Even as the global economy continues to be under a cloud, thanks to constant trade-related tensions between key economic entities such as the US and China, or indeed, the UK and the European Union, there are rumblings of another trade war brewing — this time between two US allies, Japan and South Korea.
What is the dispute?
Japan has placed export restrictions on South Korea with regard to three key high-tech materials that are critical for manufacturing semiconductors. Japan reportedly also removed South Korea from its “white country” list, that is, nations Japan deems to have trustworthy export control systems.
In response, South Korea has now threatened to take Japan’s export restriction to the World Trade Organization, after preliminary negotiations failed. What further points to growing tensions is that South Korea’s Finance Minister, Hong Nam-ki, has announced that Seoul is “working on comprehensive plans to reduce the country’s dependence on Japan’s materials, components and equipment industries.”
Why did Japan restrict exports?
Japan has accused South Korea of passing on one of the said materials — hydrogen fluoride — to North Korea. The shipment was cleared for exports from Japan to South Korea only. On its part, Seoul denied these allegations.
What’s the background?
Japan and South Korea share a bitter past when the latter was colonised by the former. South Korea has for long complained about wartime atrocities and inadequate apologies for colonial excesses on Japan’s part. From Japan’s perspective, too, this is fast becoming a matter of honour. What gives potency to these concerns is that fact that the fast-approaching election calendar.
South Korea is scheduled to have elections next year and Japan will hold elections for its upper House later this year. That essentially means that neither government can be seen to be buckling under pressure.