Tag: trade

After the very positive summit and trade deal between President Trump and Japanese PM Takaichi, it would have been hard for President Lee to not agree to a trade deal as well:

After a monthslong tug-of-war, South Korea and the United States on Wednesday struck a complete tariff deal, heralding a new chapter for their industrial and economic ties.

At the summit on the sidelines of the Asia-Pacific Economic Cooperation (APEC) gathering in the southeastern city of Gyeongju, South Korean President Lee Jae Myung and U.S. President Donald Trump agreed on the details of a trade deal, namely the structure of Seoul’s US$350 billion investment pledge and tariffs on autos.

In July this year, the two countries reached the framework deal as the U.S. slashed “reciprocal” tariffs to 15 percent from 25 percent and South Korea pledged to heavily invest in key U.S. industries such as shipbuilding.

Under the deal, the U.S. maintains its reciprocal duties on Korean goods, but cut sectoral tariffs on Korean cars and auto parts to 15 percent from 25 percent.

With Wednesday’s deal, South Korea and the U.S. will see deepened industrial and economic ties, and Asia’s fourth-largest economy will not be positioned at a disadvantage in competing with other economies in the world’s largest economy.

Yonhap

Here is where the money is going:

Under the terms agreed Wednesday, Korea’s $350 billion investment pledge will be two-pronged: $200 billion in cash installments and $150 billion allocated for shipbuilding industry cooperation, with an annual investment cap set at $20 billion, according to Kim Yong-beom, presidential chief of staff for policy.

You can read more at the link.

Here is another area impacted by the current trade dispute between Korea and Japan, the hiring of South Koreans in Japan:

Song Min-su, a Japanese major in his final year at Hannam University, south of Seoul, has watched in dismay as a dispute between South Korea and Japan over wartime forced labor has spiraled into a damaging political and economic row.

Song, 25, has been pursuing his dream of working in Japan. With historic labor shortages in Japan, he had been confident he would avoid the tough job search many of his peers faced at home in South Korea, where youth unemployment is growing.

But curbs in Japan on the exports of high-tech materials to South Korea have escalated a bitter diplomatic feud between the neighbors, sparking boycotts that have hit the sales of Japanese cars, beer and other goods in South Korea, as well as travel to Japan.

“It will not only get harder to find a job in Japan, but the current sentiment will also make things more difficult to find a job in Korea with the use of my Japanese major,” Song said.

South Korea’s relations with former colonial ruler Japan have long been testy, with Tokyo having cited a dispute over court rulings related to forced wartime labor during World War II as a factor that led to tighter export controls implemented in July.

South Korea responded by stripping Japan of favored trading nation status and scrapping an intelligence-sharing pact.

The dispute has derailed a surge in the hiring of highly educated South Korean graduates by Japanese companies in recent years, forcing job seekers, employment consultants and the Seoul government to rethink Japan as a place to work. (………..)

With unemployment at a 26-year-low, Japan was the most popular overseas place to work for Koreans in 2014 and 2016-2018, figures from Human Resources Development Service of Korea show. Japan was the destination for nearly one-third of 5,783 South Korean graduates who found jobs overseas last year under government programs, more than triple the number seen in 2013.

But last month, the Labor Ministry canceled a job fair focused on Japan and Southeast Asia for late September that would have been the largest organized by the government, blaming the strained ties.

Another job expo held by the Korea-Japan Cooperation Foundation for Industry and Technology in mid-July, also with a focus on jobs in Japan, received 20 percent fewer participants than its previous fairs, an official said.

South Korea’s Labor Ministry is planning the second of its biannual global job fairs in November, but instead of focusing on jobs in Japan, as it did last year, it plans to broaden the list of countries.

Japan Times

You can read more at the link, but with already high youth unemployment in South Korea, it seems like the Korean government would rather have people unemployed than working in Japan.

I think the Japanese are trying to derail the Moon administration’s WTO complaint by showing that their process for extra inspections on certain exports is doable and not a trade restriction:

Japan said Thursday it has granted its first permit for a South Korea-bound shipment of chemicals to produce high-tech materials under Tokyo’s new export requirement that has increased tensions with Seoul.

