Tokyo (AsiaNews/Agencies) – China wants to set up a free trade zone with Japan and South Korea, according to Japanese daily Nihon Keizai Shimbun.

For the paper the move is a step to ease tensions between Tokyo and two of its major trading partners in the wake of a recent row between China and Japan and the more long-standing grievances against Japan in both China and South Korea dating back to World War II.

China is likely to propose that the three countries create a new study group comprised of members from government, academia and the business community to study issues related to a free trade pact, the paper reported.

The proposal could be made as soon as this Saturday, May 7, when foreign ministers of the three countries meet in Kyoto on the sidelines of a meeting of Asian and European foreign ministers.

Japan and South Korea are already discussing bilateral free trade initiatives, but Tokyo seems reticent vis-à-vis China because of concerns about free trade impact on its domestic agriculture, which is protected by high custom tariffs, despite a bilateral trade flow worth US$ 212 billion in 2004.

Japan has been aiming instead for an investment pact among the three to regulate investment flow and improve the transparency of investment rules in China.  (PB)