Japan-South Korea trade war, the struggle has just begun

“As a Korean citizen, boycotting Japanese goods is our mission.” On July 5, Seoul, South Korea, in front of the Japanese Embassy in South Korea, the Korea Market Association held a press conference, and the president of the association, Jin Chengmin, announced that As a result, members of the association stopped selling Japanese goods. In order to show their determination, the members of the meeting raised their feet and stepped on the cardboard boxes bearing the logo of the Japanese company.

In some supermarkets in Seoul, beer, coffee, cigarettes and other commodities from Japan have been removed. The original place for these goods has erected a placard with the words “Stop selling, buying Japanese goods”.

On July 4th, Japan officially strengthened its export control of Korean semiconductor materials, and will remove the Korean side from the list of “white countries” that are trustworthy in security protection, making it impossible for South Korea to enjoy preferential treatment for export-free technology. The Korean side does not hesitate to pose a confrontation from top to bottom.

The dispute between Japan and South Korea has reached the edge of a comprehensive trade war.

“G20 just got the knife off”
On July 1, the G20 Osaka Summit just ended. At the summit, the smooth meeting between Chinese President Xi Jinping and US President Trump has released a positive signal to the world, opening a window for China-US trade issues to be resolved. At the closing of the summit, Japanese Prime Minister Shinzo Abe emphasized “the commitment to maintaining and developing a free, fair and non-discriminatory trading system.”

The Japanese government announced that it will revise its export management policy for South Korea and decided to implement the “fluorinated polyimide” and semiconductor manufacturing that will restrict the use of OLED display components for TV and smartphone exports to South Korea from July 4. There are three varieties of “photoresist” and “high-purity hydrogen fluoride” that must be used in the process.

“G20 has just ended, Japan has drawn a knife for South Korea.” South Korea’s “Central Daily News” directly criticized that there are two kinds of materials that limit exports. There are two kinds of materials in Japan. Japan accounts for 90% of the world’s market share. It is difficult for Korean companies to find alternative suppliers, and they will undoubtedly suffer “direct strikes”.

For South Korea, Japan’s export controls directly hit South Korea’s pillar industry, the semiconductor industry.

According to the “Nihon Keizai Shimbun” report, SK hynix said in an interview that the inventory was “less than three months”; when asked, “If the purchase cannot be made, if the factory will stop production after three months,” The answer is “yes”.

“The Korean stock market is shrouded in Japanese terror.” The report of the “Korea Economy” on July 8th wrote. On the same day, the Korean composite stock index fell 2.2%, the lowest since May 31. Semiconductor stocks fell sharply, Samsung Electronics, SK Hynix and other falling by about 2%, related small and medium-sized semiconductor companies fell more than 10%; due to fear of shrinking tourism to Japan, South Korea’s major aviation companies and tourism-related companies fell in stock prices About 5%; in addition, given that Korean culture may also be affected, the stock prices of major Korean film and entertainment companies and brokerage companies also fell by 3%-5%.

It seems that Japan’s first shot has caught the “throat” of South Korea.

Historical problem economic solution
When announcing the revision of the export management policy for South Korea, the Japanese side did not say the reason, only mentioning that “the trust relationship between Japan and South Korea was seriously damaged”, but at the time many Korean media agreed that the move was to retaliate against South Korea’s constant bidding for Japan. The compensation of Korean workers.

Two days later, on July 3, Japanese Prime Minister Shinzo Abe confirmed the analysis of the Korean media. He said that because the South Korean government did not propose a response in the original labor lawsuit, the Japanese side was a de facto confrontation measure. “Korea has not complied with its commitments. I will not give the previous preferential measures.”

Abe’s “commitment” refers to the “Korean-Japanese Comfort Women Agreement” signed by Korea and Japan on December 28, 2015. The agreement said that South Korea and Japan reached a “final and irreversible agreement” on the issue of “comfort women”. According to the agreement, Japan’s “Reconciliation and Healing Foundation” led by the Korean government invested 1 billion yen (about RMB 62 million).

However, in South Korea, the agreement signed by former President Park Geun-hye in office was generally boycotted. After the government took office, Wen refused to recognize the Korea-Japan Comfort Women Agreement.

Although South Korea has not publicly announced the tearing agreement, Japan believes that South Korea’s substantive behavior is contrary to the agreement and has repeatedly expressed dissatisfaction.

In October 2018, the Supreme Court of South Korea ruled that Japanese companies should provide compensation for Korean forced labor during the Japanese colonial rule from 1910 to 1945, and sentenced Nippon Steel Corporation to pay compensation of 100 million won to each of the four plaintiffs. 610,000 yuan). As a result, the dispute between Japan and South Korea for nearly a year has kicked off.

The Korean court subsequently made similar penalties for Japanese companies such as Mitsubishi Heavy Industries and Nagisa Fujitsu, which had forced labor. On June 19 this year, the South Korean government once again proposed a solution for compensation from Japanese and Korean companies. The Japanese Chief Cabinet Secretary, Yi Yiwei, publicly refused, saying that it was “completely unacceptable.” The South Korean side further stated that the victim has submitted an application for “selling and realizing” the assets of the Japanese companies seized, and will soon be put into practice.

