PESD fellow Nadeja Victor presented Global Natural Gas Market and Russian Gas Supply Presentation on March 14 during the "market mechanisms of energy market regulation and ways of improving them" roundtable chaired Anantoliy Yanovskiy, Director, Department of Fuel and Energy Complex, Ministry of Industry and Energy, RF. In the meeting of the Group of Eight energy ministers the following days, the chair's statement was the following:

1. G8 Energy Ministers met in Moscow on 15-16 March 2006 in order to discuss the matters of mutual interest related to global energy security.

2. The reliable energy supply plays a key role in development of worlds economies bearing in mind that the well-being, way and quality of life of people directly depend on access to energy.

3. Ministers are aware that the 21st century is sure to witness a significant increase of the global consumption of energy, primarily by dynamically developing economies. Despite the increased presence of alternative sources in the energy mix, the fossil fuels will remain the basis of the world energy industry for at least the first half of the 21st century.

4. Ministers discussed the challenges to the global energy security, issues related to promotion of market efficiency of the fuel and energy sector. We note that meeting energy security challenges will require reliance on market-oriented approaches aimed at increasing energy supply and stemming growth in demand, while encouraging market-based pricing, competition, energy efficiency, and conservation.

5. Ministers point out the importance of further development and strengthening of dialogue among energy producer, transit and consumer countries, including information exchange on the current situation as well as medium- and long-term plans and programmes of development of their respective energy sectors.

6. Ministers confirm our support for appropriate international initiatives such as the Joint Oil Data Initiative aimed at greater accessibility and transparency of data on reserves, demand and supply, stocks and production capacities.

7. Ministers note that a stable future of the international energy sector requires significant investment in the production, transportation and processing of energy resources. We recognize that to attract investment it is essential for countries to have open and favourable investment regimes including stable and predictable regulations, clear tax laws, and efficient administrative procedures as well as fair and reciprocal access to markets along the energy value chain.

8. Ministers favour the implementation of the Action plan adopted last year by our leaders in Gleneagles which includes a wide range of measures to promote innovations, increase energy efficiency and enhance environmental protection.

9. Ministers proceed from the fact that diversification of the energy portfolio in terms of energy sources, suppliers and consumers as well as delivery methods and routes will reduce energy security risks not only for individual countries but for the entire international community. Joint efforts of the G8 and other countries aimed at wider use of renewable and alternative energies, development and implementation of innovative energy technologies and development of low-carbon energy would contribute substantially to the solution of this strategic task. For those countries that wish, wide-scale development of safe and secure nuclear energy is crucial for long-term environmentally sustainable diversification of energy supply.

10. Ministers agree that continued international cooperation to develop the low carbon technologies of the future will be crucial. Facilitating development and deployment of innovative energy technology solutions will have longer term environmental, economic and energy security benefits and be key to a global sustainable energy future.

11. A significant reduction of the gap in energy supply between developed and undersupplied less-developed countries is a major aspect of global energy security.

When India spectacularly burst into the headlines via its nuclear explosions in May 1998, then US president Bill Clinton had openly vented his fury before aides in the White House. "We are going to come down on those guys like a ton of bricks," he had remarked. Clinton's "volcanic fit" found its echo in the White House statement that expressed "distress" and "displeasure", culminating in Washington imposing a slew of sanctions against India.

These images from the past, culled out from Engaging India, then deputy secretary of state Strobe Talbott's book, appear incredible now. Especially as India readies itself to accord a warm reception to US President George W. Bush next week. The entente, the product of laboriously conducted diplomacy as much as geopolitical shifts that yoked the two together as 'natural allies', is now taking deep root. Sure, there will be protest rallies, strident voices will rail against Bush's hegemonic designs, Prime Minister Manmohan Singh will be cautioned against any tight clinch with Bush. Yet even these voices arise from the awareness that there's a growing relationship between the US and India, realized through knots of strategic partnership and cooperation in every conceivable field - from economy and nuclear technology to education, space and agriculture.

Bush's visit next week prompted Karl Inderfurth, who was assistant secretary of state for South Asia in the Clinton administration, to say, "All of this represents a refreshing degree of continuity in US foreign policy, based on a recognition by the last two American presidents that India is a country that will be a key player in the 21st century." Similarly, Robert Hathaway, of the Woodrow Wilson Center for International Scholars, is impressed that "two successive Indian governments representing different political views and parties... both came to the same conclusion that it is in India's interest to forge a better relationship with the US."

