Category: Japan

This article in The Diplomat really articulates why Japan and South Korea are having their current bitter trade dispute:

To understand why a free trade-dependent, rules-upholding country is apparently willing to undermine the rules of free trade with one of its most important trading partners, it may be useful to divide rules, norms, laws, treaties – the “stuff” of international order – between the content of what they regulate, e.g. trade, and the attributes that make them meaningful, e.g. mutual acceptance, reliability, and finality. In an ironic twist, Japan is using a particular subset of international rules, norms, laws, and treaties (specifically regulating trade) to fight for a common understanding that rules, norms, laws, and treaties (but especially those concerning historical issues) ought to be mutually accepted, reliable, and final once signed.

Even if the agreement reached in years or decades prior is not the preferred agreement of the current generation, there needs to be an acceptance of those agreements as constituted. Perhaps the only silver lining in all of this is that a liberal president rules in South Korea and a conservative prime minister leads Japan — “To forge an enduring deal,” Glosserman emphasizes, “this combination is what you need.” After having been burned twice – once after reaching an agreement with a dictatorship and once after reaching an agreement with a democratically-elected conservative administration – an agreement reached with a democratically-elected liberal administration may have greater weight in Japanese estimations of its future durability. But as Japan has abided by (would have abided by) these past agreements, Tokyo wants to see the initiative for another attempt come from South Korea.

Japan’s trade restriction on exports to South Korea is not Tokyo’s optimal policy, and it is not a long-term solution to Japan’s historical issues with South Korea. It is a desperate attempt by one country trying to get its valuable economic and security partner to commit to putting the relationship of today and the relationship of the future ahead of the issues of the past.

The Diplomat

You can read the rest at the link, but it is clear that the Japanese government’s patience has reached its limit on the ROK government backing out on signed deals that a new administration does not like.

With that said I don’t know how President Moon can back down now considering how strongly he has pushed anti-Japanese sentiment for domestic political purposes since he was elected. This leads me to believe this could drag on for quite some time.

Here is the latest economic measure the Japanese are looking at taking against South Korea:

Japan’s plan to remove Korea from its “white list” of countries with preferential trade treatment will endanger the alliance between Korea, Japan and the United States and threaten regional security in Northeast Asia, the trade minister said Wednesday.

Minister of Trade, Industry and Energy Sung Yun-mo said the Korean government has delivered its “written opinion” to Tokyo. This is the first time Korea has delivered a message this way to Japan over economic issues.

The document contains details on why Japan’s July 4 export restrictions on three materials for manufacturing semiconductors, and an additional move to remove Korea from its whitelist of 27 countries are unfair and groundless. 

“The groundless export curbs on three materials for semiconductors should be lifted immediately and the action to remove Korea from its whitelist should also be scrapped,” Sung said during a press conference at the Government Complex in Seoul.

“The attempt to remove Korea from its whitelist is an especially serious issue which sways the foundation of the cooperation between Korea, Japan and the U.S. on security in Northeast Asia, as well as dealing a heavy blow to the Korea-Japan economic partnership which has lasted over 60 years.” 

Korea Times

You can read more at the link, but this is clearly tit-for-tat because earlier this week the ROK said they were considering ending the GSOMIA security pact with Japan. So Japan comes back with a threat to take South Korea off their white list.

This whole dispute could be ended if the Moon administration stops with its plan to forcibly seize the assets of Japanese companies within South Korea.

South Korea to Japan: You're violating international law
Japan to South Korea: You're violating international lawhttps://t.co/UQJmGwMeJr

— Josh Smith (@joshjonsmith) July 19, 2019

The trade dispute from South Korea and Japan may intensify by July 24th:

Trade tensions between South Korea and Japan are escalating as Tokyo seems to be preparing to expand the scope of its export controls beyond high-tech materials to a wide spectrum of areas, which could disrupt the global supply chain, industry watchers said Monday. 

Japan began applying stricter export rules on South Korea for three key materials needed for making chips and displays on July 4 over a wartime forced labor issue and is pushing to remove South Korea from a list of trusted buyers, which could affect the supply of other key materials needed for making smartphones, televisions, chemicals and other industrial materials.

Tokyo’s move to exclude Seoul from its “whitelist” of countries on national security grounds would require Korean companies to seek export licenses for a wider range of technologies, which could result in additional costs and time. 

South Korea is currently on the neighbor’s 27-nation whitelist, which includes the United States, Germany, Poland and Italy.

