Trade War Between Japan and South Korea

This article discusses the trade war between Japan and South Korea, including its background, causes, and impacts on the economies of both countries. It explores the issues related to comfort women, court rulings, and export restrictions. The article also highlights the efforts to resolve the trade war and the potential consequences for both countries. Find assignments, essays, and dissertations on this topic at Desklib.

TRADE WAR BETWEEN
JAPAN AND SOUTH KOREA

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
BACKGROUND.............................................................................................................................1
ASSIGNMENT................................................................................................................................2
REFERENCES................................................................................................................................6

INTRODUCTION
Trade refers to economic conflicts that results from high protectionism where states
creates or raise tariffs or trade barrier against other countries and states for responding to barrier
of trade created by other parties. Trade affects the global market as well as the whole economy of
the country. When trade barrier are created these raise various arguments on which discussions
are done by the countries. The discussions sometimes resolve the conflicts and sometimes no
outcomes are reached. When a trade war is raised economies of conflicting countries are
affected. Trade war between Japan and South Korea is an economic conflict in between 3rd and
11th world's largest economies.
Legacy that continued from world war II fuelled the conflict. Also after ruling from
South Korea Supreme Court in 2018 October and November about claiming compensation for
forced labour from Japanese companies. Reason behind trade was cited officially by Japanese
government because government of South Korea alleged it will not comply with security
regulation for export control and avoiding the request of Japanese government in having 3 years
bilateral trade dialogues (New York Times. 2019). Trade dispute caused deterioration to relations
between Japan and South Korea to least point after the diplomatic relation between the two
countries normalized in 1965.
BACKGROUND
The main issues that lead to conflicts between japan and south Korea is related to comfort
women. The issues related that Japanese companies forced Korean women to work even in brutal
conditions. Countries normalized the relations in 1965. Second issue is regarding the decision of
court ordering Japanese companies to compensate South Korean families who were treated
unfairly and were forced illegally for supplying labour in World War II. These issues infuriated
government of Japan the issues were settled in 1965 treaty for normalization of Diplomatic
relation between 2 countries.
Japan announced on July 1, that chemical export that is essential for the Semi conductor
of South Korea. The decision made effective on July 4 that imposed new restrictions over the
industry inclusive of processes for licensing that forced exporters for seeking approval for every
shipment for 90 days (Lau, 2018). Deputy chief reflected that restrictions were related to the
security concerns of the nation. Japan's allegation were denied by government of South Korea.
1

On September 11, 2019 Korea requests consultation with Japan with regards to certain measures,
related to licensing procedures and policies adopted by Japan. It alleged restriction over exports
of resist polymers, fluorinated polyimide, and hydrogen fluoride and related technologies which
were destined for Korea. Products were primarily used in production of TV displays,
smartphones and semiconductors. Japan removed South Korea from the white list (Kim and Cha,
2016).
ASSIGNMENT
In response of the trade barriers by Japan, Korean government stated control procedure
for the export are unfair and groundless. It is also stated that export controls are made in
violation of international laws and is harmful and disruptive for economies of both the countries
and global market. It is urged by South Korean government to Japan for withdrawal of export
control procedures as their relations would be further damaged by them.
It is argued by the Korean officials that restriction over export of chemical materials on
the national security base are purely absurd. The move is to avoid compensation payment to the
wartime victims for the atrocities faced by them for which Japan is still liable (Japan Times.
2019).
Seeing the trade wars it is seen that South Koreans have adopted move for boycotting
Japanese products. The restriction imposed by japan led Koreans to stop buying beers, cars,
cosmetics and anything else that labelled made in Japan. Protest in south Korea have always
been properly organised but they pass more quickly. The boycott of Japanese products are tied
with emotional issues of the war time and also the sense that most successful companies of
Korea are under threat. The market share of Japan in the banned chemicals amounts for 90%.
The major problems will be faced by companies like Samsung, SK Hynix. This will affect the
economy of whole country (Bouët and Laborde, 2018). Removal of whitelist status will require
Japanese companies to take prior approval of government while exporting sensitive material to
South Korea.
US also trying to ease the tensions between South Korea and Japan that are biggest Asian
Allies. The UN commission over human rights supported the view of Korea that claims of
individuals were not settled under bilateral treaties. International labour organisations also
requested Japan for responding to claims raised by forced labour victims. Also it is seen that
2