From imposing sanctions against India to laying out a blueprint for nuclear cooperation, both New Delhi and Washington have come a long way in an inordinately short time. Ironically, it was Clinton who provided the impetus for this transformation. Talbott says the former president, after coming to terms with the Pokhran II realities, found it "downright distasteful and counterproductive" to impose sanctions against a country he was trying to improve relations with. Consequently, Talbott, Inderfurth and senior director in the National Security Council Bruce Riedal were entrusted with the task of pulling out Indo-US relations from the abyss in which it had been languishing from the beginnings of the Cold War era.What followed was a dialog between foreign minister Jaswant Singh and Talbott, both seeking to convey to each other the security and strategic interests of their respective countries.

The dialog started yielding dividends immediately, even during the Kargil conflict. Clinton's confrontation of then Pakistani prime minister Nawaz Sharif at their July 4, 1999, meeting in Washington took trust patterns between the US and India to a new level. "Throughout this period, we kept the Indian government informed of what we were doing to try to ease the crisis," recalls Inderfurth, who played a key role in the dialog with Sharif. "All of this turned into an important confidence-builder in our new relationship with India."

"The July 4 meeting was the turning point," agrees Michael Krepon of the Henry L. Stimson Center in Washington. "It demonstrated that US engagement in the India-Pakistan imbroglio would not be detrimental to New Delhi's interests, and it shifted the Clinton administration's focus from proliferation to engagement." The trust was manifest in Clinton's spectacularly successful visit to India in March 2000. An enabling factor in the budding Indo-US romance, says former ambassador Richard Celeste, was the now-forgotten Y2K factor. "The crisis introduced India's enormously talented manpower to our business leaders. Today, the 24/7 bond between companies in the US and service providers in India is the stuff of books and myth-making."

The budding romance acquired a new meaning with the advent of Bush in the White House. His most perspicacious decision was to appoint confidant Robert D. Blackwill as ambassador to India. Blackwill appealed to the popular imagination; his unequivocal pronouncements against Pakistan for fomenting terrorism in India further bolstered the trust between New Delhi and Washington. More importantly, he sought to impart a new heft to the relationship by putting his formidable weight behind the "Next Steps in Strategic Partnership", which envisaged cooperation between the two countries in civil nuclear energy, hi-tech trade, space and dual technology. "If Clinton was the pioneer of the new relationship, Bush is its architect," says Teresita Schaffer of the Center for Strategic and International Studies in Washington.

The impulse for the new relationship is linked to the question: why has India started to matter to the US? Inderfurth cites three reasons: India will become the world's most populous nation, it may well have the world's fastest growing economy by 2020, and it is the world's largest democracy. Krepon adds one more to the list: intellectual capital. "The world expects India to do more heavy lifting," he says.

Ultimately, a relationship in international affairs hinges on convergence of interests. Ashley Tellis of the Carnegie Endowment for International Peace, who's now advising under secretary of state R. Nicholas Burns, listed a string of "common interests" at a congressional hearing last year. These included:

preventing Asia from being dominated by any single power that has the capacity to crowd out others and which may use aggressive assertion of national self-interest to threaten American presence, American alliances, and American ties with the states of the region; eliminating the threat posed by state sponsors of terrorism; protecting the global commons, especially the sea lanes of communications, through which flow not only goods and services critical to the global economy but also undesirable commerce such as drug trafficking, people smuggling and weapons of mass destruction technologies.

So, isn't China the "single power" that Tellis thinks could threaten American interests in Asia? He denied this assumption to Congress, but many feel China is indeed the factor behind Washington's attempts to assist India in becoming a major world power.As author Sunil Khilnani, of the Johns Hopkins School of Advanced International Studies, says, "Many current inhabitants of the Pentagon see an India allied to the US as a potential bulwark to a China whose ambitions are still difficult to read." Washington's long-term view is that since China will not support the US war on terror, it's a threat against which the US needs a counterweight. "Japan has proven it does not have the emotional and intellectual muscle to face China. Hence, India should play that role," explains Rafiq Dossani of Stanford University.

The Bush regime's keenness on India also springs from the disaster his other foreign policy initiatives have been. "Bush would like to leave at least one foreign policy achievement as his legacy. He'd like to claim that he 'delivered' India to the US, just as Nixon could earlier claim the same about China," says Khilnani.