“If Japan removes South Korea from its whitelist, about 1,100 items are estimated to be affected by the new regulations,” a Seoul trade ministry official said, asking not to be named. “We are closely analyzing the potential impact from Japan’s move on the South Korean industry.”

The Japanese government is expected to announce the decision on July 24 after a review process, which goes into effect 21 days later. Seoul’s trade ministry proposed another meeting with its Japanese counterpart before the deadline to discuss the issue, after their first meeting Friday failed to mend the disputes.

Yonhap

You can read more at the link, but some observers believe the trade dispute will ease after upper house elections in Japan are complete on Sunday. The observers believe Prime Minister Shinzo Abe is using the trade dispute for political advantage in the election.

South Korea and Japan cannot even get on the same page in regards to what happened during a working level meeting to resolve their trade dispute:

A row between Japan and South Korea escalated on Saturday, with contested accounts of a frosty meeting the day before that had failed to make progress on a dispute that could threaten global supplies of microchips and smartphone displays.

Tokyo lodged a protest against Seoul, saying it had broken an agreement on what the two sides would disclose from the Friday discussions on Japan’s curbs of exports to Korea of some materials used to make high-tech equipment, said Japanese trade ministry official Jun Iwamatsu.

Japan’s Ministry of Economy, Trade and Industry (METI) also disputed a Korean official’s statement that Seoul had asked Japan on Friday to withdraw the restrictions.

But a Korean trade ministry official shot back that Seoul had “clearly demanded Japan withdraw its trade restrictions at yesterday’s meeting, and there should be no disagreement over that matter with Japan.”

He told Reuters the two sides had discussed what they would disclose but that there was no agreement. (……..)

In response, Iwamatsu, director of METI’s trade control policy division, told a hastily arranged news conference: “We’ve checked the record of the meeting … We found no clear comment asking for the withdrawal.”

Iwamatsu said the two sides had agreed on what they would disclose from the talks but that the Korean official went beyond the agreement. “We believe this is something that affects our relationship of trust,” he said.

Reuters

You can read more at the link, but the dispute about what was disputed is important because Japan wants the working level meeting to be characterized as one where they gave explanation to South Korea for the trade restrictions, not a consultation for problem solving like the ROK has declared it. By declaring it a consultation it expedites the ROK’s efforts to refer this issue to the World Trade Organization while Japan is trying to drag it out.

Korea Times columnist Oh Young-jin believes that President Moon cannot back down from Japanese trade retaliation because he would lose his left wing base:

President Moon Jae-in has shown no sign that a compromise is an option in Japan’s embargo on key items that can halt Korea’s semiconductor making, the nation’s bread-and-butter industry.

Moon faces growing pressure from Samsung Electronics, the world’s largest chip maker for which Japanese technology is pivotal for production, and other industrialists who fear a greater impact if Tokyo increases sanctions. 

Several opinion leaders fault Moon for what they argue is his ham-fisted handling of the aftermath of the Supreme Court ruling that ordered Japanese firms to pay compensation to Koreans who were mobilized for materiel production during the Second World War. 

Moon could succumb to these pressures but only at the risk of turning his regime into a political zombie. And history shows the more he stands pat, the greater the chance the nation rallies around him. 

The issues with Japan ― compensation for forced laborers and comfort women, or sex slaves, under Japan’s imperial army ― are integral to the Moon regime’s foundation ― the liquidation of past ills.  (…….)

Moon learned a lesson the hard way when he worked for his mentor and friend, the late President Roh Moo-hyun. Roh alienated his support base by pushing for the free trade agreement with the U.S., long considered part of the conservative agenda. 

Korea Times

Notice the commonality here with South Korean leftists, working out deals with allies, the U.S. and Japan is bad, but a deal with North Korea, a regime committed to the ROK’s destruction, is a good thing.

Here is my favorite part of Mr. Oh’s article how he can’t explain why South Korea is not going after China the same way they are going after China:

I am often asked by foreigners why Korea is easily provoked by Japan while being more tolerant of China. For instance, China has retaliated against Korea for allowing the U.S. to station its anti-missile Terminal High-Altitude Area Defense (THAAD) missiles on its soil.

Beijing stopped sending tourists to Korea and put pressure on Korean firms in China, having some pack up and leave for home. But there has been little public show of indignation. The sentiment is more of a concern than resentment shown on the fly to Japan for a slight provocation. 

I would say it is related to the unhappy memories of Japan’s occupation at the turn of the 20th century. But then, the Chinese supported North Korea in the 1950-53 Korean War that killed or maimed millions of Koreans. And it also has been a key supporter keeping the North afloat since, standing in the way of unification. 