Trade Minister Hiroshige Seko made a rare announcement of the approval, saying that officials determined that the transaction raised no security concerns. The move is apparently meant to calm South Korean anger over Tokyo’s export curbs and show there is no trade ban in place.

Japan imposed stricter controls on three key materials — fluorinated polyimides, photo resists and hydrogen fluoride — that are used mainly by South Korea’s semiconductor industry as of July 4. The rules also downgrade South Korea’s trade status beginning later this month.

Japanese chemical manufacturers have expressed concerns that case-by-case inspections may prolong the approval process and hold up production for their customers.

The first approval came after about a month, faster than the standard 90 days.

“The permit merely demonstrates that export licensing by the Japanese government is not arbitrary, and is granted to any legitimate transactions that pass strict inspections,” Seko told reporters. “The step we took recently is not an export ban.”

Associated Press

You can read more at the link, but the message Prime Minister Abe could be sending is that these extra inspections are an annoyance to Korean companies just like the Moon administration’s attempt to seize the assets of Japanese companies in South Korea is an annoyance to them.

This is all very predictable that President Moon would make the claim that Japan’s trade restrictions is about trying to stop South Korea’s economic development:

Last week, Tokyo removed Seoul from its “white list” of more than two dozen nations eligible for simplified customs procedures in buying strategically sensitive materials. Moon has characterized the move as part of Japan’s attempt to prevent South Korea from further developing its economy.

“Japan can never block the leap of our economy,” Moon said. Its export curbs will rather serve as a “catalyst” for South Koreans’ resolve to build economic power, he added.

Moon pointed out that the Japanese economy is superior to South Korea’s in size and domestic market. If a peace economy is realized through economic cooperation between the two Koreas, South Korea would overtake Japan at a stretch, Moon said.

Despite tumults in inter-Korean relations or Pyongyang-Washington talks, he added, South Koreans shouldn’t be easily pessimistic about a peace economy or give up efforts toward it.

Yonhap

You can read more at the link, but the only reason Japan imposed the trade restrictions was because of the Moon administration’s cancelling of the comfort women agreement and threatening to confiscate assets of Japanese companies. None of trade restrictions would be in place by Japan if the Moon administration abided by past agreements signed between Japan and Korea resolving financial liability for past Imperial Japanese actions.

As far North Korea being an economic growth engine that can replace Japan’s importance to the South Korean economy, good luck with that because that will only happen after the Kim regime is gone.

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.

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.

Yes, but is this the #SouthKorea that is doing its best to undermine sanctions on #NorthKorea and is absolutely determined to support #KimJongUn? President #MoonJaein is no friend of the US. Trade breaks for him should be out of question. https://t.co/wR4Zmilz5c

— Gordon G. Chang (@GordonGChang) December 7, 2018

This will probably be one of a few areas that the Chinese will retaliate against the ROK for the decision to deploy THAAD:

Speculation is rife that China will target K-pop stars in retaliation against Seoul’s decision to install an American-made missile defense system on the Korean peninsula.  K-pop stars could be the unlikely first casualties of Seoul’s decision to deploy a U.S.-made missile defense system on the Korean peninsula, despite vocal opposition from China.

Speculation is rife that China will retaliate by limiting South Korean media and stars from its huge entertainment market.

According to two sources cited by the South China Morning Post, China’s national media regulator informed TV stations in Guangdong Province that TV shows featuring South Korean pop stars would not be granted approval to air “in the near future.”

Meanwhile, shares in South Korean entertainment companies took a dive Tuesday as investors bet that the firms would be hit by impending restrictions from China. SM Entertainment Co., known for such K-pop super-groups as Girls’ Generation, closed down 5.3 percent, according to Bloomberg. YG Entertainment Corp., the company known for producing Psy, fell 8 percent.  [Hollywood Reporter]

You can read more at the link, but the ROK has been through this before with China retaliating against them with trade restrictions such as during the Great Kimchi War of 2005.