government of Japan discouraged companies of Japan to honour ruling of Korean court and
warnings for consequences if it made.
` The argument are still continued over the forma and manner in which Japan would atone
for past transgression. Seoul made acquisitions on Tokyo that it is not allowing company from
sending the shipment of hydrogen fluoride for semiconductors because of worries on supply
chain (Escalating Trade War. 2019). Court of South Korea in January approved expropriations
of some equity holdings in PNR of Nippon Steel, joint venture Korean steelmaker company
Posco for funding payments to plaintiffs that prompted fear that Japanese asset can be seized in
future. Only way in which relations can be stabilized if Korean courts decides for not liquidating
seized assets belonging to Japanese companies repatriating Korean forced labours and on the
other hand Japan also removes the export curb.
Dispute is taken to World Trade Organisation by South Korea arguing Japan export
controls are constituting unfair retaliations over the rulings of court. Japan is running against the
principles of free & fair trade. Everyone is aware that largest exporter of semiconductor is South
Korea. Trade restriction will not harm economy of South Korea but also harm economies of third
countries (Elms and Sriganesh, 2017). In the discussion it is argued by Japan the restriction are
not related to labour issue of wartime but on grounds of national security.
Justification on security concerns is not accepted by experts as historically governments
are reluctant over citing the national security concerns in trade concerns. Donald Trump the US
President has made it a habit, his administration as tariffs slaps on import of steel and aluminium
from US was cited as national security. Same label under his administration is used for
describing the cars from Japan and Europe and equipments made by a Chines telecom company.
Japan decided for introducing fresh controls on export between G-20 summit. Japan
argued that out of the three chemical used for production of semiconductor, hydrogen fluoride
enriching uranium and lethal gas sarin production. But this speculation was denied by METI
official.
Trade tensions are arising as economies of both Japan and South Korea are facing
downturns. No side wants to get affected by the trade war challenges from which both the
companies are suffering. But the issues are not resolving as both the countries wants to teach
lesson to each other (Asian Review. 2019). South Korea provide Japan international talent which
are highly educated that are facing labour shortages. Industrial strength of South Korea is
3

symbolised Samsung which is also dependent for technology in Japan and components for
bringing products in market.
It has been analyzed that from recent so many years Japan and South Korea has been the
main allies of America. They have been developing threat to USA. Also Japan has cut out the
South Korea from the trading deals. This has created huge loss to Japan. Also it has been noted
that Seoul has conducted to cancel the agreement which is going in and on in Tokyo. The project
has been related to most sensitive issue which is military evasion. The sharing related to sensitive
military agreements has also been removed by Tokyo. So this can cause great loss to business of
Japan. These two countries have been in conflict from past so many years because of the forced
labour, territorial claims and sexual slavery. It has also increased the Gross domestic production
of Japan and South Korea (Macdonald, 2018). Even as it claimed to help resolve Japan’s and
South Korea’s long standing grievances with the 1965 treaty, Washington used one ally over the
other out of expedience, to advance its own interests.
It has also been analysed that in year 1965 the American allies also came up to deal with
both the countries that is Japan and South Korea. From past so many years differences do exist
between both countries that includes Japan and South Korea. So both countries needs to think
about the solution so that they can come out of this situation. There has been an unhappy history
with South Korea people not being satisfied with Japanese people. So there do exist trade war
between both these countries (WTO. 2019). The treaty which was being implemented by
America in the year 1965 do not solve the disputes between countries that is South Korea and
Japan. America but is involve in solving the grievances and criticism which is being faced by
these two countries
Both the countries should understand that economic reprisals through tit for tat will not
benefit anyone. This will also affect Japanese suppliers supplying the 3 chemicals, administration
of Moon is planning to establish domestic production of the chemicals. On success of the plan it
will increase competition and demand for the Japanese material will be reduced. Organisations
never want to face defeat due to government policies.
Even if the white country status is lost by South Korea will be on same footing like
China, Singapore and Taiwan. Restrictions are hurting economy of South Korea. Governor of
bank of Korea has stated export restriction by Japan is the factor because of which central bank
4

cut the growth forecasts from 2.5% to 2.2%. For the benefit of the economy as whole it is
important to resolve the issues between the two companies.
Instead of resolving the issues that are related to the trade war politicians of South Korea
are anti Japan sentiments for boosting the popularity in general to be held next year. State power
of South Korea is much more stronger than of the South Korea. Politicians encouraged nation by
stating state power of Japan is not same as that in 1965 when signing Japan Korea treaty.
By delaying the exports to Korea the threat of trade war will be posed on the global
supply chain. Companies of South Korea provides for 60 % of the DRAM memory chips in the
world that are used daily in many products. Shortage in these product will affect every industry
from dell laptops to I phones that will further slow sown the global economy.
Issue of concerns by many economists is that how trade will help to normalize usage of
national security for justifying the trade policy . The argument was supported by a previous
action of South Korea where it decided deployment of THAAD that is an American anti ballistic
missile defence system for combatting the threats arising from North Korea. This was seen as
threat to military operations of China and tried to reverse the decision coercing South Korea
(Shearer, 2017). Korea was lashed out by China through promotions of trade boycotts that were
government sanctioned. The unfair economic attacks from China of that time had now became
new normal.
Economists are having enormous impact over the trade policies and provide strong
rationale over removing trade barriers and free trade. Trade agreements are for liberalizing the
trade but actual provisions of the trade are highly shaped by political parties which may be
national or international.
Objectives behind reducing trade barrier are for increasing the trade levels for increasing
the well being of country. GDP is the measurement for economic well being in a country. Trade
negotiations are discussed in multiple rounds in WTO this reduces the tariffs for transition period
but this is not eliminating its completely (New York Times. 2019). Reducing trade barriers reflect
that this is move towards free trade, but in certain situations tariff reduction helps in increasing
the effective rates for protecting domestic industry. The expanded export benefits economy as
market access between trade partners are indisputable and clear (Koga, 2016). Japan stripped the
5