Another possible explanation is that Korea had long served as a midpoint transmitting advanced culture from China to Japan, an experience that induced its people to look down on Japan. Japan used to pay tribute to Korea. Maybe that piece of history is affecting Koreans’ collective consciousness. 

As I have long said on this site, China is responsible for more death and destruction on the Korean peninsula than Imperial Japan ever caused by their colonial occupation of the peninsula. However, China does not get the same treatment Japan gets because they will strongly respond.

Japan on the other hand has been an easy punching bag for ROK politicians for decades because they would not strongly respond. That has clearly changed now as President Moon has found out.

This is the affect that I think the Trump administration’s tariffs on China is trying to cause, the movement of manufacturing out of China. Vietnam could end up being a big winner of this tariff war between the U.S. and China:

Nintendo Co. plans to start making its Switch video game console in Vietnam this year, transferring some of its production from China, a company spokesman said Tuesday.

The official, who spoke on customary condition of anonymity, said the change has been in the works for some time, to reduce risks that come from having production in one nation. He denied it was a direct response to the growing trade friction between the U.S. and China.

He declined to give details on manufacturers or production sites in Vietnam, citing company policy. He said production was set to start this summer but declined to give a date.

Japan’s major business daily Nikkei reported Tuesday that the move was driven by worries that U.S. tariffs on goods produced in China may affect game device sales.

Japan Times

You can read more at the link.

This is going to be a lot of businesses going under in the next six months if the Japanese trade restrictions are not lifted:

The Korea Federation of Mid-sized and Small Manufacturers said Tuesday that 60 percent of medium and small-sized firms(SME) in South Korea affected by Japan’s export controls will not be able to endure the restrictions after six months.

The federation announced the results of a survey it held on 269 SMEs in the semiconductor sector following Tokyo’s export control announcement last week.

Fifty-nine percent of surveyed firms said they will only be able to withstand the export restrictions for a maximum of six months. 

KBS World Radio

You can read more at the link, but it is pretty clear that the trade restrictions were carefully crafted to put massive pressure on the Moon administration in the short term to abide by past agreements resolving Imperial Japanese era abuses.

Japanese Prime Minister Shinzo Abe is really increasing his criticism of the Moon administration:

Japanese Prime Minister Shinzo Abe on Sunday linked Tokyo’s economic retaliatory measures against Seoul with the implementation of North Korea sanctions – underscoring a lack of “trust” in South Korea. 

Abe appeared to be sidestepping the real reason for his government’s restrictions on industrial exports to Korea – court rulings against Japanese companies found guilty of forcing Koreans to work for them during World War II – and suggesting an overarching problem with trust in Seoul that extends to security concerns.

One suggestion is that high-tech products made with Japanese materials may be making their way to North Korea.

Speaking on a televised debate ahead of upper house elections on Fuji TV, Abe said that South Korea “claims that it is abiding by sanctions on North Korea” and is also following the Wassenaar Arrangement, the first multilateral export control regime for conventional weapons and sensitive dual-use goods and technologies.

Abe went on to suggest that Seoul is not capable of fulfilling its commitment to implement sanctions on the North because it “clearly does not keep its promises and abide by the claims agreement between two countries” and “obviously will not properly abide by trade regulations.” 

On the matter of his government’s new restrictions on exports of key industrial materials to Korea, Abe said that there was an “occurrence of an inappropriate matter,” and added, “you can’t trust what they say.”

Japan on Thursday implemented export restrictions to Korea on three key materials – fluorinated polyimide, hydrogen fluoride and photoresists – needed in the production of semiconductors and smartphones.

Joong Ang Ilbo

You can read more at the link.

You have to love the irony of President Moon asking for “sincere consultations” with Japan when his administration withdrew from the prior comfort women agreement and have been using the courts to further attack Japan for domestic political purposes:

President Moon Jae-in called on Japan on Monday to withdraw its recent export control against South Korean firms, describing it as an attempt to limit trade for a political purpose.

Breaking his strategic reticence on the sensitive issue, Moon said his administration will first make “calm” efforts to resolve it diplomatically.

In case of “actual damages” to South Korean companies, however, the government will be left with no other choice but to take “necessary” measures, he stressed, presiding over a meeting with senior Cheong Wa Dae officials.

He added he hopes to avoid such a vicious cycle of tit for tat.

“(I) call on the Japanese side to retract the measure and call for sincere consultations between the two countries,” he said.

Yonhap

You can read more at the link, but I don’t see the Abe administration bending on this until the Moon administration agrees to uphold the 1965 treaty that normalized relations between the two countries.