These reasons apart, the relationship has gathered great momentum from business-to-business links over the last decade. Says Anatol Lieven of the New America Foundation in Washington, "India's abandoning of its social democratic economic model, derived from the Nehru period, in favor of globalization and free market economics has made it much more attractive to investment and ideologically sympathetic to the US." Indeed, the more the two countries deepen their economic interdependence, the more each will have a stake in the other. And this economic interdependence can deepen, says Stephen P. Cohen of the Brookings Institution, through the removal of obstacles to US investments. "Infrastructure, (inadequate) liberalization, and education are three real obstacles. These (improvement in the three areas) will make it easy to implement the strategic relationship."

That India matters to the US is no longer a promise of the future. At a recent conference, former state department official Walter Andersen pointed out two US decisions that underscored India's enhanced importance. First, the four-country tsunami relief efforts involving the navies of the US, Japan, Australia and India. Two, the Bush administration's efforts to exempt a nuclear-capable India from exports restrictions on nuclear and dual use technology.

The blossoming ties have enabled significant partnerships in the international arena too. India has supported the war on terror in Afghanistan; its navy protected high-value US cargoes through the Straits of Malacca; more recently, India voted with the US at the International Atomic Energy Agency to declare Iran in "non-compliance" with the nuclear Non-Proliferation Treaty.

All this doesn't mean the US and India will automatically collaborate on every problem dogging them. "Nobody expects a perfect alignment ever, but increasing alignment is something we hope will come naturally," says Schaffer. Partly this alignment can be brought about through changes in the conduct of foreign policy. For instance, the US, Hathaway admits, needs to recognize that India expects to be treated on a basis of equality. Similarly, Khilnani contends, a section of Indian political elites need to shed its instinctive anti-Americanism. "This does not mean renouncing a critical position, or an independent assessment of our own interests. It means engaging more deeply and confidently, and picking battles more selectively and prudently," he says.

Obviously, like any two countries, there will be disagreements. "Indeed, there have been over the past few years on a number of issues, including the war in Iraq," says Inderfurth. But, he adds optimistically, "the fact that this has not disrupted the upward trajectory of our relationship is a good sign and a promising one for future relations."

The United States and India have gone a long way from Cold War days of wariness and suspicion to genuine friendship and incipient global partnership. The visit of President Clinton to India in 2000 marked a breakthrough in Indo-U.S. ties, which had been set back by India's decision to conduct nuclear weapons tests in 1998.

President Bush, to his credit, broadened the road opened by Clinton and paved it with a more solid foundation. Cooperation in a range of areas, from military ties to joint scientific work, is well established. A presidential visit puts a personal seal on that budding partnership -- even if it is a couple of years late.

When it comes to Indo-U.S. relations, however, there are three pitfalls to avoid: the India card; democracy matters; and it's the economy, stupid!

The India card

Washington has a surplus of geo-strategists. As Kissinger famously played the "China card'' against the Soviet Union, the strategists imagine cleverly using an India card against a rising China.

There is one small rub in that grand design -- India isn't interested in being an instrument of an American containment strategy against China. As Robert Blackwill, former Bush administration ambassador to India, put it recently: "There's no way better to empty a drawing room in New Delhi of Indian strategists than to start talking about this idea.''

Indians eagerly compete with China for economic leadership in Asia. They have a legacy of tensions, from border wars to nuclear rivalry. But Indian policy is to engage China and create the best relationship possible.

The president is avoiding India card talk. But it is no secret that some inside the administration harbor these illusions. Let's hope they keep their mouths shut for at least this week.

Democracy matters

Beyond cliches about the world's two largest democracies, both governments have a habit of forgetting that democracy really matters. Witness the up-to-the-last-minute effort to salvage a deal from July to open India's civilian nuclear program to international inspection in exchange for access to nuclear energy technology and fuel.

The Bush administration did little to sell that deal in Congress, either ahead or afterward. Opposition has mounted on both sides of the aisles from those who fear it would undermine nuclear proliferation controls, particularly when Iran is claiming its own right to pursue peaceful nuclear technology.

The United States has now toughened its requirements. But the coalition government of Prime Minister Manmohan Singh faces rising resistance in parliament, encouraged by the prestigious nuclear establishment, to any deal that would significantly restrict India's ability to develop and build nuclear weapons.

I favored the July deal and support any reasonable new agreement that would separate a significant part of India's civilian nuclear program from its military one. Hopefully, the negotiations will succeed, but even if they do, both governments need to do a much better job selling it in their feisty democratic systems.

