Why are Japan and Korea in a trade war? | CNBC Explains

There’s a brewing trade war brewing between
two major economies that could further slow global growth and could potentially even make
the price of your smartphones go up. But this is not the one you’re thinking of. This one is between Japan and Korea. Japan and South Korea are Asia’s biggest
economies after China and India, and have gained worldwide acclaim for their global brands. But the relationship between the two powerhouses
has long been strained, and now we’re seeing those tensions manifest themselves in
a trade dispute. It all kicked off in July 2019, when Tokyo
added trade restrictions on Korean companies purchasing three chemicals made in Japan. It cited Korea’s “inadequate management”
of the sensitive items, essentially hinting the chemicals were being sent on to unapproved
countries like North Korea and Iran. Japan produces up to 90% of the world’s
supply of these chemicals, which are often used in making semiconductors
and display screens. Semiconductors are critical for making major
components of today’s electronic products, like your smartphone. That makes the chemicals vital to South Korea’s
economy, which is home to semiconductor giants Samsung Electronics and SK Hynix. These two companies alone supplied 61% of
the components used in memory chips globally. In 2018, semiconductor sales made up 92% of
Korean export growth. Now, thanks to a perfect storm, its trade
is expected to fall in 2019. The real bone of contention, however, goes
way back in time and beyond trade. Korea’s modern-day resentment of the Japanese
can be traced back to over a century ago, when the Korean peninsula was colonized by
the Japanese in 1910. During this time, many Koreans were made to work in
Japanese factories and mines under poor conditions. Tens of thousands of women, many of them Korean,
also served as “comfort women,” a Japanese euphemism used to describe those forced
into sex work at military brothels. Korean culture, language and history were
at risk of being erased. Japanese rule came to an end in 1945, following
the Axis powers’ defeat in World War II. After years of negotiation, the two nations
signed a treaty in 1965. It aimed to resolve all colonial-era claims “completely
and finally” in exchange for $800 million worth of economic aid and loans from Japan. This amounted to more than a quarter
of Korea’s GDP at the time. But many in Asia rejected the treaty as insincere
or insufficient, pointing out it did not cover sensitive issues like Korea’s “comfort women.” The nations attempted to settle this
decades later in 2015. Japanese Prime Minister Shinzo Abe offered
his “most sincere apologies and remorse,” and his government agreed to send Seoul $10
million to establish a foundation to support surviving “comfort women.” As a part of the agreement, the two head of states agreed not to criticize each other over the contentious issue on an
international stage anymore. The agreement was short-lived. Many Korean civilians and interest groups
were unhappy with the outcome, saying they weren’t consulted during the negotiations.
The resentment festered and eventually escalated into several mass demonstrations
on the streets of Seoul. Korean consumers began to
boycott Japanese goods. In 2017, Moon Jae-in became South Korea’s
president, and made it clear that South Koreans would not accept the 2015 deal brokered
by his predecessor. Resentment was growing in Japan as well, where
many felt South Korea kept “moving the goal post” on the issue, making it impossible
to settle colonial claims. At the end of 2018, the Japanese government
was infuriated by a South Korean Supreme Court decision. It held Japanese companies
accountable for forcing Korean workers into factories during the Second World War. Two companies — Nippon Steel & Sumitomo
Metal and Mitsubishi Heavy Industries — were ordered to compensate several Koreans
for forced labor during the war. It wasn’t long before these tensions spread
to other parts of the countries relationship, including their trade ties – which brings
us back to where we left off in 2019. Only a month after tightening trade exports
to South Korea, Tokyo took it a step further by announcing it would remove South Korea
