Op-Ed

Geopolitics: The emerging Japan-South Korea tech trade spat is about history, not trade

By Rob Attwell 17 July 2019

South Koreans visit the Samsung Electronics gallery at the Samsung Electronics headquarters in Seoul, South Korea, 05 April 2019. EPA-EFE/JEON HEON-KYUN

The trade spat between Japan and South Korea could have global commercial implications. It is a deep-rooted historical issue that dates back to Japan’s 1910-1945 colonial occupation of the Korean Peninsula.

Starting on 4 July 2019, amid an escalating trade row over wartime labour issues, Japan imposed stricter regulations on the export of several key chemical components used in the production of microchips and smartphones, among other hi-tech products, to South Korea.

These new measures strip South Korea of its “white country” status — meaning it is no longer a beneficiary of an expedited export process — and will force exporters to apply for permission to send these materials to South Korea, a process which can take up to 90 days per batch.

The South Korean government is considering retaliatory measures, which could include lodging a formal complaint with the World Trade Organisation. Meanwhile, South Korean consumers are threatening to boycott Japanese products ranging from cosmetics to beer and cars.

South Korean firms are major players in the global tech sector and these new Japanese restrictions are expected to cause severe disruptions to the global tech supply chains. Among other hi-tech goods such as smartphones, South Korean firms produce around 70% of the world’s DRAM, a type of random-access memory used in computing devices, primarily personal computers. Meanwhile, Japanese suppliers provide these firms with about 70-90% of the materials needed to make these components, a fact with implications for global technology firms ranging from Apple to Huawei.

What’s it all about?

While the spat will affect the production of modern hi-tech products, a dispute over Japan’s 1910-1945 colonial occupation of the Korean Peninsula drives the current trade row. Japan and South Korea have clashed over issues pertaining to Japanese colonial history for decades. The most famous of these disputes is the so-called comfort women” issue, a contentious term referring to the women and girls forced into sexual slavery for the benefit of the Japanese Imperial Army before and during World War II.

The current trade spat, however, revolves around the issue of forced labour. Up to 150,000 Koreans were forced to work in Japanese factories and mines during the war. In late 2018, South Korean courts ordered Japanese companies, including Mitsubishi Heavy Industries, to financially compensate surviving victims and their families.

These rulings prompted a diplomatic spat, with Japanese authorities saying they violate the 1965 treaty which restored diplomatic relations between the countries. Japanese authorities have since said they want to refer the matter to arbitration using the terms of the treaty as a guideline. Seemingly growing exasperated by South Korea’s alleged reluctance to resolve the issue through arbitration, Japan decided to impose the latest restrictions.

1965 treaty

After a period of post-war stasis, Japan and South Korea re-established diplomatic links with the signing of the 1965 Treaty on Basic Relations. As part of the agreement, the Japanese authorities provided the then South Korean government under Park Chung Hee, a military dictator, with hundreds of millions of US dollars in loans for infrastructure development projects and other forms of economic co-operation. With the signing of the treaty and this provision of economic aid, Japanese authorities now consider issues pertaining to compensation over colonial-era misdeeds to be resolved.

None of the aid provided, however, was used to compensate individual victims of Japanese colonial-era policies. In 2005, the South Korean government revealed that Japanese negotiators had raised the issue of compensation for individual victims, but Park’s military government had insisted it would receive this money on their behalf. Instead of providing them with compensation, however, the then South Korean government used the money to fund various infrastructure development projects.

After Park was assassinated in 1979, South Korea began to democratise, although successive military governments would remain in power until the late 1980s. As part of this process, civil society groups suppressed under military rule were empowered, as was the independent judiciary.

Campaigns by various activist groups and judicial rulings critical of the South Korean government’s failure to address these issues previously have forced the South Korean authorities to raise the issue diplomatically, much to Japan’s displeasure.

While successive Japanese governments have continued to insist that these issues were resolved by the 1965 treaty, the nature of South Korean politics has changed fundamentally. In order to resolve these issues, Japan can no longer seek a purely “government-to-government” solution and must engage with other stakeholders, including civil society activists. The failure to do so has now moved beyond a bilateral dispute with regional implications.

With the current trade spat’s potential to affect global technology supply chains, Japan and South Korea’s disputes over history may now have global commercial consequences. DM

Rob Attwell is an analyst specialising in Asian political and security issues.

Gallery

In other news...

South Africa is in a very real battle. A political fight where terms such as truth and democracy can seem more of a suggestion as opposed to a necessity.

On one side of the battle are those openly willing to undermine the sovereignty of a democratic society, completely disregarding the weight and power of the oaths declared when they took office. If their mission was to decrease society’s trust in government - mission accomplished.

And on the other side are those who believe in the ethos of a country whose constitution was once declared the most progressive in the world. The hope that truth, justice and accountability in politics, business and society is not simply fairy tale dust sprinkled in great electoral speeches; but rather a cause that needs to be intentionally acted upon every day.

However, it would be an offensive oversight not to acknowledge that right there on the front lines, alongside whistleblowers and civil society, stand the journalists. Armed with only their determination to inform society and defend the truth, caught in the crossfire of shots fired from both sides.

If you believe in supporting the cause and the work of Daily Maverick then take your position on the battleground and sign up to Maverick Insider today.

For whatever amount you choose, you can support Daily Maverick and it only takes a minute.

Support Daily MaverickPayment options


Comments - share your knowledge and experience

Please note you must be a Maverick Insider to comment. Sign up here or if you are already an Insider.

BUSINESS MAVERICK

Forgotten Promises: Ease of doing business

By Sasha Planting

"It's the friends you can call up at 4am that matter." ~ Marlene Dietrich