Updated May.7,2008 09:19 KST

Korea's Trade Deficit With Japan Tops $10 Bil.
Korea's trade deficit with Japan this year has surpassed US$10 billion in less than four months. According to the Ministry of Knowledge Economy on Tuesday, Korea racked up a trade deficit with Japan from the start of this year until April 20 of $10.289 billion.

This is an increase of more than $1 billion over the same period last year ($9.242 billion). The deficit is larger than Korea's combined trade surplus of $10.019 billion with the European Union and China, the sources of Korea's largest trade surpluses.

The growing trade deficit with Japan is due largely to surging imports of capital goods, such as high-tech components and semiconductor manufacturing equipment. Increased imports of iron and steel products made from raw materials whose prices have been soaring also played a part.

From Jan. 1 to April 20, Korea imported $633 million worth of iron and steel products from Japan, up 29.2 percent year-on-year. Imports of precision chemicals also jumped 33.4 percent year-on-year to $268 million.

While almost no Korean cars were sold in Japan, Korea imported $53 million worth of Japanese cars, up 22.7 percent from the previous year.

The widening trade gap will likely trouble the possible signing of a Korea-Japan free trade agreement. Working-level talks on the proposed pact are set to take place soon.

A government official said, "Imports from Japan are expected to increase if a Korea-Japan FTA is signed, so the worsening current trade deficit will not work favorably toward creating a positive atmosphere for the negotiations."

(englishnews@chosun.com )