SEOUL, Jul. 19 (Korea Bizwire) — Amid a tentative truce in the U.S.-China trade war, another potentially calamitous conflict is looming between two other key players in the global economy and regional security — South Korea and Japan — with trade weaponized as well.
Often prickly Seoul-Tokyo relations are at the worst level since the establishment of their diplomatic ties in a 1965 treaty, ironically a source of their contemporary political rifts.
Japan started the latest face-off by restricting exports of some key materials to South Korea beginning July 4.
Those are photoresist, fluorinated polyimides and hydrogen fluoride, also known as etching gas. Directly targeted are South Korea’s chipmakers, especially Samsung Electronics Co.
South Korean officials said they had already drawn up a list of around 100 items shipped from Japan and vulnerable to such export control.
But Japan launched the blitzkrieg shortly after the Group of 20 summit held in Osaka, during which the host, Prime Minister Shinzo Abe, stated, “A free and open economy is the foundation of global peace and prosperity.”
Tokyo’s trade pressure on Seoul is, no doubt, premeditated. It reportedly plans to expand the export restrictions through the removal of South Korea from its “whitelist” of trusted buyers of other Japanese products, probably effective in August.
If Japan presses ahead with the significant step, it would portend a drawn-out trade fight between the two sides.
President Moon Jae-in has emphasized a focus on a diplomatic resolution but warned that the Japanese economy will suffer “more damage” if the export measure remains in effect and South Korean companies diversify import sources or commence localization.
On Thursday, Moon had emergency Cheong Wa Dae talks with the leaders of five major political parties and agreed to form a bipartisan task force to tackle the issue.
The Abe administration is apparently retaliating against Moon’s unyielding stance on the issue of compensating victims of Japan’s colonial-era atrocities, especially during World War II.
Last year, the Supreme Court here ordered two Japanese firms to pay money to the Korean victims of wartime forced labor in line with their individual rights to compensation.
Refusing to follow the rulings, they face a court-approved asset seizure.
Japan has vehemently protested the rulings, arguing all reparations, associated with its 1910-45 colonization of Korea, were covered by the 1965 state-to-state accord.
“Japan is trying to secure a permanent ‘trade weapon’ to check the growth of South Korea’s industry and jolt its ecosystem,” Chung In-kyo, a professor of international trade at Inha University, said.
Japan first mentioned a “breach of bilateral trust” and then alleged South Korea’s “inappropriate management” of dual-use, strategic materials.
Cheong Wa Dae called for an international probe into how Seoul and Tokyo have handled such materials. Japan has stayed silent about the call.
In the short term, Abe appears to be trying to drum up political support at home ahead of the Upper House election this weekend.
While the Beijing-Washington spat is about protectionism, hegemony, economic rivalry or security concerns, the Seoul-Tokyo one is more complicated as it’s rooted in their shared history.
Moon openly lamented “Japan’s unprecedented tying of history-related issues to economic ones.” He called it “truly ill-advised conduct that goes against the history of progress in bilateral relations.”
Abe’s longer-term intentions remain unconfirmed.
Japan watchers say Abe, viewed as staging a nationalist or revisionist campaign for political gains, may be seeking to reset Seoul-Tokyo relations and eventually reshape the security order in Northeast Asia as part of his “normal country” vision.
If that is the case, it heralds a far more serious blow to the overall bilateral relationship and trilateral security cooperation involving Washington.
The U.S. has been relatively quiet on the feud between its two top allies in Asia, with regional security cooperation probably in jeopardy.
On a visit to Seoul earlier this week, David Stilwell, assistant secretary of state for East Asian and Pacific affairs, faced a barrage of questions from reporters about Washington’s position.
He simply said the U.S. will do “what it can” to support the efforts to resolve the problem. He did not elaborate.
It’s an open secret that the U.S. push for closer three-way partnerships was a reason for South Korea’s previous Park Geun-hye administration’s hasty signing of a highly controversial deal with Japan in 2015 on settling the issue of “comfort women,” who served as wartime sex slaves for Japanese troops.
Washington may take behind-the-scenes action to keep the Seoul-Tokyo military information-sharing agreement alive, a key to security cooperation among the three regional powers.
For now, Cheong Wa Dae said it hopes that the General Security of Military Information Agreement (GSOMIA) will be extended as scheduled later this year.
But it added the government can review what to do about it “in accordance with situations.”
Moon has emphasized a “victim-centered” approach toward the comfort women and forced labor issues, as many South Koreans believe Japan has yet to fully atone for its wartime wrongdoings.
For Abe, Moon’s principled stance is a nagging obstacle to his normal but stronger Japan ambition.
In that sense, the trade measure may represent an initial step to change the mode of relations with South Korea from cooperation to pressure.
Internationally, Japan had long been defensive in dealing with the shameful legacy of its imperialist past.
It’s now shifting to an aggressive tone, framing South Korea as an unreliable partner. Abe may be taking a page from President Donald Trump’s tactic against Huawei, a Chinese tech giant.
Some observers talk about a de-facto end to “the 1965 system,” or the South Korea-Japan relationship 1.0.
The treaty was born when South Korea was striving to rise from the ashes of the Korean War under a dictatorial leadership.
What’s more worrisome is indications of a break from the practice of the neighboring countries maintaining close economic cooperation and people-to-people exchanges even in the event of serious historical or territorial disputes.
A growing number of South Koreans are joining a boycott of Japanese apparel, travel and electronics in their own protest at Japan’s export curbs.
Chances seem low that Japan will lift the trade measure anytime soon. Abe may be eyeing a “package” deal on the historical matters.
Moon is still determined to prevent the stand-off from spiraling out of control.
Seoul earlier proposed a joint fund created by South Korean and Japanese firms to address the compensation issue, which Japan turned down.
Moon stated his government has never said the joint fund is the only solution, and it’s open to another option that can be accepted by victims.
Japanese pundits also point out the urgency of resolving the row.
“The Abe administration would not want to push the situation into a catastrophe either,” Hideki Okuzono, professor at the University of Shizuoka, said.
“The governments of South Korea and Japan should find a resolution before the forced labor victims liquidate Japanese companies’ assets.”