What's driving the South Korea-Japan trade dispute?

16 June 2020

In recent weeks the government of South Korea has spoken about reopening a complaint filed with the World Trade Organisation over Japan’s attempts to curb high end technology exports to its companies. This complaint is just the latest turn in a continuation of Seoul’s bilateral trade dispute with Japan which started last year when South Korea demanded compensation from Japan for the use of forced labour during the occupation of the Korean Peninsula from 1910 until the end of the Second World War. As observers of East Asian geopolitics can attest this relatively recent history continues to be a source of contention between two nominal allies. Despite multiple attempts to move forward, Japan’s imperial legacy in Korea remains very much alive in their bilateral discourse.

The trade dispute

Understanding the trade dispute is key to understanding the geopolitics that underlie the tensions between Seoul and Tokyo. Starting in 2019, Japan imposed restrictions on the export of materials critical to South Korea’s production of high end technology products such as display screens and semi-conductor components. Soon after, South Korea was removed from Japan’s “white list” of countries thereby excluding companies such as Samsung and LG from preferential trade treatment. In response South Korea lodged a complaint with the WTO regarding Japan’s export controls, leading to the removal of Japan from South Korea’s own white list of trusted trade partners. The COVID-19 pandemic has further aggravated tensions as Japan recently imposed a14 day quarantine rule and suspended visa free entry to those entering from China and South Korea prompting South Korea to suspend its own visa free entry for Japanese citizens.

Factoring geopolitics in the dispute

South Korea’s repeated efforts to revive the issue of Japan’s imperial legacy is best understood in the context of East Asia’s geopolitical framework. South Korean governments of all stripes have undertaken repeated attempts to weaponize history, which serves as a serious point of contention with Japan and ensures that despite both being United States allies the two are never truly close partners. As China increasingly plays the role of coercive power in East Asia by asserting itself in the South and East China Sea, a combination of its growing naval power, alongside a deep history of rivalry between the two states means that Beijing is viewed by Japan as a threat.

As a nation dependent on seaborne trade Japan considers the security of the Sea Lines of Communication (SLOCs) a major national security priority and thus Tokyo desperately needs the support of an anchoring power like the United States (with its substantial military and naval capabilities) to provide the security SLOCs require and which its economy is so reliant. Japan has thus aligned heavily with the United States in balancing the power of China, whilst also deepening its security ties with like-minded democratic countries like India and Australia.

South Korea’s geographical orientation however (spanning across both the maritime and continental spheres) enhances its inclination towards strategic ambivalence. Given its economic dependence on China and a strong focus towards seeking peaceful ties with North Korea, Seoul needs to adopt a friendlier approach to Beijing. At the same time it remains heavily dependent on the United States for security in the face of Pyongyang’s nuclear program. Therefore, maintaining a balance between China and the United States is of greater importance for South Korea.

When the trade spat between Seoul and Tokyo spilled into the security domain, the dispute served to highlight the geopolitical roles of the United States and China in East Asia. In the face of rising tensions with Japan over trade, South Korea delayed renewing the General Security of Military Information Agreement (GSOMIA) with Tokyo which would have reduced sharply the sharing of intelligence between the two sides. The disrupting of this key security relationship between two American allies risked providing an opening for China at a particularly sensitive time. Seoul’s decision to renew GSOMIA only came after intense diplomatic pressure from the United States. Failure to renew the agreement would have dramatically undermined Washington’s alliance system in East Asia, which it views as vital to balancing China and countering North Korea.

The GSOMIA episode highlights just how the cycle of unresolved historical grievances risks undermining the very cohesion required to support a key regional alliance. Japan and South Korea's strategic calculations in the last year over trade have led to a greater degree of discord, which in turn is damaging the United State’s own strategic position in relation to China. As other commentators have pointed out, current tensions between Tokyo and Seoul could in the long run undermine the wider strategic trust between the two sides, as diplomatic relations currently sit at their lowest point since1965. While this approach allows South Korea to continue its strategy of ambivalence and balances ties between China and the United States, it comes at the cost of relations with Japan which Seoul has calculated as less important. The ongoing trade tensions offer an important opening for China to further undermine the Japan-South Korea alliance via a wedging strategy, ultimately hindering the United State’s attempt to manage an increasingly fragile alliance system in the region.

It was telling that while the United States worked hard to ensure South Korea renewed the GSOMIA agreement, China sought to also play the role of mediator between Tokyo and Seoul at the 2019 Chengdu trilateral summit, circumventing the United States and highlighting its own ability to make mischief and undermine America’s role in the trilateral. In addition, due to economic interests with Beijing, aspirations for reunification and its difficult colonial history with Japan, South Korea remains vulnerable. It should therefore been seen as a weak link China will seek to exploit as part of its wider strategy to undermine the United States in the region.

The way forward

The current situation between Japan and South Korea remains precarious and whether COVID-19 and the economic crisis it has produced can lead to new avenues for cooperation that might quell trade tensions remains an open question.

In a challenging first quarter to 2020 the GDP of both countries has shrunk alongside domestic and international demand for exports. In addition as they struggle to shift from a crisis response to economic recovery both Tokyo and Seoul will have to review the cost of their trade dispute and ask whether it is worth continuing in the face of a new and more dangerous economic reality. In the long run the stability of East Asia demands a healthy balance between the three major economies to induce an economic recovery and also prevent a miscalculation in the maritime space(s) of the East and South China Sea.

Meanwhile China, the largest economy in Northeast Asia and the key driver of economic growth is going through its own trade dispute with the United States, with rising tensions and fears of a new Cold War. Washington has loudly raised its own voice over Beijing’s growing assertiveness in the region and beyond and in the face of a worsening economic situation in the Indo-Pacific and deteriorating ties between its two superpowers it is now up to Japan and South Korea to reflect on their priorities and consider whether their current course of action should be continued.

DISCLAIMER: All views expressed are those of the writer and do not necessarily represent that of the 9DASHLINE.com platform.

Author biography

Angana Guha Roy is a Research Associate with the Delhi Policy Group. Her research interests pertain to the geopolitics of East and Southeast Asia, and maritime affairs. Image credit: Republic of Korea/Flickr.

East Asia9DLJune 16, 2020China, Japan