Korea, Japan in 'final stages' of talks over forced labor: National security adviser

National Security Adviser Kim Sung-han, left, speaks to reporters at Incheon International Airport on Sunday, ahead of a five-day visit to Washington. [YONHAP]

National Security Adviser Kim Sung-han said Sunday that Seoul and Tokyo are in the final stages of negotiations on compensation for forced labor victims, stressing the importance of the future generation in paving a "new era" of bilateral relations.

"I am aware that the negotiations between the diplomatic authorities of Korea and Japan are now in their final stages," Kim told reporters at Incheon International Airport before departing for Washington for a five-day trip. "An official announcement will be made at an appropriate time if such an important measure to open a new era in Korea-Japan relations is established."

His remarks comes amid expectations that Seoul's Ministry of Foreign Affairs will announce the details of an agreement reached between the two countries to settle the issue of compensation for Korean victims of forced labor during World War II.

"The future generation will be most important for Korea-Japan relations to enter a new era," said Kim. "Discussions are under way between our two countries' business circles and various sectors on what role they can play in helping youths and the future generations of Korea and Japan open a new era in bilateral relations and building their potential."

However, he didn't directly respond to a reporter's question on the creation of a joint fund.

The two countries have reportedly come to a tentative agreement to create a so-called "future youth fund" to provide scholarships for students as part of the larger comprehensive agreement to resolve the forced labor issue. The fund is expected to be jointly formed by the Federation of Korean Industries (FKI) and the Japan Business Federation (Keidanren), according to several government sources.

In two landmark rulings in 2018, the Korean Supreme Court ordered two Japanese companies — Nippon Steel and Mitsubishi Heavy Industries — to individually compensate Korean victims of forced labor during World War II. The Japanese companies refused to comply.

Japan's export restrictions on the Korean chip and display industry, starting in July 2019, were widely seen as retaliation against the Supreme Court rulings, contributing to a further deterioration of bilateral ties that are often rocky over historical disputes stemming from Japan's 1910-45 colonial rule over Korea.

The Yoon Suk Yeol administration has been making overtures to mend frayed bilateral ties since taking office in May last year.

The Korean government initially proposed compensating the victims through a government foundation using donations from Korean businesses alongside voluntary contributions from Japanese companies.

However, Japan reportedly refused any compensation, maintaining that that all matters of compensation were settled under a 1965 treaty that normalized bilateral ties. Thus, Korean companies like steelmaker Posco that benefited from the 1965 claims settlement agreement between Korea and Japan are expected to contribute to a fund for the compensation of the victims.

It appears that the two sides agreed to a third-party reimbursement method instead through establishing the future youth fund. The two companies are expected to indirectly contribute to the new youth fund through Keidanren membership fees and donations.

In turn, Japan's Prime Minister Fumio Kishida could state his government's intent to uphold a joint declaration adopted by President Kim Dae-jung and Japanese Prime Minister Keizo Obuchi in 1998, according to Japanese media.

In the landmark Kim-Obuchi declaration, Japan acknowledged the "tremendous damage and suffering to the people of the Republic of Korea through its colonial rule" and Obuchi expressed his "deep remorse and heartfelt apology."

This could pave way for Yoon to make his first visit to Japan for a summit with Kishida as early as late March.

According to Japanese media reports, the two governments are working toward the lifting of export restrictions on Korea's semiconductor materials and withdrawing of Korea's World Trade Organization (WTO) complaints in line with efforts to resolve the forced labor compensation issue.

The Yomiuri Shimbun reported Sunday that the Japanese government is planning to lift export restrictions on key materials if the Korean government withdraws its complaint with the World Trade Organization (WTO) over the ongoing trade dispute.

"If pending issues are resolved well, this will open the way for a more comprehensive relationship between the two sides," said security chief Kim on Sunday, which in turn will provide opportunities for the development of trilateral cooperation between Korea, Japan and the United States.

Kim also plans to finalize the timing and details of President Yoon Suk Yeol's upcoming visit to Washington during his U.S. trip. This comes amid reports that Yoon could make a state visit to the Washington for a summit with U.S. President Joe Biden as early as April, as the two countries mark the 70th anniversary of the Korea-U.S. alliance this year.

"We plan to conclude discussions on the timing and level of the visit during this trip," said Kim.

He said he plans to discuss with his White House counterpart, National Security Adviser Jake Sullivan, and other U.S. foreign and security officials on "how to make the Korea-U.S. alliance a more powerful alliance."

This will also be an opportunity for him to discuss with U.S. officials economic security issues, including the Inflation Reduction Act (IRA) and Chips Act, to seek ways to minimize damage on Korean businesses, and to coordinate over North Korea's nuclear threat.

When asked if he will be discussing the forced labor issue during his Washington trip, Kim replied that it is a bilateral matter between Seoul and Tokyo, but added, "The U.S. side is closely watching the improvement of Korea-Japan relations."

BY SARAH KIM [kim.sarah@joongang.co.kr]