from its white list. Soon after, Seoul did the same thing. So what is the white list? It is a list of 27 countries – now 26 without Korea – that
Japan considers to be trustworthy trade partners. This means they won’t misuse the goods they
buy for unauthorized military use or resell them to sanctioned countries. The move affects
more than 1,000 goods from South Korea. Moving forward, the companies will have to
go through more rigorous vetting. Approval will take longer, and goods imported
from Korea to Japan will go under closer examination. As trade ties break down, prices of chips
will go up in the short-term. Samsung phone prices could potentially go up too. And companies like Samsung and SK Hynix may
be forced to look for alternative supply sources for its technology parts and materials
imported from Japan. But there may be a silver lining in the long run. Before trade ties between both countries took
a nosedive, the prices of DRAM memory chips, a common type of random access memory,
were at new lows. This was due to an expected
abundance in supply. That slashed profits at Samsung Electronics
in the company’s worst drop in four years. But when Japan tightened its export controls,
supplies of DRAM chips suddenly dropped and prices went up in turn, leading to better than expected
results for Samsung and other Korean manufacturers. Experts say that Japan’s trade curbs on
South Korea could actually backfire and hurt the Japanese economy because many Korean
companies have lost trust in Japan and may choose not to do business with
Japanese firms in the future. Bilateral ties took a further hit in August.
The South Korean government announced its withdrawal from a highly sensitive
intelligence sharing pact. So what is the intelligence agreement and
why does it matter for global security? The General Security of Military Information
Agreement, more commonly referred to as GSOMIA, allowed the two countries to directly share
information on North Korea’s nuclear and missile activities, ensuring that the two
U.S. allies are aligned defensively. It’s the first intelligence-sharing agreement
between the two nations since Korea’s liberation from Imperial Japan in 1945. It was signed in 2016
after five years of negotiation. The delay, according to an expert, likely
came down to negative public sentiment in South Korea, and it’s very likely that is
what drove Seoul’s withdrawal now. Dropping out of the intelligence sharing deal
means that South Korea’s government will no longer be quickly notified about irregular
activities in regional waters. In 2019 alone, Seoul and Tokyo exchanged “classified
military information” about North Korea 7 times. Still, the two Asian countries can technically share intelligence through their ally, the United States. But that makes it more complicated. Some experts say this could create a serious
lag and cause detrimental consequences for the effective monitoring of North Korea’s
nuclear threats. Beyond military effects, a worsening Japan-Korea
relationship may weaken geopolitical ties. The deteriorating relationship between the
two neighboring countries is impacting the world’s largest economies. For one, China
and the U.S. are fighting to be the mediator. While the two largest economies are in the
midst of a trade war of their own, they’re doing their best to avoid a souring bond
between Japan and Korea. China has publicly supported a resolution
to the trade tension, but at the same time, Chinese companies are positioning themselves
as replacements for their Japanese counterparts. While China could benefit from new export
orders, Beijing ultimately hopes to keep the Japan-South Korea-China free trade agreement
negotiations on track, but that will be unlikely as tension escalates. Analysts say China
can benefit economically if South Korea and Japan resolve their differences, but it could potentially benefit
geopolitically if their relationship worsens, weakening U.S. influence in the region. The U.S., which
has a sizable military presence in both countries, has always served as a bridge between the two nations. But the Trump administration has stayed relatively
low key in the recent Japan-Korea dispute. Some experts suggest this could even indirectly
strengthen China’s influence globally, a prospect that is raising eyebrows in Washington.

