On July 5th, Japan’s prime minister imposed new restrictions on exports that could hit South Korea’s tech industry. The limitation of the export products has caused a lot of issues in the relationship between the two countries. South Korea also responded with multiples restrictions which had gotten the public to get involved in the tension. Ever since then, issues had been consistently brought up between the two countries. Based on the CNBC, it was stated that the latest escalation to be caused by the Japanese Prime Minister Shinzō Abe and South Korean President Moon Jae-in failing to make a progress disagreement in June 2019 G-20 summit.
According to Scott Seaman, director of Asia at political consultancy Eurasia Group cited from CNBC, Abe “appears to have been particularly irked” by failure to resolve differences over the handling of recent South Korean court rulings awarding damages to Koreans claiming to have been forced to work for Japanese firms during World War II.” He also mentioned that “The two government ill engage in a tit-for-tat exchange of retaliatory measures for at least he several months that further sours bilateral relations”. According to ABC, some experts linked this “flare-up between South Korean and Japan” to the trade war between China and the United States. While China and the United States are the two most powerful economy in the world, the other two countries are the two of Asia’s major economic players appear to be nearing their own trade war over political disputes.
On July 8th this year, Japan’s Ministry of Economy, Trade, and Industry issued a statement that Tokyo “will apply updated licensing policies and procedures on the expert and transfer of controlled item and their relevant technologies to [South Korea].” It continued, “Through careful consideration among the relevant ministries in Japan, the Government of Japan cannot help but state that the Japan-South Korea relationship of trust including in the field of export control and regulating has been significantly undermined.” In addition, Tokyo also removed South Korea from the “white countries” list where Japan consider being a trustworthy export control system. If the move is implemented, by the end of the August Japanese firms selling semiconductor material to South Korea will be required to obtained approval for each export contract – a process that could take 90 days.
Last year, a Supreme Court ruling in South Korea ordered Japanese companies to compensate former wartime laborers; the Japanese government cited national security concerns to justify its plan to tighten its export controls on semiconductor materials being brought to South Korea. South Korea unions have taken their own version trade restriction over Japanese products by spreading their messages over social media to “boycott” on Japanese goods.
Based on The Diplomat, two of the boycott case happened when South Korean delivery workers denied delivering a shipment of a Japanese retailers Uniqlo and worker at petrol stations refused to service Japanese-branded cars. More cases of the boycott were about twenty-three thousand retailers decided to withdraw Japanese beer, condiments, cosmetics and pens from their shops and stores while posting notices letting customers know they will no longer be selling or buying items made in Japan. In addition, travel agencies are being forced by South Korean patrons to cancel most of the flights and tour to Japan. Asiana Airlines, which is the second largest South Korean airline, is considering cancelling the daily route from Seoul and Chitose airport in Hokkaido due to thirty percent fall in reservations in August compared to last year.
The tension also linked to the history of the two countries about sixty years ago when the Korean Peninsula (South and North Korea) was under Japanese occupation from 1910 to 1945 where many Korean women were forced to be sex workers in military brothels. “Comfort women” was the term used by Japan as a euphemism for all the women forced into sex work in the region during WWII. In 2015, Japan apologized and provided 1 billion yen which was estimated to be 9.4 million dollars to South Korea to help them. The advocacy group for the “comfort women” in South Korea criticized the fund and the government of South Korea dissolved the fund even though the Japanese government warned that the action will affect the bilateral ties between the two countries.
During this month, the Japanese government put a regulatory restriction on three chemical key to South Korea’s tech industry, and some of them found in most smartphones. The chemical is essential in creating semiconductors, memory chips, and screen displays. Those chemical substances are also used to make chips that are found in refrigerator, cars, and even missiles. By banning these types of products, it disturbed the flow of the national operation and economy. Based on ABC, South Korean President Moon Jae-in has described the situation as an “unprecedented emergency,” but Japan’s ambassador Junichi Ihara says the country has national security concerns, following “some cases of inappropriate export.” South Korea’s electronics manufacturing industry has a problem due to those three chemicals key were massively produced in Japan.
According to ABC, fluorinated polyimides which are used in smartphone displays, photoresists which are used to create circuit patterns and hydrogen fluoride is used as the etching gas. Ninety percent of fluoride polyimides and photoresists and seventy percent of hydrogen fluoride are made in Japan. This type of restriction placed by the Japanese government has raised questions about the long-term and short term economic losses to both Japanese and South Korean Companies. Expert speculates that the policy will not only affect just those two national companies; however, the industries that are associated them, mostly South Korean’s because it will also slow down the company sales to major Korean customers and could lead to the development of substitutes where Japanese firms could lose their international competitiveness.
Another statement from Scott Seaman in ABC read that “looking ahead, neither [Prime Minister, Shinzō] Abe nor [President] Moon [Jae-In] wanted to look weak ahead of upcoming election.” He refers to the two leaders wanting to impose more influence to their people, continuing to say, “Abe will not want to appear weak ahead of upper house elections on 21 July, and Moon will likewise be loath to back down as he and his party ramp up preparation for National Assembly elections in April 2020.” However, according to CNN, Shinzō Abe has declared victory in Japan’s national elections with polls indicating his party has own majority of seats in the upper house of Parliament and is now set to become the country’s longest-serving prime minister. It is indecisive whether the imposing policy has an effect or any relevancy on the election.
The South Korean government submitted an official statement to Japan asking not to exclude South Korea from the white list in an effect to persuade the cabinet before deliberation begins this week. South Korea stressed that they are “ready to talk anytime, anywhere” but criticized how the Japanese government is lacking the willingness to get involved in dialogue. The two major economic players of Asia will have to engage in a negotiation to dissolve this tension and find a suitable solution that does not affect national security, economy, and reputation.