It's the economy, stupid

The biggest threat to this emergent partnership is to forget what brought the two countries together -- not geopolitics but shared interests. Some of those are security-driven, not least a common foe in Islamist terrorism. But the real driver has been economics.

Since India decided to open its protected economy in the early 1990s, the country has taken off, producing sustained growth rates nearing double digits. Led by the high-technology industry, foreign investment and trade with India is rising rapidly. The Indo-Americans who thrive in Silicon Valley form a powerful cultural and economic bridge between our two countries.

India's billon people include a middle class of 200 million to 300 million, equal to the population of this country, with an increasingly sophisticated appetite for Western consumer goods. In contrast to China, India has a young population, half of them under 25 years old.

For the United States, there are added opportunities -- and competitive challenges. As is evident from the Saturday morning phone calls from telemarketers in Chennai trying to sell me a new mortgage, India has a great resource in its English-speaking educated elite. That has meant job loss in the United States but also openings to create new businesses and new jobs.

Both governments need to focus on what is needed to accelerate the kind of virtual integration between India and the United States we see in Silicon Valley. If we do that right, the geopolitics will follow naturally. If we mess that up, all the strategic castles in the sky will come crashing to Earth very soon.

This past autumn the Freeman Spogli Institute for International Studies (FSI) in conjunction with the Woods Institute for the Environment launched a program on Food Security and the Environment (FSE) to address the deficit in academia and, on a larger scale, the global dialogue surrounding the critical issues of food security, poverty, and environmental degradation.

"Hunger is the silent killer and moral outrage of our time; however, there are few university programs in the United States designed to study and solve the problem of global food insecurity," states program director Rosamond L. Naylor. "FSE's dual affiliation with FSI and the new Stanford Institute for the Environment position it well to make significant steps in this area."

Through a focused research portfolio and an interdisciplinary team of scholars led by Naylor and CESP (Center for Environmental Science and Policy) co-director Walter P. Falcon, FSE aims to design new approaches to solve these persistent and under-prioritized problems, expand higher education on food security and the environment at Stanford, and provide direct policy outreach.

Productive food systems and their environmental consequences are at the core of the program. While many of these systems are global in character, but they are influenced significantly by differing food objectives, income level, and instruments among nations. The program thus seeks to understand the food security issues that are of paramount interest to poor countries, the food diversification challenges that are a focus of middle-income nations, and the food safety and subsidy concerns prominent in richer nations.

Chronic hunger in a time of prosperity

Although the world's supply of basic foods has doubled over the past century, roughly 850 million people (12 percent of the world's population) suffer from chronic hunger. Food insecurity deaths during the past 20 years outnumber war deaths by a factor of at least 5 to 1. Food insecurity is particularly widespread in agricultural regions where resource scarcity and environmental degradation constrain productivity and income growth.

FSE is currently assessing the impacts of climate variability on food security in Asian rice economies. This ongoing project combines the expertise of atmospheric scientists, agricultural economists, and policy analysts to understand and mitigate the adverse effects of El Niño-related climate variability on rice production and food security under current and future global warming conditions. As a consequence of Falcon and Naylor's long-standing roles as policy advisors in Indonesia, models developed through this project have already been embedded into analytical units within Indonesia's Ministry of Agriculture, the Planning Ministry, and the Ministry of Finance.

"With such forecasts in hand, the relevant government agencies are much better equipped to mitigate the negative consequences of El Niño events on incomes and food security in the Indonesian countryside," explain Falcon and Naylor.

Food diversification and intensification

With rapid income growth, urbanization, and population growth in developing economies, priorities shift from food security to the diversification of agricultural production and consumption. "Meat production is projected to double by 2020" states Harold A. Mooney, CESP senior fellow and an author of the Millennium Ecosystem Assessment. "In China alone, meat consumption has more than doubled in the past generation." As a result, land once used to provide grains for humans now provides feed for hogs and poultry.

These trends will have major consequences on the global environment-affecting the quality of the atmosphere, water, and soil due to nutrient overloads; impacting marine fisheries both locally and globally through fish meal use; and threatening human health, as, for example, through excessive use of antibiotics.

An FSE project is looking at these trends as it relates to intensive livestock production and assessing the environmental impacts to gain a better understanding of the true costs of this resource-intensive system. A product of this work recently appeared as a Policy Forum piece in the December 9, 2005, issue of Science titled "Losing the Links Between Livestock and Land".

