Why Japan and South Korea are locked in a trade dispute | FT


The world has been fixated
on Donald Trump’s tariffs on China, but a new
trade war is emerging in Asia, this time between
Japan and South Korea. What started as a historical
dispute over forced labour during Japan’s wartime rule
on the Korean peninsula has swiftly turned into a major
economic and political crisis for Seoul. Tokyo believes that compensation
for wartime forced labour was settled under a 1965 treaty. But South Korean courts have
allowed individual claims to be made against
Japanese companies. Blaming a loss of trust
and security issues, Shinzo Abe’s government has
turned to export controls, threatening to disrupt
supplies of key technologies to South Korean
companies in a bid to pressure South Korean
president Moon Jae-in. South Koreans are outraged,
boycotting Japanese-made goods. And in the most
extreme cases, two men have died after setting
themselves on fire in protest. Some international
experts are also worried that Mr Abe
is following the Trump playbook in weaponising trade. South Korea’s tech giants,
including the world’s two biggest makers of memory
chips, Samsung and SK Hynix, are urgently looking
for replacement sources for some of the key
materials and components that they use to
make computer chips. Any long-term disruptions to
the South Korean companies will cause serious headaches
across the global technology supply chain. There are also fears
that the dispute will drive a lasting wedge
between these key US allies in Asia, just as Washington
needs their co-operation to deal with North
Korea’s missile tests and the rising threats
posed by China and Russia.

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