[New Year Special Commentary Series - EAI 2020 Outlook and Strategy] IV. South Korea-Japan Relations in 2020 and Policy Toward Japan: Conflict Resolution Visible When Broadening the Perspective

Editor's Note

To mark the year 2020, EAI is publishing a series of six special New Year commentaries titled "EAI 2020 Outlook and Strategy."

1. Ha Young-sun: North Korea in 2020: A Breakthrough Strategy for Two Major Challenges (Published January 6, 2020)

2. Chun Jae-sung: South Korea's Strategy for US-China Relations and its Strategy Toward the US in 2020 (Published January 8, 2020)

3. Lee Dong-ryul: South Korea-China Relations and South Korea's Diplomatic Strategy Toward China (Published January 13, 2020)

4. Sohn Yeol: South Korea-Japan Relations in 2020 and Policy Toward Japan: Conflict Resolution Visible When Broadening the Perspective (Published January 15, 2020)

5. Lee Seung-ju: US-China Trade Dispute and Trade Policy: Middle Power Diplomacy for the Restoration of Multilateralism and the Restructuring of Regional Economic Order (Scheduled for publication January 20, 2020)

6. Choi Tae-wook: Electoral System Reform in 2019 and the General Election in 2020: Outlook and Tasks (Scheduled for publication January 22, 2020)

This is the fourth report in the special New Year commentary series "EAI 2020 Outlook and Strategy." The commentary by Sohn Yeol, President of EAI and Professor at Yonsei University, presents an outlook for South Korea-Japan relations in 2020 and strategies for policy toward Japan. It would not be an exaggeration to say that the biggest crisis in South Korean diplomacy in 2019 was the conflict with Japan. Starting as a historical dispute, it escalated to economic retaliation and then to a security conflict with the termination of GSOMIA, reaching a temporary lull with the bilateral summit that was barely held. However, the room for improving relations appears narrow, and the potential for crisis remains high. The author points out that last year's diplomatic disaster stemmed from underestimating Japan's internal situation, overlooking the US-China relationship as a structural variable defining South Korea-Japan relations, and becoming bogged down in historical issues, thus missing opportunities for strategic cooperation. Furthermore, the author proposes solutions to the stalled conflict between South Korea and Japan, arguing that South Korean diplomacy must learn from past mistakes, broaden its perspective, and establish fundamental principles for its strategy toward Japan to seek a path of cooperation.

I. Introduction

The biggest crisis in South Korean diplomacy in 2019 was the conflict with Japan. After a series of minor and major ruptures, the South Korea-Japan relationship exploded with Prime Minister Abe's July 1st announcement of export restrictions, escalating from historical disputes over the Supreme Court's forced labor rulings to economic and security conflicts with the termination of GSOMIA. This diplomatic disaster could have been averted through diplomacy if both countries had not misjudged the situation. Although a bilateral summit was held on the sidelines of the trilateral summit between South Korea, China, and Japan on December 24th, it is proving difficult to move beyond damage control to improve relations.

At first glance, the current lull in South Korea-Japan relations is like holding a time bomb. The deadline for the liquidation of assets, based on the Supreme Court's ruling in 2019, is approaching. If this cannot be prevented, the relationship between the two countries will face another crisis, accompanied by Japanese retaliatory measures.

As we enter the 2020s, the world is becoming increasingly volatile due to strategic competition among great powers, and the position of middle powers like South Korea is shrinking. To avoid missing the tide of the times while arguing over right and wrong and blaming each other, it is necessary to first find and reflect on the lessons from last year's diplomacy toward Japan. First, the underestimation of Japan's internal situation; second, the oversight of the dynamics of the US-China relationship as a structural variable defining bilateral relations; and third, the missed opportunities for strategic cooperation due to being bogged down in the frame of historical issues. In short, we need to reflect on whether we have been viewing the world through an insular logic, applying self-serving interpretations. Only by broadening our perspective can we see the possibility of South Korea-Japan cooperation.

II. Lessons from the 2019 South Korea-Japan Conflict

The year 2019 began with a turbulent South Korea-Japan relationship. Following the decision to dissolve the Reconciliation and Healing Foundation established under the 2015 comfort women agreement, the Supreme Court's ruling on forced labor prompted the Abe administration to exert strong pressure on South Korea, intending to retaliate. Japan first launched an offensive, labeling the Supreme Court ruling as "an act of violence and a challenge to the international order," and then engaged in a sharp dispute over radar targeting by a patrol aircraft over the East Sea in December. In January 2019, Japan requested diplomatic consultations based on Article 3, Paragraph 1 of the 1965 South Korea-Japan Claims Agreement, followed by a request for arbitration under Article 3, Paragraph 2 of the same agreement in May, and finally unleashed its retaliatory measures with the sudden announcement of export restrictions on July 1st.