Numerous factors have contributed to the global growth of livestock systems, lead author Naylor notes, including declining feed-grain prices, relatively inexpensive transportation costs, and trade liberalization. "But many of the true costs remain largely unaccounted for," she says. Those costs include destruction of forests and grasslands to provide farmland for corn, soybeans, and other feed crops destined not directly for humans but for livestock; utilization of large quantities of freshwater; and nitrogen losses from croplands and animal manure.

Naylor and her research team are seeking better ways to track all costs of livestock production, especially the hidden ones related to ecosystem degradation and destruction. "What is needed is a re-coupling of crop and livestock systems," Naylor says. "If not physically, then through pricing and other policy mechanisms that reflect social costs of resource use and ecological abuse."

Such policies "should not significantly compromise the improving diets of developing countries, nor should they prohibit trade," Naylor adds. Instead, they should "focus on regulatory and incentive-based tools to encourage livestock and feed producers to internalize pollution costs, minimize nutrient run-off, and pay the true price of water."

Looking ahead

The future of the program on Food Security and the Environment looks bright, busy, and expansive. While a varied portfolio of projects is in line for the upcoming year, a strong emphasis remains in the area of food security. Building on existing research at Stanford, researchers are identifying avenues for enhancing orphan crop production in the world's least developed countries-crops with little international trade and investment, but with high local value in terms of food and nutrition security. The work seeks to identify advanced genetic and genomic strategies, along with natural resource management strategies, to improve orphan crop yields and stability, enhance crop diversity, and increase rural incomes through orphan crop production.

Another priority area of research centers on the development of biofuels. Biofuels are becoming increasingly a part of the policy set for world food and agriculture. As countries such as the United States seek energy self-reliance and look for alternatives to food and feed subsidies under WTO (World Trade Organization) rules, the conversion of corn, sugar, and soybeans to ethanol and other energy sources becomes more attractive. New extraction methods are making the technology more efficient, and crude oil prices at $60 per barrel are fundamentally changing the economics of biomass energy conversion. A large switch by key export food and feed suppliers, such as the United States and Brazil, to biofuels could fundamentally alter export prices, and hence the world food and feed situation. A team of FSE researchers will assess the true costs of these conversions.

The FSE program recently received a grant through the Presidential Fund for Innovation in International Studies to initiate new interdisciplinary research activities. One such project links ongoing research at Stanford on the environmental and resource costs of industrial livestock production and trade to assess the extent and rate of Brazil's rainforest destruction for soybean production. "Tens of millions of hectares of native grassland and rainforest are currently being cleared for soybean production to supply the global industrial livestock sector," says Naylor. A significant share of Brazil's soybeans is being shipped to China, where rapid income growth is fueling tremendous increases in meat consumption."

A team of remote-sensing experts, ecologists, agronomists, and economists will be looking at the ecological effects on the landscape through biogeochemical changes and biodiversity loss, the impacts of land clearing on the regional hydrologic cycle and climate change, the economic patterns of trade, and the role of policies to achieve an appropriate balance between agricultural commodity trade, production practices, and conservation in Brazil's rainforest states.

"I'm extremely pleased to see the rapid growth of FSE and am encouraged by the recent support provided through the Presidential Fund for Innovation in International Studies," states Naylor. "It enables the program to engage faculty members from economics, political science, biology, civil and environmental engineering, earth sciences, and medicine-as well as graduate students throughout the university-in a set of collaborative research activities that could significantly improve human well-being and the quality of the environment."

Multinational corporations (MNCs) have increasingly located research and development (R&D) in developing countries such as China and India since the 1990s. On the one hand, governments in developing countries are eager to attract R&D to their local economies; on the other hand, developed countries are concerned about losing their competitive advantage due to R&D offshoring. At the same time, intellectual property protection is a growing concern.

What are the MNC R&D labs actually doing in China? Quan noted that her 2004 survey of MNC R&D labs in information technology industries in Beijing found that these MNC R&D labs are not just providing technical support, product localization, or product development for the local market; rather, they are developing products for the global market. Her study documents an emerging spatial division of labor in R&D based on the increasing specialization of R&D activities.

Ensuring returns appropriation

Appropriating returns is essential to continuous R&D investment. However, returns appropriation is not necessarily realized through formal IP protection institutions such as the patent system. As the growing trend of globalization of R&D has evolved to this new stage characterized by MNCs locating R&D labs in developing countries, it provides a good test bed to further explore more theoretical mechanisms of IP protection. Considering the weak intellectual property rights regimes these developing countries typically have, it is crucial for MNCs to find an effective way to protect their valuable technologies thus facilitating returns appropriation from their R&D activities in host developing regions. It is in fact the effective means of IP protection that can greatly assist MNCs' location of R&D offshore, in addition to other well-known incentives such as low cost R&D labor and market attraction.