South Korea from trading privileges, and after that Japan was removed by Korea from list of
favourable trade partners. Current rift is centred over Washington brokered treaty of 1965 that
was for normalizing the relation between Japan and South Korea.
First attempt of South Korea was rejected by Japan for finding a compromise. The
suggestions involved voluntary contributions South Korean and Japanese companies into the
funds for compensating forced labourers. It was published in financial newspapers that solution
are looked for by South Korea without involving state and any better suggesting will also be
welcomed from Japan. The willingness of achieving a compromise may be related to growing
cost that is resulting from bilateral disputes. Both the countries are crossing each other in lists of
preferred trading partner (Kim, 2015). Because of these restriction hundreds of organisations
over both sides are now required to get export licenses, that is slowing down the trade in
economic exchange and goods (New York Times. 2019).
Because of the actions bot economies are struggling currently. Government of Japan has
lowered the economic evaluation for the growth. Also the economic growth is much weaker than
it had been in many years. Seeing the downturn of the economy it is essential for both the
economies to ensure that they resolve these issues as early as possible. Treaty for reducing the
trade restrictions should be agreed between both the countries before it further starts exploiting
the economies (Chung and Kim, 2016).
CONCLUSION
Impacts of the trade war on Japan and South Korea
The trade war between the South Korea and Japan have a ripple effect than in the prices within
the markets. As it damages the technology supply with the china.
It affects the business al over the multiple sectors as well as potentially even dent economy.
The third largest airlines of the South Korea's have made cuts as well as adjustments regarding
the flight routes between the china and South Korea.
The tourism,airlines,luxury brands boutiques ,restaurants are also felt the pain as per the
Reputed news channel.
It is going to be a continuous disrupt the continuous damage the two countries and also the trust
within the global trading system. The trust goes down as it is considered as the permanent effect
6

on the way organization's think about the risks as well as strategies.
Mostly the technology sector is facing a big loss overall.
Korea send most of their tourist to the japan after the china,as per the report of the JTB Tourism
Research and consulting. As per the Korean tourism organization it make-up the largest group of
the visitors from the region called Asia pacific region. As it drops the tourism among the two
countries so the revenue also decrease which is beneficial for the development of the
infrastructure.
The major influence on the petrochemical industry that is critical export sector regarding South
Korea .
7

REFERENCES
Books and Journals
Lau, L.J., 2018. A better alternative to a trade war. China and the World, 1(02), p.1850014.
Kim, E. and Cha, V., 2016. Between a rock and a hard place: South Korea’s strategic dilemmas
with China and the United States. asia policy. (21). pp.101-122.
Bouët, A. and Laborde, D., 2018. US trade wars in the twenty‐first century with emerging
countries: Make America and its partners lose again. The World Economy. 41(9). pp.2276-
2319.
Elms, D. and Sriganesh, B., 2017. Trump's Trade Policy: Discerning between Rhetoric and
Reality. Asian J. WTO & Int'l Health L & Pol'y. 12. p.247.
Macdonald, D.S., 2018. The Koreans: Contemporary politics and society. Routledge.
Shearer, A., 2017. US–Japan–Australia Strategic Cooperation in the Trump Era: Moving from
Aspiration to Action. Southeast Asian Affairs. pp.83-100.
Koga, K., 2016. The Yasukuni question: histories, logics, and Japan–South Korea relations. The
Pacific Review. 29(3). pp.331-359.
Kim, W., 2015. Rising China, pivotal middle power South Korea, and alliance transition
theory. International Area Studies Review. 18(3). pp.251-265.
Chung, J.H. and Kim, J., 2016. Is South Korea in China’s orbit? Assessing Seoul’s perceptions
and policies. asia policy. (21). pp.123-146.
Online
New York Times. 2019. [Online]. Available through :
<https://www.nytimes.com/2019/09/23/opinion/america-japan-south-korea-dispute.html>.
Japan Times. 2019. [Online]. Available through :
<https://www.japantimes.co.jp/opinion/2019/10/04/commentary/japan-commentary/saving-
japan-south-korea-relationship/#.Xckvv3V94_o>.
Escalating Trade War. 2019.[Online]. Available through :
<https://www.vox.com/world/2019/8/9/20758025/trade-war-south-korea-japan>.
8

Asian Review. 2019. [Online]. Available through : <https://asia.nikkei.com/Spotlight/Cover-
Story/Inside-the-lose-lose-trade-fight-between-Japan-and-South-Korea>.
WTO. 2019. [Online]. Available through :
<https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds590_e.htm>.
9