change issues, but both areas have been identified as a goal of the new government's foreign policy. But the Prime Minister, Mr. Han Seung-soo, as special envoy of UN Secretary General on climate change, has voiced criticism of South Korea for failing to take efficient measures against its CO2 emissions. There are also indications that the new government may react to growing international pressure with a more constructive approach on climate change policy—although economic growth will remain the highest priority. Plans for the construction of a trans-Korea canal will also be presented as a contribution to the reduction of air pollution but it will have an enormous environmental impact and there is strong opposition in South Korea—also on grounds of cost.

Development Relations

  100.  South Korea is a key emerging donor with a great deal of promise. Multilaterally, Korea is stepping up engagement in all fora. Most recently, in January 2008, South Korea was granted observer status with the Multilateral Organisations Performance Assessment Network (MOPAN). Although an OECD member, South Korea is not yet a member of the Development Assistance Committee (DAC).

  101.  In preparation for joining DAC (planned for 2010), South Korea is substantially increasing its aid volumes and aid effectiveness. Korea's ODA/GNI ratio is set to grow from 0.09% to 0.15% by 2010 and 0.25% by 2015, bringing volumes of $3-3.5 billion. This would easily put Korea in the top 10 DAC donors in volume terms based on present forecasts. President Lee has pledged to increase South Korea's ODA, particularly to Africa (although as yet he has not announced any figures).

  102. South Korea looks to the UK as a role model for ODA work and has established a close working relationship with the Department for International Development (DFID). Korea is particularly interested in exchanges on evaluation and effectiveness and a policy dialogue is held annually between DFID and the Ministry of Foreign Affairs and Trade (MOFAT). This is a key partnership for the UK in terms of increasing aid volumes, effectiveness and co-operation. Korea has the potential to have considerable impact on the world stage.

Human Rights

  103.  The death penalty is a divisive and controversial issue in South Korea. As of October 2007, there were 64 people on death row, but an execution has not been carried out since 31 December 1997. South Korea, therefore, gained "an abolitionist in practice" status from Amnesty International on 31 December 2007. A special bill to abolish the death penalty has been introduced three times into the National Assembly (NA), but it has yet to be debated in the National Assembly Legislation and Judiciary Committee. If the National Assembly doesn't vote for this bill by May 2008, the bill will expire. President Lee, however, is a retentionist, which perhaps reduces the chances of the bill going through the National Assembly by the required deadline. Nevertheless, the UK will continue to take every opportunity to encourage the South Korean government to abolish the death penalty.

DEMOCRATIC PEOPLE'S REPUBLIC OF KOREA (DPRK)

United Nations Security Council Resolution 1718

  104.  Following the DPRK's nuclear test on 9 October 2006, the UN Security Council unanimously adopted UNSCR 1718. The resulting sanctions included a ban on the export and import to/from DPRK of goods and technologies that could be used in a WMD programme. It also provided for the freezing of assets of individuals and entities supporting DPRK's WMD programmes and a travel ban on those individuals. The UK, along with EU partners, has implemented 1718, and encourages others to do the same.

DPRK's nuclear programmes and international efforts to end it

  105.  The DPRK's nuclear weapons and ballistic missiles programmes are the most immediate threat to security in the region. Besides the potential threat to the DPRK's neighbours (in particular Japan) and the wider risk from onward proliferation, an unchecked DPRK nuclear programme would undermine global non-proliferation norms weakening our ability to counter proliferation elsewhere.

  106.  The DPRK acceded to the Non Proliferation Treaty (NPT) in 1985, but in January 2003 it stated its intention to withdraw. The UK does not consider the DPRK to have met the withdrawal provisions of the NPT when announcing its departure, though we accept that others recognise that the DPRK has withdrawn. Following that announcement, we halted any bilateral activity, which might be seen to directly support the DPRK regime, eg economic/technical assistance and trade promotion. We have made it clear to the DPRK that relaxation of these restrictions will not be considered without progress on the nuclear issue and also on human rights concerns.

  107.  On 10 February 2005, the DPRK publicly claimed to have manufactured nuclear weapons. In February 2007 it acknowledged having extracted plutonium from spent fuel rods (almost certainly removed from the DPRK's 5-megawatt reactor at Yongbyon). We believe that the DPRK has also tried to develop a uranium enrichment programme for weapons purposes.

  108.  In addition, the DPRK is also believed to have chemical and biological weapons capabilities. It is not a party to the Chemical Weapons Convention (CWC), but has ratified the Biological and Toxin Weapons Convention (BTWC). It possesses and has tested missiles, which we believe are capable of delivering payloads to all of Japan and beyond. It has also demonstrated expertise in technologies that could, if developed successfully, give its missiles the capability to reach the UK.