R&D specialization essential

Using evidence from MNC R&D labs in Beijing and Shanghai, Quan's study proposes that R&D is further specialized within MNCs' global R&D network. Furthermore, IP protection and returns appropriation can be realized through such R&D specialization. The key proposition is formulated as below: 'Hierarchical modular R&D structure can be an effective way for MNC R&D labs to protect their intellectual property and thus facilitate returns appropriation in weak IPR regime developing countries'. This 'hierarchy' includes 'core R&D' and 'peripheral R&D', based on two dimensions--technology value-added, desire and ease of IP protection. While 'core R&D' is mostly done in developed countries, 'peripheral R&D' is conducted in developing countries. Dr. Quan's study suggests that this hierarchical modular R&D structure facilitates the global configuration of MNC R&D labs.

Slides from this presentation can be found at the event link below.

SEOUL, Korea - The visit last month of North Korea's diminutive dictator Kim Jong Il to China is still making waves here in the South Korean capital.

The Chinese rolled Kim through showcases of their market reforms. The North Korean leader, who once denounced the Chinese for retreating from socialism, responded with dutiful words of praise for the Chinese model.

South Koreans applaud any evidence that Kim may be headed down a Chinese-style path. Like the Chinese, most South Koreans believe this may be the only way to ultimately persuade the North to abandon its nuclear weapons program.

But in conversations here with senior South Korean officials and others closely involved with North Korea, I detected unease, even alarm, at the growth of China's influence and presence in the North. Some talked darkly about a Chinese "takeover'' of the North.

South Korean mixed feelings about China are not new. But the Kim visit comes on top of a rapid broadening of Chinese economic ties to North Korea, described in detail in a new report issued by the International Crisis Group. Chinese trade and investment in North Korea has reached $2 billion annually. Bridges and highways in and out of North Korea are being built, making it easier to ship iron ore and other raw materials out.

Hundreds of Chinese firms are investing into North Korea, in some cases grabbing deals away from South Korean companies.

Is China willing to use this expanded influence to compel Pyongyang to give up nuclear weapons? Some in the Bush administration still cling to that hope. But the report argues strongly against that happening.

China may again drag Pyongyang back to the stalled six-party talks that it hosts. And it will move quickly to curb any North Korea provocation, such as a nuclear test, that could lead to war.

But China has an overriding interest in stability as well, opposing any attempt to destabilize the Kim government. The Chinese will cooperate to curb Pyongyang's laundering of counterfeit money through their banks, the report says, but will not shut down the North's banking operations in China.

South Koreans don't differ with China on the need to engage the North. Their own economic ties with the North are deepening. And Seoul too is consumed with the danger of triggering a war by trying to cut off the North's economic lifeline.

But South Koreans now also worry that China's deepening stake in the North will only perpetuate the division of the Korean Peninsula.

A South Korean businessman who is deeply engaged in dealings with the North argued to me privately that the North Koreans are unhappy with their dependence on Beijing and eager for an alliance with the United States. By refusing to deal directly with Kim Il Jong, he argued, "the Bush administration is pushing North Korea into the camp of China.''

We should explore such claims with a healthy dose of skepticism. The North Koreans are masters at playing the Chinese and South Koreans against each other, as they did with the Russians and Chinese during the Cold War.

More important, South Korean nervousness about China comes together with renewed interest in shoring up the strained alliance with the United States. This is partly behind a decision to negotiate a free-trade agreement (FTA) with the United States this year.

A free-trade agreement between the United States and Korea, one of the largest economies in the world, would be good for both economies. It should open more markets in Korea, removing a host of barriers such as restrictions on foreign investment. Korean officials, led by a young and ambitious American-trained trade minister, believe an FTA will spur a new round of needed internal reform and a jump in growth.

Anti-FTA protests were already taking place as I was discussing this with Korean officials. More are sure to come from those, such as farmers, most threatened by more open markets. But officials say the president and his government are committed to pushing this through.

Privately, Korean officials hope the FTA will also remind Koreans and Americans of the value of their alliance. It gives both sides something to talk about other than to dwell on their differences over North Korea. We should push hard from both sides to quickly finish an FTA deal -- and continue to talk quietly about our shared interests in maintaining a strategic balance in Northeast Asia.