[EAI Commentary] Frustrated Korea-Japan Relations: Approaching Crisis, Receding Solutions

[Editor's Note]

One year has passed since the trade dispute between Korea and Japan began on July 1, last year, with Japan's imposition of export controls. The two countries have fallen into a vicious cycle of responding to each other's missteps with further missteps, linking historical issues, economic issues, and security issues. The author, Son Yeol, President of EAI and Professor at Yonsei University, diagnoses the core of the problem as intergovernmental distrust and emotional confrontation, arguing that it will be difficult to find solutions to forced mobilization and export controls as long as the attitudes of anti-Japan sentiment and anti-Korea sentiment do not change. In the current situation, where neither the mediation role of the United States, which is caught in self-centered nationalism, nor the self-regulatory efforts of the political circles can be expected, it is foreseen that a time of arduous effort awaits to overcome frustration and trials, moving towards the reconstruction of Korea-Japan relations based on a rational judgment of the strategic value of both countries.

July 1 marks one year since the trade dispute between Korea and Japan began. Japanese Prime Minister Shinzo Abe abruptly declared controls on three types of materials related to semiconductors and displays targeting South Korea, freezing bilateral relations. In response, South Korea escalated the conflict by imposing an import ban on Japanese goods and filing a complaint with the World Trade Organization (WTO), eventually leading to the termination of the General Security of Military Information Agreement (GSOMIA), which in turn prompted U.S. intervention. The triple conflict structure, where historical disputes over the South Korean Supreme Court's ruling on compensation for forced labor have escalated into economic and security disputes, is now showing signs of rupture as the deadline for the sale and liquidation of Japanese corporate assets approaches.

In response to the Japanese government's overt threat of retaliation, the South Korean government and ruling party have self-assessed that they have "turned a crisis into an opportunity by steadfastly confronting Japan's surprise measures over the past year" and are showing renewed determination by vowing to "launch Season 2 of the strategy for domestic production of materials, parts, and equipment." The attention of the media, political circles, and governments of both countries is focused on superficial issues such as the profit and loss statements of both countries resulting from export control measures, the possibility and extent of future Japanese retaliatory measures, and South Korea's countermeasures.

However, the core of the problem lies in the fact that intergovernmental distrust and emotional confrontation are approaching a dangerous level. The two governments are caught in a vortex of distrust, repeatedly engaging in a game of mutual disregard and retaliation. Despite the fact that both countries are in a de facto self-quarantine due to COVID-19, they are relentlessly engaged in a non-contact diplomatic war, attacking each other on every issue. Korea-Japan relations have now entered a state that can hardly be considered normal diplomatic relations.

The problem is politics. While the political leaders and governments of both countries may be able to temporarily postpone the second round of retaliation and resistance with tricks and stopgap measures to delay the liquidation of assets, it will be difficult to find a solution to the issues of forced mobilization and export controls as long as the attitudes of anti-Japan sentiment and anti-Korea sentiment do not change. Politics is causing frustration for businesses suffering from the unintended decoupling of the Korean and Japanese economies amidst the severe business environment of COVID-19, and for the United States, which is striving to link both countries through trilateral security cooperation and Indo-Pacific strategy. Above all, the consequences of unresolved conflict will fall squarely on the younger generation, who are frustrated by fading nationalism.

The Vortex Structure of Emotional Confrontation

The Korea-Japan conflict is nearing a decade. This is an unprecedented situation. The conflict, which fully escalated with then-President Lee Myung-bak's visit to Dokdo and demand for an apology from the Emperor in 2012, continued with Prime Minister Abe's denial of aggression and visit to the Yasukuni Shrine in 2013, and disputes over the comfort women solution and international public diplomacy in 2014. After the comfort women agreement in December 2015, the conflict actually deepened. The Abe government, constantly criticizing issues such as the installation of a comfort women statue in Busan, the pledges of presidential candidates to break or renegotiate the agreement, the review of the comfort women agreement, and the dissolution of the 'Reconciliation and Healing Foundation,' succeeded in inciting the anger of its citizens by branding South Korea as 'a country that does not keep its promises.' It switched to an offensive policy towards South Korea, stating that it could not tolerate South Korea's behavior of constantly harassing Japan by moving the 'goalposts' over historical issues. It launched a strong offensive, calling the South Korean Supreme Court ruling 'a grave challenge to the international legal order' and demanding 'prompt rectification of the violation of international law,' and further chose the drastic attack of trade retaliation as part of this strategy to beat up on South Korea.

The Abe government's declaration of export controls on semiconductor and display-related materials was a dagger aimed at the heart of the South Korean economy, but it failed to achieve the intended effect as it did not lead to an embargo. This was because it fell into a logical contradiction in its justification. While the Abe government claimed that the Moon Jae-in administration should rectify the violation of the international legal order, it simultaneously engaged in the hypocritical act of undermining international norms of separating economy and politics by imposing export controls as retaliation for political issues such as the forced labor ruling. The Japanese government, which has been advocating for the preservation of the liberal international order by leading the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), feared that its international credibility would be shaken. It denied the logic of retaliation for forced labor, claiming that export controls were 'measures to demand the proper implementation of export management for national security purposes,' and as a high-handed tactic to portray the issue as not violating WTO trade norms, it issued export permits to Korean companies and publicly disclosed this fact. Meanwhile, Korean companies were able to manage the damage appropriately by reorganizing their supply chains through procurement from third countries or domestic production.

