Escalating Japan-South Korea trade feud threatens global economy, security

Over the past month, bilateral relations between South Korea and Japan have deteriorated after South Korea’s Supreme Court ordered Korea-based Japanese firms to compensate Korean workers for their labour during Japan’s colonization of Korea (1910-1945) and Tokyo’s decision to implement export restrictions on materials vital to South Korea’s production of semiconductor chips in response. This week, in a ratcheting up of tensions, the Japanese government announced that it will remove South Korea from its preferential trade “white list,” forcing Japanese companies to get government approval to export certain goods to South Korea.

This move will push bilateral relations to their lowest point in decades, and the fallout will extend well beyond trade.

In today’s Asia Watch Special Edition, we focus on the impacts of this trade dispute on not only commerce and the technology supply chain, but also regional security and possible implications for Canada. The dispute is a lose-lose scenario for both Japan and South Korea and should be addressed before more parties are dragged into the fray, either directly or indirectly.


Unresolved history of colonialism . . .

Japan colonized the Korean peninsula between 1910 and 1945, and animosity within Korea over its actions during this period remains strong. The two countries signed a treaty normalizing their relationship in 1965, and Japan paid South Korea US$800 million (US$9 billion in 2019 dollars) in grants and loans as compensation. Despite strong security, economic, and people-to-people ties, two issues have been a constant source of tension and mistrust between the two Asian powerhouses: South Korea's position that Japan has failed to categorically claim responsibility for instituting comfort women (military sex slaves) and forced labour/conscription during the colonial period, and competing claims over the islands known as Dokdo in South Korea and Takeshima in Japan.

Political cleavages in South Korea . . .

In South Korea, progressives tend to be more dovish on North Korea and hawkish on Japan, while conservatives tend to be the opposite. When South Korea's relationship with North Korea sees improvement, South Koreans tend to become more hawkish towards Japan, rallying around an 'all-of-Korea' nationalism. In recent years, several developments have deepened the political cleavages between the progressives and conservatives, including: the 2016 impeachment of conservative President Park Geun-hye, daughter of former President Park Chung-hee, who signed the 1965 treaty; the subsequent election of Moon Jae-in, a progressive; and, an improvement in relations with Pyongyang.

Political validation for Abe . . .

In Japan, there is a growing sense among the government and public that Japan has repeatedly expressed regret for its past actions and that South Korea’s refusal to acknowledge its contrition is a matter of domestic politics, not foreign relations. Prime Minister Abe Shinzo, in particular, has long held that Japan is wrongly victimized for its behaviour – a position that is gaining in popularity among Japanese youth. The Abe administration announced the export restrictions and floated the idea of removing South Korea from its preferential trade “white list” prior to the House of Councillors election on July 21. Abe’s party, the Liberal Democratic Party, took 71 of the 124 seats in that election, suggesting public support for his ‘hardline’ approach to South Korea. Furthermore, according to a July 29 poll, 58 per cent of Japanese citizens said they support the export restrictions against South Korea. The feeling that Japan has done enough to address its colonial history, combined with Abe’s strong performance on economics, seems to add support to the government’s current stance on South Korea.