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Japan and South Korea are trading blows in a conflict that threatens to impact businesses around the world – and to deepen divides between allies the U.S. relies on in East Asia.
Their trade spat kicked off in July, with Tokyo imposing export restrictions on chemicals key for South Korea’s heavily high-tech economy. But to understand the roots, most observers say, we need to look back to at least 1910, when Japan annexed Korea. Ever since the end of World War II, the two countries have disagreed over how Japan should make amends. Last year, South Korea’s Supreme Court ruled two Japanese companies should pay reparations to Koreans who were forced into labor, propelling tensions back into overdrive.
But if the escalating trade spat started with history, it also points to how East Asia is changing today, and where it may be headed. If unresolved, the conflict could have ripple effects for manufacturers. And it’s growing the gap between key U.S. allies who counterbalance China and North Korea. As the U.S. role in the region changes under the Trump administration, Japan and South Korea are increasingly turning their backs on one another.
“This is a problem not just for Japan and South Korea. This is a problem for the world,” says Don Hellmann, a professor at the University of Washington.
As nationalist sentiments rise around the world, Northeast Asia has not been immune. Propelled by decades-old resentments, Japan and South Korea are trading blows in a conflict that threatens to impact businesses around the world – and deepen divides between two allies the U.S. relies on to help counterbalance China and North Korea.
The trade spat kicked off with Tokyo imposing restrictions on chemicals key to South Korea’s high-tech industry, citing unspecified security concerns. Most observers, however, see the trade war as historical frictions spilling over into economic and national security arenas – underscoring how large the past looms in East Asia today.
The solution, experts say, requires a multilateral approach. But that, in turn, raises questions about evolving leadership roles of not only the United States, but China.
How did all these tensions start?
Animosity and mistrust originated in Japan’s 1910 to 1945 colonization of Korea, when Japan forced an estimated hundreds of thousands of Koreans to work as unpaid laborers or to serve as sex slaves in military brothels. Ever since, the two countries have disagreed over what Japan must do to fully make amends.
Japan and South Korea normalized relations in 1965 and agreed Japan would pay South Korea $800 million in economic aid and loans. Japan asserts the 1965 government accord resolved the issue, but the South Korean public has long supported individual claims for compensation.
The latest flare-up followed rulings last year by South Korea’s Supreme Court that ordered two Japanese companies to award reparations to Korean laborers, infuriating Tokyo.
“This is incredibly important. Whose side of the story gets told is part of the national narrative, it’s part of a leader’s narrative, it’s a country’s identity,” says David Kang, director of the Korean Studies Institute at the University of Southern California.
Both countries are “showing resolve, they are showing how much they care. They are showing, ‘We are willing to suffer costs over this issue,’” Professor Kang says.
What is happening in the trade dispute?
Japan in July tightened controls over the export to South Korea of key chemicals and other materials that South Korea’s tech industry needs to produce smartphone screens and semiconductors. As a result, Japanese firms must undergo a lengthy government approval process to sell these products to South Korea.
On August 2, Japan announced plans to remove South Korea from its list of favored trading partners by August 28, which would impact exports of more than 1,000 different products.
In response, South Korea announced it would also move to revoke Japan’s preferential trade status. Many South Koreans have called for boycotts of Japanese products.
Japan’s new export restrictions threaten to have international ripple effects. Japan controls 90% of the world supply of special chemicals needed for semiconductors and smartphone displays, of which South Korean companies are the world’s dominant producers. If South Korean companies run out of the chemicals, global tech supply chains for everything from Apple iPhones to TV sets would suffer.
“This is a problem not just for Japan and South Korea. This is a problem for the world,” says Don Hellmann, a Japan expert and professor at the University of Washington.
What is the United States doing – or not – to help smooth tensions?
The United States has always been reluctant to intervene in historical disputes between Japan and South Korea. But the Trump administration is being particularly hands-off, some experts say, as “fatigue” grows over the allies’ inability to bury the hatchet.
“Now frankly there’s both Seoul fatigue and Japan fatigue,” says Bruce Klingner, a Northeast Asia expert at the Heritage Foundation in Washington. “[Japan and South Korea] are still arguing over the issues of the last millennium, when we are on to the issues of this millennium, like a rising China and North Korea.”
Others note that the Trump administration is thin on mid-level officials with Asia expertise. In past administrations, such officials held “regular trilateral meetings … that encompassed anything that risked disturbing the working relations among us,” says James Schoff, a former adviser for East Asia policy in the Office of the Secretary of Defense. “You definitely don’t see that now.”
He acknowledges that the Trump administration faces a “much more challenging environment” as the historical dispute spreads into economics and security. But as the dispute widens to areas of greater concern to Washington, the U.S. should be more active in quelling the storm, Mr. Schoff and other analysts say.
Mr. Klingner notes that the Obama administration “played a strong private role that included very stern private conversations with both sides,” he says. “That was an example of what the U.S. role is – to be more of a marriage counselor than a divorce judge who makes rulings about who’s wrong and who’s right.”
How does this reflect on U.S. diplomacy, more broadly?
The growing gap between the two key U.S. allies highlights an evolving U.S. role in Asia, many regional analysts say.
First, the U.S. is no longer the dominant power it was in Asia even a decade ago. And second, President Donald Trump’s disregard for post-World War II alliances has decreased U.S. influence in the region, loosening the ties that bind allies like Japan and South Korea.
“U.S. standing in the region is somewhat diminished, and then add to that Trump’s view of our allies as taking advantage of us, not paying their fair share, and of alliances as business deals, and all of that hurts the United States’ image and our ability to lead based on common values,” says Mr. Klingner.
As the U.S. role has waned, Japan and South Korea increasingly turn their backs on one another to pursue perceived national interests. Amid the trade dispute, Seoul has threatened to pull out of an intelligence-sharing agreement with Tokyo.
“If indeed there are real questions about the dependability of the U.S. alliance with the region, you might think that would drive Japan and South Korea – with their highly interdependent economies and common security interests – closer together, but that has not happened,” says Mr. Schoff, now a senior fellow at the Carnegie Endowment for International Peace in Washington.
Instead, Japan is looking to Australia and elsewhere in the Indo-Pacific, while South Korea focuses on North Korea and figuring out a way forward with China.