  109.  Since 2003, the DPRK has engaged in the Six Party Talks process with South Korea, US, Russia, China and Japan. In September 2005 the parties agreed a Joint Statement in which the DPRK undertook to abandon its nuclear weapons and programmes and return at an early date to the NPT.

  110.  Two further agreements followed. The first was on 13 February 2007 and laid out the First Phase Initial Actions for the Implementation of the 2005 Joint Statement. The DPRK met its obligations under this Agreement, albeit after a delay while a mechanism was found to release its funds from the Banco Delta Asia in Macau, which had previously been subject to financial measures imposed by the US. The Second Phase Actions were agreed on 3 October 2007. Under this, the DPRK had to disable all its existing nuclear facilities. It also undertook by the end of 2007 to provide a complete and correct declaration of all its nuclear programmes (the US has made clear that this must include any hitherto clandestine programme to produce highly-enriched uranium). In return, it will get further substantial energy assistance and the prospect of further progress on normalisation of relations with the US and Japan.

  111.  At the time of writing, the DPRK had still not made its nuclear declaration. The sticking points appear to be references to its uranium enrichment programme and the size of its plutonium stockpile and past proliferation activities. Resolution of these sensitive matters will delay release of the declaration. Also, the DPRK claims that it has not received all the oil and other compensation agreed under the Six Party Talks, and that the US needs to remove it from the list of state sponsors of terrorism and to cease application of the Trading with the Enemy Act to the DPRK before it delivers its declaration (the US firmly rejects this). Most of the disablement at Yongbyon has been completed, but the DPRK has slowed the unloading of the nearly 8,000 fuel rods there in response to what it claims is the slowness of other Six Party Talks partners to meet their obligations.

  112.  The 3 October Agreement leaves for the next (third) stage the big issue of dismantling North Korea's existing nuclear devices and stockpile of plutonium. Until these are given up the DRPK will remain a nuclear and proliferation threat.

  113.  Whilst not a participant in the Six Party Talks, the UK and the EU strongly support the process, and both we and the EU have made clear our readiness to assist. The UK and EU also take every opportunity to press the DPRK to honour NPT obligations and to negotiate constructively and in good faith in the Six Party Talks. We will continue to work with the EU and the international community to try to reduce the threat of DPRK WMD proliferation.

EU/DPRK Relations

  114.  As already mentioned, the DPRK's nuclear programme and the attendant risks of proliferation is a major threat facing the region. A stable region is vital to protect the EU's economic interests in countries such as South Korea. Thus, the EU is keen to see successful progress at the Six Party Talks, leading to the denuclearisation of the Korean Peninsula.

  115.  Following the DPRK government's call for an end to humanitarian aid in 2005, the EU has been winding down interim arrangements put in place to cover existing projects. The main focus of EU funding is now food security, primarily to tackle chronic malnutrition. The World Food Programme (WFP) is continuing its efforts on a reduced scale, but monitoring food distribution is difficult and concerns remain that not enough food is reaching intended targets, including vulnerable groups such as small children and the elderly.

  116.  In the absence of any progress following a widely supported condemnatory resolution at the 2003 UN Commission on Human Rights, the EU tabled a second resolution in April 2004. This called for the establishment of a UN Special Rapporteur on DPRK Human Rights. Professor Vitit Muntarbhorn was appointed to this position in July 2004. The DPRK government refused to acknowledge either the resolution or the appointment. The EU tabled a further resolution at the UN CHR in April 2005, which was again adopted by a significant majority. In addition, an EU-sponsored resolution was adopted by UNGA in December 2005 during the UK's Presidency of the EU, and again in 2006 and 2007.

Relations with International Organisations

UN—Human Rights

  117.  The DPRK is party to four key UN human rights treaties: the International Covenant on Economic, Social and Cultural Rights (ICESCR); the International Covenant on Civil and Political Rights (ICCPR); the Convention on the Rights of the Child (CRC); and the Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW). Reports are however regularly submitted late. The UK continues to urge the DPRK government to fulfil its obligations under the human rights instruments to which it is party and to allow UN special representatives to visit the country, including Special Rapporteur, Vitit Muntarbhorn. The UK strongly opposed any move to drop the DPRK Rapporteur's mandate at the Human Rights Council in June 2007, and worked closely with partners to ensure it was not weakened or abolished.

