VZCZCXRO9562
OO RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHUL #2433/01 3531117
ZNR UUUUU ZZH
O 181117Z DEC 08
FM AMEMBASSY SEOUL
TO RUEHC/SECSTATE WASHDC IMMEDIATE 2687
INFO RUCNASE/ASEAN MEMBER COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING 5089
RUEHKO/AMEMBASSY TOKYO 5196
RUEHHK/AMCONSUL HONG KONG 3753
RUCPDOC/DEPT OF COMMERCE WASHDC 1860
RUEATRS/DEPT OF TREASURY WASHINGTON DC

UNCLAS SECTION 01 OF 02 SEOUL 002433 
 
SENSITIVE 
SIPDIS 
 
STATE PLEASE PASS TO USTR FOR CUTLER 
 
E.O. 12958: N/A 
TAGS: EFIN ECON ECIN PREL KS CH JA
SUBJECT: ROKG VIEWS ON ECONOMIC ASPECTS OF CHINA-JAPAN-ROK 
SUMMIT IN FUKUOKA 
 
REF: SEOUL 2345 
 
¶1. (U) This cable is Sensitive but Unclassified and not/not 
intended for internet distribution. 
 
¶2. (SBU) Summary: The ROKG was pleased with the substantive 
economic results and press coverage of the China-Japan-ROK 
summit meeting in Fukuoka, Japan on December 13.  The 
Japan-ROK USD 3 billion "peacetime" currency swap line was 
expanded into a USD 20 billion arrangement (but in national 
currencies).  China and Korea agreed on a new swap mechanism 
denominated in local currency only -- up to RMB 180 
billion/KRW 38 trillion (approximately USD 26 billion at 
current exchange rates).  The ROKG is optimistic that the 
Chiang Mai Initiative (CMI) leaders meeting cancelled earlier 
this month can be rescheduled in January or February, which 
will afford an opportunity to announce progress on the CMI 
Multilateralization (CMIM).  The leaders agreed on a Chinese 
proposal to upgrade central bank ties through an annual 
Tripartite (Central Bank) Governors' Meeting.  Our ROKG 
interlocutors told us that the Joint Statement on the 
International Financial and Economic Situation language on 
economic cooperation referred to mutual agreement that all 
three governments would develop additional stimulus packages 
for their economies.  In his public statments, ROK President 
Lee Myung-bak stressed the agreement to work together to 
support the Declaration and Action Plan of the November 15 
Summit on Financial Markets and the World Economy.  End 
Summary. 
 
¶3. (SBU) Deputy Econ Couns talked on December 15 about ROKG 
reaction on economic aspects of the summit with Yoo Byung-hee 
(protect), of the Ministry of Strategy and Finance's 
Financial Cooperation Division and Chung Hwan-Sik (protect) 
of the Bank of Korea.  (Reftel provided Korean expectations 
of key issues to be addressed at or on the margins of the 
December 13 China-Japan-ROK summit in Fukuoka, Japan, 
including the CMIM and bilateral currency swaps). 
 
¶4. (SBU)  Yoo described the ROKG as pleased with the 
substantive outcome and press coverage of the summit.  He 
stressed President Lee's emphasis on the agreement to work 
together to support the Declaration and Action Plan of the 
November 15 Summit on Financial Markets and the World 
Economy.  Chung focused on the increasing weight given to 
dialogue between central bank governors. 
 
 
New Bilateral Swaps, CMIM and Annual Central Bank Meetings 
--------------------------------------------- ------------- 
 
¶5. (SBU) Yoo and BOK's Chung both said that the ROKG was 
pleased with the announcement just ahead of the summit on the 
new bilateral swap arrangemets.  The ROKG achieved its goal 
of expanding the swap arrangements.  Moreover,this was done 
without any linkage to progress on CMIM.  In the case of 
Korea-Japan, the USD 10 billion crisis swap line negotiated 
within the context of CMI remains intact.  The additional USD 
3 billion "peacetime" swap line (no link to the IMF) was 
expanded into a USD 20 billion arrangement.  Although this 
swap is denominated in dollar terms, it is actually a won-yen 
swap mechanism.  In the case of Korea-China, the USD 4 
billion crisis swap line remains in effect and a new swap 
mechanism was added.  The new arrangement is denominated in 
local currency only -- up to RMB 180 billion/KRW 38 trillion 
(approximately USD 28 billion at current exchange rates). 
Yoo stated that it was highly likely that the new swap 
arrangements would remain intact when the CMIM arrangements 
are implemented, but that no specific decision had yet been 
taken with respect to either the new national currency swaps 
or the bilateral crisis swaps. 
 
¶6. (SBU) Yoo added that, given the absence of ASEAN members 
at the Fukuoka meeting, no new agreements on CMI or CMIM 
could be announced at this summit.  Hinting that progress 
toward the launch of CMIM has been achieved, he said the ROKG 
will work with others to attempt to reschedule the ASEAN Plus 
3 Summit that was postponed earlier this month because of the 
situation in Thailand.  Yoo was hopeful that this could be 
arranged for January or February and would allow for an 
announcement on the CMIM. 
 
¶7. (SBU) Chung mentioned the announcement that the central 
 
SEOUL 00002433  002 OF 002 
 
 
bank governors of the three countries would hold annual 
meetings.  Previously, he explained, central bankers of the 
three countries have met informally as a group, but always on 
the margins of larger gatherings of central bankers.  In 
contrast, the new Tripartite Governors' Meetings will be 
formalized and held on an annual basis.  Chung explained that 
the Chinese had originated this idea and pushed for agreement 
to hold these formal annual central bank meetings.  He 
rejected press reports suggesting that the date and place of 
the first of these meetings had already been determined. 
 
 
Other Economic Issues 
--------------------- 
 
¶8. (SBU) The summit resulted in a Joint Statement on the 
International Financial and Economic Situation.  Yoo 
described the leaders' endorsement of the Declaration (and 
Action Plan) of the Summit on Financial Markets and the World 
Economy as hortatory.  He added that the language in the 
joint statement regarding the commitment to investment and 
free trade (and to the Doha Round) was intended to send a 
signal but was not a main topic of discussion. 
 
¶8. (SBU) Yoo noted that the reference in the joint statement 
to Asian countries playing a role as the "center of world 
economic growth" did reflect discussion of financial 
cooperation.  While no specific measures were announced, the 
leaders expressed satisfaction that each country was pulling 
in the same direction in efforts to shore up financial 
markets and enact large fiscal stimulus packages.  He said 
the leaders agreed that further fiscal stimulation would be 
undertaken by each government. 
STEPHENS