During the G20 summit in Osaka from June 29th to 30th, Abe and I have left in a short 8-second handshake and did not meet separately. The reasons given by both parties are “the trip is full and there is no time”.

Chen Yang, a young Japanese scholar, analyzed in his commentary that the Japanese government actually began to discuss measures to retaliate against South Korea from the beginning of the year. Considering that the election of the Japanese Senate is about to take place, by strengthening the export control of South Korea, the Abe regime has demonstrated a tough diplomatic stance and conformed to the current social public opinion of Japan – a non-profit group Japanese speech recently released a poll showing: Fifty percent of Japanese respondents have a “bad impression” of South Korea – adding a bit of confidence to the ruling party’s winning elections.

“I think that compared with the difference in historical understanding, it is more important that the national interests are different. Around the North Korean nuclear issue, Japan (which attaches importance to maintaining pressure) is far from the strategic interests of South Korea, which is active in relaxing sanctions. In addition, it cannot be ignored. Yes, in terms of relations with China, the interests of Japan and South Korea are also very different.” Sheila Smith, a senior researcher at the American Association of Foreign Relations, believes that at present, Japan and South Korea do not see signs of hope that the United States will intervene in mediation, and the US government “There are too many other concerns”, but there is no time to take care of it, but “there has been a sign of zero-sum status between the Japan-US alliance and the US-South Korea alliance (which one is chosen.) This is very difficult and dangerous for US policy makers. status”.

“Japan may think that it is necessary to create new hotspots in Japan-Korea relations to cool down historical issues, and thus let the people and governments of both countries know more about Japan. The importance of Korea’s economic and trade relations as a breakthrough to promote the re-development of Japan-ROK relations.”

He pointed out that the Japanese side has begun to lay down but there is still room for it. The inventory of Korean semiconductor giants can only be “maintained for three or four months”, and in fact, the Japanese government’s review of Japanese suppliers’ exports to Korea is usually around 90 days (three months). “It can be said that as long as the relationship between the two countries returns to the relationship of trust, the two companies are willing to trade, and Korean companies do not have to face the worst case of stoppage due to lack of imports.”

“This fight is just the beginning.”
“We should resist travel to Japan. (South Korea) The government should also take measures such as tariff retaliation, travel bans and export restrictions on the Japanese economic sanctions.”

A Korean netizen wrote such a statement on the petition of the Qingwatai website, and received 11,622 people in just two days.

At least for the moment, South Korea does not accept “to surrender to Japan.”

The results of the polls released by the Korean public opinion survey agency on July 4 showed that 45.5% of the respondents supported the Korean side to respond to Japanese export controls from the international law level such as the WTO; 24.4% supported economic retaliation.

South Korean Deputy Prime Minister and Minister of Planning and Finance Minister Hong Nanji said on the same day that because the WTO arbitration takes a long time and the WTO is “not the only option”, the ROK will take measures according to domestic and international laws. Reuters believes that Hong Nanji’s words indicate that the South Korean side may take retaliatory measures against Japan.

South Korea’s “East Asia Daily” said that with Japan and South Korea’s evil, South Korea has listed 100 kinds of industrial products that Japan may restrict exports. In addition, South Korea has begun to comprehensively assess the risks of the spread of disputes over Japan to the financial and capital markets.

“This fight is just beginning, it is not over yet,” said Li Haijun, leader of the Democratic Party of South Korea.

On July 5, the “Reconciliation and Healing Foundation” was officially disbanded by the South Korean government. The South Korean government announced in November 2018 that some of the contents of the “Korean Consolation Women’s Agreement” had not been approved by the victims in advance. Reconciliation and Healing Foundation “legal qualifications and initiation of liquidation procedures.

This “retaliation” action by South Korea has once again spurred Japan. Japan’s Chief Cabinet Secretary Nakamura said in Tokyo that Japan “never accepts”.

Subsequently, Prime Minister Shinzo Abe gave the media another reason to “sanction” South Korea on July 7: “Korea said that it has complied with the sanctions regulations (for the DPRK) and implemented trade controls, but considering that Korea has clearly violated it (Japan and South Korea) ) Claims agreement, we suspect that South Korea’s failure to comply with trade control regulations is taken for granted. “They (Korea) are not worth trusting.”

“I hope that the Japanese side can ask itself: Is there any faith in the principle of free trade and the international community’s common prosperity through trade?” On July 8, South Korean President Wen Zaiyu finally said, “Han and Japan are in a vicious circle.” It is absolutely unacceptable. The two countries should resolve the issue through consultations. The Japanese government should withdraw relevant measures and return to respect the free trade track.”

The leaders of South Korea and Japan embarked on the front line of the trade war, showing that the dispute between Japan and South Korea may expand into a comprehensive trade war. The Nikkei Asia Review said that this is not a good sign for East Asia at a time when the world is facing increasing risks.