Japan-South Korea Tensions Escalate into Tit-for-Tat Trade Conflict

August 14, 2019

Tokyo- Tensions between Japan and South Korea over a wartime labor dispute have escalated into a tit-for-tat trade conflict, dragging bilateral relations to the lowest point since the two countries normalized diplomatic ties in 1965.

The South Korea's industry ministry said Monday that it will remove Japan in September from its list of trusted trading partners qualified for preferential treatment in export procedures.

The step is apparently in retaliation for a Japanese decision earlier this month to drop South Korea from its list of trusted trading partners, although the South Korean ministry argued that it had no such intention, pundits said.

"We...cannot help but take Japan's ongoing economic retaliation very seriously," South Korean President Moon Jae-in told senior aides in a meeting on Monday.

Moon's hard-line approach to Japan is apparently aimed at winning public support ahead of National Liberation Day on Thursday, which commemorates South Korea's independence from Japanese colonial rule, as well as the general election scheduled for spring next year, sources familiar with his thinking said.

But overly anti-Japanese measures may affect tourism and other exchanges between the two countries, possibly dealing an additional blow to the South Korean economy, which is already reeling from sluggish exports, analysts said. "Our response to Japan's economic retaliation shouldn't be emotional," Moon said at Monday's meeting.

Japan had hoped that its trade measure would prompt South Korea to make concessions on the wartime labor issue. Tokyo is unhappy with South Korean Supreme Court rulings last year that ordered Japanese companies to pay damages to South Korean plaintiffs over wartime labor.

Tokyo is ready to launch additional measures if Seoul fails to take action to address the Japanese complaint. It plans to keep pressure on Seoul for concessions on the wartime labor issue, downplaying the impact of the South Korean measure.

"The South Korean items subject to the measure can be procured from other countries. This means nothing to Japan," a Japanese Foreign Ministry official said.

Japan is considering raising tariffs on some products from South Korea if Japanese companies' assets in South Korea are sold to pay compensation under the wartime labor lawsuits, informed sources said.

"The Japan-South Korea tensions will never end unless someone throws in the towel," a senior Japanese Foreign Ministry official said. Jiji Press