Reflections on Korea-Japan Tensions

Reflections on Korea-Japan Conflict

The Korea-Japan conflict, which began when the Japanese government imposed economic retaliation—such as tighter export controls on essential materials for semiconductor production—following the South Korean Supreme Court’s ruling ordering compensation for victims of forced labor during the Japanese colonial period, is deepening into a military and security conflict. This includes the South Korean government’s decision to terminate the General Security of Military Information Agreement (GSOMIA) and the Japanese government’s removal of South Korea from its “white country” (whitelist). It is hard not to see a political intention on Japan’s part behind this series of developments. The issue of wartime forced labor under Japanese rule has long been an explicitly and implicitly sensitive source of conflict between Korea and Japan. Using this as a pretext, Japan’s tighter export controls on essential materials—measures that could have a fatal impact on South Korea’s trade volume—are functioning as a means of checking South Korea’s export competitiveness and pressuring the South Korean government and political circles. More broadly interpreted, one cannot rule out the possibility that there is also an underlying intent to weaken the South Korean government’s diplomatic influence within the political dynamics of Northeast Asia.

Last year, South Korea’s exports totaled $605.5 billion and imports totaled $535.0 billion, bringing total trade volume to a record high of $1.1405 trillion. This was especially the result of strong exports in key items such as semiconductors. South Korea’s trade volume ranks among the world’s top 10. Last year, trade between South Korea and Japan amounted to ¥4.2717 trillion. Of this, South Korea’s exports totaled ¥1.6629 trillion and imports ¥2.6088 trillion. However, compared with the trade figures themselves, the degree of dependence on components and materials needed for South Korean exports is in fact very large. It can be said that the global economy is dominated by the influence of multinational corporate activity. These firms utilize economies of scale worldwide in pursuit of lower production costs and global marketing. In reality, a substantial portion of both countries’ exports and imports is embedded in this process. For that reason, the weakening of the Global Value Chain caused by Korea-Japan conflict acts as a factor that undermines corporate vitality. This year, South Korea’s exports have declined for seven consecutive months, and in August as well (August 1–20), exports were found to have fallen 13.3% year-on-year. In particular, exports to Japan fell 13.1%, while imports from Japan also declined 8.3%.

It has been reported that angry South Korean consumers, outraged by Japan’s retaliatory export restrictions, are boycotting Japanese products and canceling or refraining from travel to Japan. As yet, there does not appear to have been any equally large-scale movement in Japan to boycott South Korean products or prominently cancel or alter travel plans to South Korea. Both South Korea and Japan are countries with relatively high dependence on trade, and the losses arising from impediments to free direct trade resulting from Korea-Japan conflict are by no means small. Disruptions also occur in the production and sales of South Korean and Japanese firms, as well as companies connected through the global supply chain, meaning that firms and consumers in third countries outside South Korea and Japan are affected as well. In other words, it leads to a situation in which the production and consumption of cheaper, higher-quality products become more difficult on a global scale.

By contrast, the Japanese government and ruling party may use Korea-Japan conflict as an opportunity to strengthen public cohesion and support and thereby pursue political benefits. Voluntarily or involuntarily, South Korea is not very different in this regard. This is not much different from the benefits of the U.S.-China trade war being enjoyed by the leaders of both countries while firms and consumers in both nations pay the cost. What is even more problematic is that, as this kind of conflict between countries continues, the economic losses in both countries are likely to grow larger. Amid all this, irrational consumption driven by the emotional responses of consumers in both countries is unlikely to be fundamentally helpful in resolving the problem. Emotional responses may provide temporary satisfaction, but it is necessary to recognize that they may instead bring about long-term difficulties. Even if the governments of the two countries continue to run in parallel on political issues, if they are to restore relations, it is necessary to avoid emotional and extreme choices. This is because there is also a limit to how much the political circles in both countries can benefit from politicizing Korea-Japan conflict. Therefore, escalating reciprocal retaliatory measures—such as the South Korean government’s decision not to renew GSOMIA and the Japanese government’s exclusion of South Korea from the whitelist—will ultimately bring nothing but harm to both sides.

Then when might the current intensification of Korea-Japan conflict be eased? Probably when the time comes that political benefits disappear for both governments and are replaced by economic burdens and costs that they must pay. It will be when the influence of consumers, who are also voters, actually takes effect in the market and at the ballot box.

The national interest is about pursuing the peace and prosperity of the vast majority of ordinary citizens who make up the nation, not the pursuit of benefits for particular interest groups or politicians. That is why I believe this is a time when all of us must exercise cooler judgment and make wiser choices than ever before.

Youngshin Kim

Professor of International Trade, Keimyung University

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Original title: 한일 갈등에 대한 단상

Author: Young-shin Kim

Date: 2019-08-29

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=column&pn=12&idx=20461