Japan-India relationship, back to economics?

Japan's Foreign Minister Nakasone wrapped up a visit to India earlier in the month. That Japan's interests in India are expanding should come as no surprise, India too is a rising power in international affairs. What is interesting however is the approach to India that Japan has taken. It is no secret that India is viewed as something of a strategic hedge against China in some if the conservative circles in Japan. The Quadrilateral Initiative was a clear indication of this strategic assessment by Japan. Indeed, PM Abe who set up the Quad was crystal clear about the need to balance China out in the region when he discussed it with President Bush in 2007. But the Indians were in no mood to be added to a balancing coalition and this type of obvious strategic coordination collapsed in short order (early 2008). If India does not view China in quite the same way as Japan, how has Japan attempt to persuade them?

The same as always it seems, by providing economic side payments. The most important of these is the Japan-India Free Trade Agreement currently under negotiation. The Japan-India FTA is a strategic issue for Japan, as much as an economic one. Let's compare some figures. The bilateral trade flow between India and Japan is hoped to reach USD 20 billion by 2010. While, in spite of the current world financial crisis (which has knocked off nearly a quarter of trade versus the previous year) China and Japan's bilateral trade flow is over twice that at 45 billion. But Japan and China are not discussing an FTA. While, on the other hand, Japan and India are discussing an FTA.

With India accession to an ASEAN plus FTA, and the Australia/New Zealand-ASEAN FTA in place, Japan's FTA with India will lock-in the East Asia Summit (preferred by Japan to the APT) as the focus point for future regionalism.