United Nations Development Program (UNDP)

  118.  UNDP suspended its operations in the DPRK in 2007 following suspicions that in 2006 funds in the DPRK were misspent and used to purchase "dual use" items (GIS equipment, computers and a spectrometer). These questions are still being investigated.

UK/DPRK relationship

  119.  Despite our strong condemnation of DPRK's poor human rights record, we have maintained an Embassy in Pyongyang since 2001. Despite the difficult circumstances in which our staff operate, they have regularly and frankly imparted our concerns about nuclear proliferation and human rights to senior DPRK officials.

  120.  The UK has a policy of carefully targeted engagement with the North Koreans. It sets out to support the Six Party Talks in order to ensure early denuclearisation of the Korean peninsula, as well as considering ways to counter the wider threat that the DPRK poses to regional stability in North-East Asia. It also outlines our efforts to challenge human rights abuses in the DPRK and explores ways to improve the overall flow of information into and out of the DPRK on human rights issues. Our aim is to work for a positive change in the DPRK by exposing the country to external thinking and alternative models of economic and social organisation.

English Language Training

  121.  The FCO has funded a British Council-run programme to provide English language training to North Korean trainee teachers and students at three Pyongyang universities since 2003. This programme is welcomed by the DPRK government. Each year some trainee teachers are given the opportunity to visit the UK as part of their course, which provides an excellent opportunity for them to experience British culture at first hand.

  122. Through the British Council, we have also arranged English Language Training courses in the UK for mid-ranking officials from various DPRK Ministries. Again, this has enabled us to expose those who may hold influential positions in the future to external thinking.

Trade

  123.  We have considered the possibility of expanding UK trade links with the DPRK, for example, by notifying UK business of Trade Fairs held in Pyongyang twice a year. However, UKTI ministers on advice from the FCO decided in 2002 that all trade promotion activity by HMG should be suspended until the DPRK nuclear issue was resolved. Some EU partners, on the other hand, argue that trade relations are an important part of bringing the DPRK out of its isolation. While the DPRK has certainly made some positive moves in relation to the nuclear issue, it is a long way from being resolved. We therefore continue to feel that for now we should uphold the existing trade policy, but bring this under review if there is significant progress on the nuclear issue.

Human rights

  124.  The DPRK is widely considered to have one of the worst human rights records in the world. Much of the evidence for this record comes from North Korean defectors, who are also referred to as refugees, escapees or border crossers, who provide shocking reports of serious and widespread violations of basic human rights in the DPRK. The alleged abuses include: abductions and disappearances; arbitrary detention and imprisonment for up to three generations of the same family; regular use of the death penalty (including political and extra-judicial and public executions); routine use of torture and inhumane treatment; forced abortions; political prison camps and labour rehabilitation camps; extreme religious persecution; and chemical experimentation. Foreign observers in Pyongyang have been able to confirm directly harsh restraints on freedom of information.

  125.  The DPRK has repeatedly invoked sovereignty, non-interference and cultural differences to avoid its human rights responsibilities. Humanitarian aid workers and diplomats in Pyongyang are subject to severe internal travel restrictions and some 20% of the counties in the DPRK remain inaccessible "for reasons of national security". The government denies foreign diplomats access to judicial institutions, saying that it amounts to interference in the country's internal affairs. These restrictions, coupled with the government's self-imposed isolation and unwillingness to co-operate with the international community on human rights, make it difficult to compile evidence regarding human rights abuses.

  126.  We have made it clear to the DPRK government that we cannot extend the benefits of a full and normal bilateral relationship until we have evidence that it is addressing our concerns on issues such as human rights. We will continue to raise human rights issues directly with the government and voice our concern in international fora. Until the DPRK responds to international concerns, the UK will work with EU partners and others to maintain and increase pressure in the appropriate international bodies.

Broadcasting

  127.  Anecdotal evidence from refugees suggests that increased numbers of illegal radio sets are being smuggled in to the DPRK from China, and that more people are listening to foreign radio broadcasts. Refugees have often said that this has been a factor encouraging them to leave the DPRK.

  128.  The UK has explored the possibility of the BBC World Service broadcasting Korean language programmes into the DPRK, based on the assumption that such a broadcast would not be jammed. The BBC produces no Korean service at present. The World Service has concluded that it would be difficult to make a robust business case for this service in the current financial climate and given the difficulty in measuring impact. US radio services VOA and RFA already have Korean language broadcasts and do not operate under the same restrictions as the BBC in having to justify audience numbers. It is likely, therefore, that the US will continue to lead the way forward in this area.

March 2008

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Prepared 30 November 2008