Volume 8, 2006

Beijing and Washington continued to spar over economic policies, mainly: the trade imbalance, revaluation of China’s currency, and intellectual property rights (IPR) violations. However, both sides made attempts to improve relations. President Bush and President Hu held an April summit in Washington and Admiral Fallon – the Commander of US Pacific Command visited China. Moreover, Visits to China by USTR Schwab and Treasury Secretary Paulson, resulted in the launching of a new US-China Strategic Economic Dialogue. Bilateral military ties took a step forward with the first ever US-China joint naval exercise. The end of 2006 saw a gaggle of Cabinet secretaries, led by Treasury Secretary Paulson, travel to Beijing for the inaugural meeting of the Strategic Economic Dialogue. No breakthroughs were achieved, but both sides seemed pleased with the outcome.

As the Six-Party talks went into another freeze, North Korea continued to exacerbate tensions throughout the region. Despite a DPRK delegation traveling to New York for a “working-level” meeting to discuss US financial sanctions for North Korea’s alleged counterfeiting of US dollar, Pyongyang said it would continue to boycott the nuclear talks until Washington lifted the financial sanctions. Seoul was furious when in late May Pyongyang cancelled a long-delayed test run on the reconnected cross-border rail tracks. While the impasse over the Six-Party Talks continued, North Korea shocked its neighbors by launching seven missiles on July 4. This rude gesture cast a large shadow on Seoul’s “Sunshine” policy, and put most of the dense network of inter-Korean contacts on ice. Fourth quarter events were overshadowed by a North Korean nuclear test, resulting in a strongly worded (but not strongly enforceable) UNSCR 1718, imposing sanctions. However, the nuclear test spurred a flurry of diplomatic action, which resulted in North Korea returning to the Six-Party Talks. When the talks reconvened in Beijing on Dec. 18, little progress was made other than reaffirming the Sept. 19, 2005 Joint Statement.

The Japan-US relationship took a minor hit as Japan re-imposed the ban on US beef imports. However, they bounced back in the second quarter as the “Sayonara Summit” was considered a huge success and Japan lifted the ban on US beef (once again). Japan’s bilateral relationships with China and South Korea continued to fray due to Prime Minister Koizumi’s visits to Yasakuni Shrine. Yet, for the first time in over a year, the foreign ministers of Japan and China met on May 23.

In a historic first, the US and South Korea agreed in late October to transfer wartime operational control of Korean troops to South Korea sometime between 2009 and 2012