East Asia has many simmering geopolitical conflicts that could bubble over. At least in the short term, according to Ian Bremmer, president of global risk consulting firm Eurasia Group, however he doesn’t think that North Korea’s nuclear program is one of them.

The major story in Asia, Bremmer began, is China’s rise to regional power status just at the moment when Japan, stirring from its long economic torpor, is reasserting itself. The two giants are set on a collision course. The U.S. lacks the political will to broker an agreement between the two, and Asia lacks the E.U.-style international institutions that could restrain them. Bremmer said his firm believes there’s a 10- to 20-percent chance of a diplomatic crisis between the two nations so severe that it could result in a substantial flight of Japanese investment from China. Conflict could also break out over access to oil and gas reserves beneath the East Sea.

On the Korean Peninsula, North Korea remains a potentially destabilizing variable. However, Bremmer believes that in the near future, “from a market perspective, [the DPRK] is no longer a problem.” It’s possible to negotiate with North Korea, he stressed. Though he believes North Korea has made it difficult to reach consensus at the Six-Party Talks by dragging its feet and trying to manipulate South Korea and China, Kim Jong-il is not a risk taker in the vein of Saddam Hussein of Iraq or President Ahmadinejad of Iran. Given the right inducements, North Korea is very likely to step back from its nuclear program.

Unfortunately Bremmer has little hope that the U.S. will put any such inducements on the bargaining table. The Bush administration, preoccupied with Iraq, has essentially stopped trying to reach a breakthrough at the talks and beneath its rhetoric, seems content with the status quo.

Bremmer closed his presentation by talking about some over-hyped Asian trouble spots, as well as some under appreciated ones. Taiwan-China issues frequently captivate the news media, however there’s less to the story than there seems. Bremmer predicted that eventually the island nation will be peacefully integrated with the People’s Republic. On the flip side, China’s relationship with India is fraught with contentious issues, and few outsiders appreciate the immense social strain China will come under when, starting in 2009, its labor force begins to shrink.

Representatives from America’s top businesses in Korea and their trade group, the American Chamber of Commerce in Korea (AMCHAM Korea), came together for a panel discussion on the current business conditions in South Korea and what both the U.S. and South Korean governments need to do to wrap up the Free Trade Agreement (FTA). The speakers were: Wayne Chumley, chairman of AMCHAM Korea; Tami Overby, president of AMCHAM Korea; Tong-Soo Chung, head of Invest Korea and senior vice president of KOTRA; Michael Zink, vice chairman of AMCHAM Korea and senior executive vice president of Citibank Korea; David Ruch, Korea country manager for United Airlines; Henry I. An, partner at Samil PricewaterhouseCoopers; James Reinstein, regional vice president for Boston Scientific; Il-Young Maing, president of United Technologies International and Jeffery Jones, attorney at Kim & Chang.

Many on the panel had just returned from AMCHAM Korea’s annual lobbying trip to Capitol Hill. According to Wayne Chumley, support for the U.S.-Korea FTA under negotiation is surprisingly high among lawmakers.

Michael Zink, whose company spent $3 billion in 2004 to acquire KorAm bank, held up his company’s experience as an example of the success open markets can create. When Citibank bought KorAm, he said, there was a public backlash, as many Koreans feared their domestic banks would be run out of business. Instead, Korea’s big banks have rethought their strategies and become stronger competitors. An FTA would mean little for U.S. investment in Korea’s financial sector, Zink added, because the country’s financial markets are already open to foreign investment.

T.S. Chung noted that American investors frequently use Korea as a safe haven from which to access risky opportunities in China. While welcoming the activity, Chung said Korea should be seen as an opportunity in its own right. China has so much foreign investment already, Chung said, that it’s cutting back on the tax incentives and grants it makes to foreign companies. Korea is ramping them up.

Closing the discussion, Jeffery Jones urged U.S. politicians to move forward on the issue of adding Korea to the country’s visa waiver program. The current U.S. visa regime is an irksome process for South Korean travelers. Relaxing it would win a great deal of respect from the Korean public, and bring millions more visitors, and billions more dollars, to America each year.

Conventional wisdom is that South Korea’s most important trading partner is the United States. Ku-Hyun Jung, president and CEO of the Samsung Economic Research Institute in Seoul, disagrees. He argues that Northeast Asia has become Korea’s most important export and investment market, and that as the region’s economy continues to grow, so will its importance to South Korea.

Seoul’s economic ties to the U.S. are vital, Ku said. Recalling when he first came to America, a time when South Korean regulations barred him from buying more than $200 of American currency, he explained that the two economies had grown closer. Looking ahead to a U.S.-Korea FTA, he added that they would continue to grow closer still. However, Northeast Asia’s economies hold much more potential for Korean companies.

South Korea’s exports to Northeast Asia have increased 600% over the last few decades, while exports to the rest of the world are up just 400%. Korean foreign direct investment in Northeast Asia is currently at $26 billion. For Samsung and LG, buyers in Northeast Asia account for a third of their total sales. POSCO sells a quarter of its products to Northeast Asian customers. With economists predicting that the region will make up 35% of the global economy in years to come, those already impressive numbers are set to grow rapidly.

South Korea’s strong position in Northeast Asia dates back to the end of the Cold War in the early 1990s. Eager to expand, export and resource oriented Korean businesses faced a daunting challenge in trying to break into mature markets like North America and Western Europe. So instead, they opted to establish a presence in places like China and the Russian Far East.

In the coming decades, Korean multinationals will draw upon their non-price advantages (such as the high quality of Korean engineers, and the country’s aptitude for developing advanced technology) to expand on their strong position in Northeast Asia. Ku predicted that, fueled by growth in Northeast Asia, the next 10 to 15 years will be a golden age for the Korean economy.