WHITE FISH, Montana -- The accidental discovery of buried canisters of mustard gas, abandoned by Japanese troops in China over a half century ago, is only the most recent tangible reminder of the unfinished legacy of World War II. Forty Chinese workers were injured and one died after barrels of nerve gas were cut open -- one more incident to add to the register of historical grievances that China holds against Japan.

That bitter past has not prevented the two countries from working out a functional and progressive relationship. Economics is a powerful driving force. China is the biggest exporter to Japan: Beijing forecasts bilateral trade will top $130 billion by 2005. In the first half of this year, trade jumped 36 percent, with imports totaling $33.8 billion and exports rising to $27 billion. The two governments have apparently decided that pragmatism should prevail over the physical and psychological scars of war.

It is unclear how long that can continue. Japan and China are changing, as is the world around them. Failure to acknowledge and work through the past could prevent them from establishing the peaceful and stable relationship that is essential to security and prosperity in East Asia. To help that process along, the think tank for which I work, Pacific Forum CSIS, along with the Maureen and Mike Mansfield Foundation and the Asia Foundation, has cohosted a series of retreats for young opinion leaders from the two countries. We met last week in Montana to discuss the issues that divide Japan and China and see if we could come up with ways to bridge them.