100 thoughts on “Why are Japan and Korea in a trade war? | CNBC Explains

  1. I really hope that this resolves and gets better in the near future. I really love Korea and as a Japanese myself, I think both countries could benefit if the relationship between them wasn't so bad. It really isn't beneficial to either countries, the boycott of Japanese goods are negatively affecting people who work for Japanese countries in South Korea, and the drop from the whitelist is proving to backfire on Japan. Japan should just formally apologize about this issue and see what it can do to resolve the issue properly and South Korea should try to not hold onto its past so tightly.

  2. Japan shot itself on its foot. Korea doesn't need Japan as much as Japan needs Korea. Yes, Trump's hands-off policy has worsened the situation too.

  3. South Korea just being stupid now, I understand issues from the past are severe however there’s a place where people need to learn to draw a line protecting people now instead of focusing on the past work together for a better future or the other countries in the world will take your place. Japan is a powerful country however South Korea is already one of the smaller ecomomies of the world powers.

  4. I was going to write a negative comment but this was actually educational 👍

    I don't know if ppl notice but CNBC sometimes comes out with really thought grabbing stories unlike other major News networks

  5. Chinese Market is saturating, Indian mobile market is fastest growing on earth, but Indian govt doesn't give one dime to Korean or Japanese companies wanting to open semiconductor fabs, Indian govt is so stupid

  6. I'm team Korae, Japan has no use in our society, all they do is export hentai and their shitty cartoons! Let them die! Kpop all the way! /s

  7. 日本がいらないと言うならこっちを見るな


  8. I'm a South Korean and I'm sad to see how far this has gone. The conflict between South Korea and Japan should have been resolved decades ago, but every time there is a shift in political power my country calls the agreement 'not sincere ' and demands more apologies. Our government is adding flame to the anti-Japan movement because it is a good way of getting political support. An agreement made between countries should not be set aside like that. I wish that this endless cycle will end and both countries can move on to a better future

  9. Why does YouTube not tell me how cnbc is funded with a watermark from Wikipedia under every one of their videos like it does with RT?

  10. the fact: Japan was caught much more bc they sold the chemicals to North Korea illegally and they've been protesting for discrimination against Korean in the middle of Tokyo which is their capital

  11. 댇긇 개갇넿. 쪾빨이듫 맗 듵는 샊읻읋 조오오오옪나 뼝씬갇닿. 겆잇의 믾쪽 마를 듵는 밥오샊읻을.
    해석 열심히 하시길. 이건 번역기도 못 거르는 댓이다 일뽕들아.

  12. 일bon는 아찍 min주ju의ga 미seong숙han데 데mo크ra시를 자rang하neun 쪽ba리reul 보ni 참 불ssang하da. 아ni, 오hi려 그run 생gak을 하neun 민jok이ra는 걸 알ge 됐go, 참eu로 병sin같eun 민jok이ra는 걸 깨dat게 해ju어 고map다. 섬e서 잘 썩eo라 원sung이deul아. 민ju혁myeong 한beon 안 해bon 것deul이 어di서 3nyeon 전e 국min들 힘eu로 대tong령 탄haek한 민jok을 건deu려? 나neun 죽eul 때kka지 일bon제pum 불mae할 거da. 다reun 사ram들eun 어jjeol 지 모reu겠ji만, 난 그reol 거da 이 원sung이deul아.

  13. to Koreans : stop crying about the past
    to Japaneses: don't you dare to hide your crime with kawaii culture and stop playing victim with those 2 atomic bombs, plus rewrite your history class textbook

  14. I'm Japanase. sorry for my strange English

    It is not true that Japan and Korea always get quarrels.
    It is true that Korea always pick a fight with Japan.

    Japan has tightened trade control because Korea doesn't treat properly with sensitive materials.
    Japan has claimed for three years against Korea to improve materials treatment, but Korea has ignored Japan.

  15. Japan actually hoped to bring the golden age back to their falling semiconductor companies by chocking samsung and hynix. Sadly it didn't work and japan is taking all the backfire damage of this trade war what they caused.

  16. 제발 일본이랑 나쁜 사이 지속되서 대한민국 망했으면 좋겠다. 태국 감비아 동맹 든든합니다

  17. Please state your source. Abe has not apologized for the comfort women issue. Thats the ONE thing Koreans want, an apology.

  18. This video fails to cover the fact that none of the treaties between the two country settled the individual claims from the war victims. The court ruling covered exactly that issue; individuals claiming compensation from the Japanese companies. Therefore the court ruling isn’t contradicting any of the treaties.

  19. What kind of BULLSHIT is this?
    1. There was NO sincere apology and remorse AT ALL.
    2. The treaty that Korea and Japan agreed to was kind of big crap because Korean government was autocracy. That dictator wanted money and Japan used the chance with U.S forcing Korea to sign the treaty, which did NOT CARE THE REAL VICTIM OF JAPANESE COLONIALISM.
    3. The thing that so called GSOMIA is about military information. But WHAT IS THE POINT IF A COUNTRY CANNOT HAVE ITS OWN ARMY BECAUSE THEY ARE WAR CRIMINALS?!!! THAT'S JAPAN ITSELF!!!!!!!!!!!!!!


  20. Most of historical facts mentioned in this video are wrong and not based on realty. I doubt CNBC's ability to analyze the world and broadcast, and will never recommend anyone around.

  21. Hate and contentions are not the solution and I wish both Japan and Korean come to terms and become friendly neighborhood. If countries like Japan and Korea become friends then the world economy will be in better places. Hopefully both China and US also resolve differences soon!

  22. What I can understand from the video is that “the trade war” originated from ww 2. But it is mainly about a competition between two neighbors over technological innovation and global influence.
    Tell me what you understand about the video.
    War issues is nothing, Vietnam suffers from 2 wars in 20th century and we are not bitching about it.