The problem is that the South Korean government misjudged the situation to some extent. Experts on South Korea-Japan relations had consistently emphasized that the results of the forced labor lawsuit would be a greater issue than the comfort women agreement. They also pointed out the continuously deteriorating sentiment toward South Korea within Japan and the resulting public support for the government's hardline stance toward South Korea (Sohn Yeol, On the Threshold of the 100th Anniversary of the March 1st Movement).

Conversely, the South Korean government prioritized inter-Korean reconciliation and cooperation and North Korean denuclearization as the most crucial foreign and security policy issues. Due to clear differences in stance with the Abe administration, which favored sanctions against North Korea, the South Korean government paid less attention to Japan's role and status. Amidst this, the South Korean government adhered to the principle of respecting judicial decisions as a democratic nation that values the separation of powers, offering no substantial response. However, when the rulings of the highest courts of the two countries differ, granting absolute value only to one's own court's ruling makes it difficult to gain the other's understanding, thus Japan's offensive was a predictable course of action. In response to Japan's diplomatic offensive, the government proposed a resolution in June involving the formation of a fund by South Korean companies that benefited from the Claims Agreement and Japanese companies that utilized forced labor (the so-called "1+1" plan), but Abe had already decided on retaliatory measures.

The second misjudgment of the situation relates to international affairs. In response to Abe's unexpected hardline measures, the Moon Jae-in administration also responded with a level of counter-retaliation that exceeded expectations. While condemning the export restrictions as economic aggression with the participation of the ruling party and government, it made a decisive move by announcing the termination of GSOMIA on August 22nd. This was intended as a shock therapy to urge Japan, which was refusing dialogue in retaliation, to change its stance.

The problem lies in the perception of South Korea-Japan relations primarily as a bilateral issue. Structurally, South Korea-Japan relations are influenced by the overarching variable of the US-China relationship. As US-China strategic competition intensifies, the United States has put forward its Indo-Pacific strategy, aiming to secure a leading position in the Pacific and Indian Ocean networks to contain China's expanding influence. In this context, GSOMIA is not merely an information-sharing system between South Korea and Japan but a crucial component of the South Korea-US-Japan network, a key element of the Indo-Pacific strategy. South Korea intended to induce US intervention by raising the GSOMIA issue, a security matter between South Korea and Japan, to pressure Japan to change, but the US perceived it as an issue that could destabilize the united front against China and strongly pressured the South Korean government, arguing that its actions benefited China and North Korea.

Japan's reaction should also be understood within the dynamics of US-China competition, rather than as a result of South Korea's strong pressure. Contrary to the concerns in July that the export restrictions imposed by Japan would lead to actual embargoes, they did not significantly harm the South Korean economy. This was not due to South Korea's resistance and countermeasures but to the inherent contradictions of economic retaliation. While the Abe administration demanded that the Moon Jae-in administration resolve the violation of international law stemming from the forced labor ruling, it paradoxically engaged in actions that undermined the international norm of separating economy and politics by retaliating with export restrictions on political issues akin to forced labor. Furthermore, the norm of separating economy and politics is the very logic Japan has used to criticize China's economic retaliation over the Senkaku Islands issue.

Japan has made diplomatic efforts to uphold and advance an international order based on liberal ideals and principles. Japan's leadership in initiatives such as the "Free and Open Indo-Pacific (FOIP)" and the "Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)" is a product of its strategy to avoid an order based on military power balance between the two great powers, the US and China, or power politics driven by them. In this context, the Japanese government packaged its export restrictions as not violating WTO trade rules, and in fact, granted export permits to South Korean companies, which it specifically publicized.

South Korea is also not exempt from the principle of separating economy and politics. In response to Japan's export restrictions, an economic issue, it used GSOMIA, a security issue, linking economic and security retaliation. While this could be seen as an issue linkage strategy common in trade negotiations, the use of GSOMIA as a security card resulted in outcomes contrary to the spirit of liberal international norms.

III. Fundamental Principles for South Korea's Strategy Toward Japan in 2020

The governments of South Korea and Japan, failing to properly grasp the changing national interests within the dynamics of US-China strategic competition, made the mistake of engaging in tit-for-tat hardline responses, ultimately showing a pattern of mutual retreat. Therefore, the fundamental principles of policy toward Japan in 2020 must begin by correcting these errors.

The first principle is to recognize that South Korea-Japan relations do not operate as historically unique bilateral relations but within the structural conditions of the US-China relationship. US-China strategic competition leads to actions that undermine or arbitrarily distort international norms to maximize national interests, while also shrinking the space for neighboring countries through competition for regional architecture. Conversely, this also creates opportunities for converging interests and collective action among neighboring countries. Looking back, while South Korea and Japan showed significant differences in their views on China and definitions of national interest amidst the regional order changes due to China's rise over a decade ago, their mutual interests in the current US-China competitive structure have considerably converged.