  23. It's kind of nonsense. Japan gains more economical profit by trading with Korea, but they suppress the trading….😂😂🤣

  24. We are moving away from globalism….components to make one phone come from individual companies and countries then sold as a final product all over the world. We are reverting back to days where we are no longer reliant on others and creat our own good and services and sell domestically first then globally.

    Companies only about cheap labor costs and profits. Now we will move away from quantity based economics to quality based.

    I dont need my phone upgraded every 2 years…or companies intentionally screwing with my phone so I am forced to buy a new model. What happened to phones that lasted for a decade? Show your worth or go bankrupt.

  25. Who exactly are these "comfort women"? if they were 20 y/o in 1945 when the war ended, they'd be 75 y/o in 2000. Add another 17 years and they YOUNGEST ONES would be in their early 90's (!) They act like these women are everywhere. Statistically speaking they would have to be mostly dead. Who are these women that are being shown holding signs? They are definitely Not Korean women that are 90 to 100 Plus. wtf

  26. It's not a trade war, it's a legitimate measure by Japan against the disrespect of Korea. Nevertheless, Koreans discriminate against and abhor Japan. The problem is serious and behind it is the ruling socialist party in Korea.

  27. Because the Korean people are ignorant of economics and politics, the Korean socialist party uses it to instill false knowledge and use it in politics.

  28. South Koreans are under the illusion that they are tricked into a trade war by a socialist party. But the reality is that a fool is doing shadow boxing by himself.

  29. Only reason Korean people didn't want to accept the deal is Japanes government and politician wouldn't admit what they did. They are still denying sexy slaving – not confort women- women and children – yes they are 14 at the time- but offering us apology. What kind of BS is that. Every apology start with acknowledging what they did, without it it's nothing but BS.
    Also claiming Korea's "inadequate management" of the sensitive items has no prove what so ever and Japan wants to have military information exchange – GSOMIA- with the country of 'inadequate management" of sensitive items. Talk about hypocrisy.

  30. Thanks to America and china trade war
    Now Japan & Korea trade war it wil create job less and stress and economic slowdown effecting the world

  31. Korea and Japan are fighting for the past while China is reaping benefits in the present . Look, Indians have forgiven the British for their deeds in the past and we have a good trade with them these days . We know how it feels but this trade war will neither benefit Korea nor Japan just the bystanders.

    Past belongs in the books not in our hearts .

    The present generation shouldn't suffer the deeds of the predecessor, that's not what justice looks like and will neither benefit the victim nor the convict .


  32. Mostly, because Japanese Army invaded Korea during WW2, which forced korean women to be sex slave " comfort women", and nowadays Japanese Gov still haven't apoligized.

  33. I guess we’re in a trade war with every single nation we do business with as well based on the logic of the US media outlets lol

  34. It's not 10s and thousands of women…it is upwards of more than 200,000 innocent women tarnished by the Japanese while being robbed of their hopes, dreams, future and of their dignity as a woman, as a Korean, and as a human being.

  35. oh btw the proof they depend on is an article issued by asahi news paper in 80s, wbtw the writers wife is a korean, the asahi themself admitted to apology to the public that the artcle was fabricated by their political intention in case you dont know. oh another btw, from looking at their track record they have tendency to pick up terrible choice when it come to crunch time.

  36. ほぼ韓国視点の動画かな。肝心の韓国海軍のレーダー照射問題抜けてるし。CNBCの日本に対する調査能力の欠落がわかる良い動画。もっとも説明したいのは貿易戦争じゃなくて、今後の韓国半導体市況でしょ?

  37. For me, it looks like

    USA : Let's make them thrive, and use them as a democracy shield!
    years later
    Japan : f u korea
    Korea : f u japan


    (Not being aggressive I respect all perspectives)

  38. Because China controls current Korean regime to break alliance between US-Korea-Japan. carefully calculated sneak attack.

  39. There in a trade War because they want to see who can please us the United States more because they're all puppies lol. They will hurt each other just to show us the U.S who's stronger between the two countries LOL.

  40. Japanese war criminals still got government officials Japanese big companies never punished not educating their people think polite? Worst 2 face country in the world

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