Due to their externally dependent nature, both countries share an interest in upholding a rules-based order, as they are exposed to the unilateral high-handedness of great powers and arbitrary power politics through force. Although rules and norms are also established under the leadership of great powers in the reality of international politics, if international politics operates through a network of defined rules and norms, the scope of action for middle powers expands, and there is room to avoid the tragedies of great power politics. In this regard, South Korea's strategy toward Japan should focus on pursuing bilateral and multilateral efforts that are based on liberal ideals and principles and support a rules-based international order. Japan is a key partner in this regard.

Beyond the Korean Peninsula issue, both South Korea and Japan have room for cooperation in expanding the free trade order, such as through CPTPP and RCEP, and strengthening the WTO. Furthermore, the areas listed as priority projects in the "Joint Declaration" and "Joint Fact Sheet" prepared by South Korea and the United States in November last year for Indo-Pacific cooperation—energy, infrastructure, development finance, and digital connectivity—are all connected to Japan without exception. These areas of potential cooperation have been overshadowed by historical issues and have not yet come to fruition. Strategic cooperation between South Korea and Japan in 2020 should actively commence in these areas and lead to trilateral cooperation among South Korea, the US, and Japan.

Such substantive cooperation is only possible when the strategic standing of the other party is enhanced. The Abe administration has pursued a strategic foreign policy based on its long tenure in power and has secured a significant standing in the international community. Nevertheless, Japan does not possess the capacity to rally regional countries' cooperation by bypassing South Korea (Korea passing). South Korea must also reconsider the strategic importance of its relationship with Japan. Policy toward Japan should not be limited to resolving immediate issues such as forced labor, GSOMIA, and export restrictions, but should be framed as a means to broaden South Korea's strategic diplomatic space and pursue long-term national interests.

The second principle is to uphold the principle of separating economy and politics, which is the central norm of the East Asian international economic order. In a reality where "weaponization of trade" by two great powers frequently leads to "negative spillovers" between economy and security, South Korea and Japan continuing their conflict by linking political, security, and economic issues is self-contradictory and a zero-sum competition. South Korea must respond to the forced labor ruling, export restrictions, and GSOMIA separately, adopting a three-track approach.

Regarding the export restrictions, South Korea's position is that they must be reversed as they are retaliation for the forced labor issue, but it is unlikely that Japan will agree to this. Instead, by accepting the framework of Japan's Ministry of Economy, Trade and Industry, which frames it as an issue of managing strategic material control systems, progress can be made through natural consultations reflecting market changes within the WTO regime. Concerning the suspension of GSOMIA termination, the linkage strategy with export restrictions should be abandoned, and the issue should not be touched unless there are significant security changes.

The third principle is a victim-centered approach. As seen in the previous comfort women agreement, historical issues cannot be resolved through intergovernmental agreements alone unless they are based on the understanding and consent of the stakeholders and the public. As clearly stated by the President at the New Year's press conference on January 14th, the most crucial part of resolving the forced labor issue is to establish a plan that obtains the consent of the victims. However, the circumstances are difficult. The worst outcome of the current South Korea-Japan conflict is that trust between the two countries has fallen into crisis not only at the governmental level but also at the private level. Amidst widespread distrust and avoidance of Japan, it is difficult for the South Korean government to reach an agreement with the victims, forced labor support groups, etc., to formulate a plan for diplomatic consultations with Japan. Conversely, it is also unlikely that the Japanese government will offer a solution that victims can accept. These difficulties can only be overcome if the President demonstrates resolute leadership and engages in persuasive leadership with the victim groups and the public. 2020 will be a crucial year determining the success or failure of the Moon Jae-in administration's five-year policy toward Japan. ■

■ Author: Sohn Yeol_ President of EAI and Professor at the Graduate School of International Studies, Yonsei University. He holds a Ph.D. in Political Science from the University of Chicago. He has served as Dean of the Graduate School of International Studies at Yonsei University, Dean of Underwood International College, President of the Association for Japanese Studies in Korea, and President of the Korean Political Science Association. His main research areas include international political economy, Japanese foreign policy, and East Asian international relations. His recent publications include Japan and Asia's Contested Order (2018, with T.J. Pempel), Middle Power Diplomacy of South Korea (2017, co-edited with Kim Sang-bae and Lee Seung-ju), and Understanding Public Diplomacy in East Asia (2016, with Jan Melissen).

■ Managed and Edited by: Yoon Jun-il, EAI Research Fellow

Inquiries: 02 2277 1683 (ext. 203) I junilyoon@eai.or.kr

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