In contrast, South Korea's response was insufficient to demonstrate the agility and persistence needed to exploit Japan's weaknesses. While intense anti-Japanese policies, including boycotts of Japanese goods, were pursued under slogans pursuing 'a strong economy that no one can shake' and 'independence from Japan,' fueled by anti-Japanese sentiment, particularly in political circles, these did not go beyond domestic unity.

A greater miscalculation was the strategy of linking the two issues – the withdrawal of Japan's export controls and South Korea's termination of GSOMIA – by declaring the termination of GSOMIA. South Korea sought to elicit U.S. intervention through the security issue of GSOMIA to urge Japan to change its stance, but the United States, viewing it as an issue that would undermine the united front against China, strongly pressured South Korea. The declaration of GSOMIA termination was not so much a blow to Japan's security as it was an excessive measure that tarnished South Korea's security and diplomatically covered up Abe's missteps.

Looking back, both South Korea and Japan engaged in foolish exchanges of missteps responding to missteps, escalating anti-Japanese sentiment in South Korea and anti-Korean sentiment in Japan to dangerous levels of distrust between the two governments. While the vortex of distrust and conflict between nations typically unfolds in situations of security dilemmas arising from conflicting interests, in the case of Korea and Japan, emotions, rather than interests, are fueling the vortex of conflict. This creates a vicious cycle where mutual emotional confrontation leads to negative ripple effects that harm shared interests, and the damage to interests, in turn, exacerbates emotional confrontation.

The vortex of conflict, accelerated by export controls and the GSOMIA dispute, shows no signs of stopping even amidst the COVID-19 crisis. Despite sincere measures by South Korea to improve its export control system, Japan has not lifted the controls without a valid reason, and in response, South Korea has abruptly resumed WTO litigation procedures against Japan and hinted at reusing the GSOMIA card. Following entry and exit disputes, they engaged in a protracted battle over the UNESCO World Heritage inscription of the battleship island industrial heritage, and when Japan expressed its opposition to South Korea's participation in the G7, South Korea unleashed verbal attacks, calling it "the highest level of shamelessness in the world." A diplomatic war fueled by distrust and emotions is ongoing.

Economic Decoupling and the U.S. Mediation Role

There are two factors that can be cited as inhibiting the vicious cycle of emotional disputes. These are economic interdependence and the mediation role of third countries. In the case of the previous comfort women agreement negotiations, the weakening of Korea-U.S.-Japan cooperation due to the Park Geun-hye administration's hardline drive against Japan increased strategic concerns in the U.S., and as economic transactions decreased, concerns about damage to the business community and the future of business grew, leading to a policy shift (Son Yeol 2018). This indicates that the vortex effect of conflict caused by historical issues has downward rigidity.

Economic interdependence acts as a safety valve that inhibits conflict between nations. The reason why the U.S.-China strategic competition has not devolved into a security dilemma and a vortex of conflict is that the power of complex interdependence, unfolding at multiple levels, is at play. The issue is the economic relationship between Korea and Japan. This is because as the level of economic interdependence between the two countries decreases due to emotional factors, the level of political and strategic conflict can conversely increase.

Strategic decoupling is occurring between Korea and Japan, as evidenced by Japan's export controls on three semiconductor-related items. South Korean semiconductor companies are pursuing the reorganization of their supply chains, including domestic production or procurement from third countries of hydrogen fluoride, fluorine polyimide, and photoresist. From an economic perspective, there is no reason to use lower-purity domestic products, but in consideration of political uncertainty, decoupling from Japanese companies is inevitable. Looking at Figures 1 and 2 in the longer term, a decoupling phenomenon in the Korean and Japanese economies has been evident since 2012. Trade volume between the two countries decreased by 27% in 2019 compared to 2012, and from January to May 2020, it fell by about 9.3% compared to the previous year. Decoupling in the investment sector is even more pronounced, with Japan's investment in South Korea decreasing sharply by 69% between 2012 and 2019. Macroeconomically, amidst the risks of U.S.-China decoupling, Korean and Japanese policymakers are encouraging mutual decoupling instead of engaging in liberal solidarity to counter it.

If distrust and emotional disputes cannot be curbed by economic effects, then the mediation role of the United States is expected. It is a well-known fact that the U.S. presence in Northeast Asia and the stationing of U.S. forces have contributed to the stabilization of Korea-Japan relations. The United States was the hidden architect of the normalization of diplomatic relations between Korea and Japan in 1965 and has led security cooperation between the two countries within the framework of Korea-U.S.-Japan trilateral cooperation. However, it is powerless to intervene in historical issues and alleviate the emotional disputes between Korea and Japan. In the process of achieving the comfort women agreement in 2015, the U.S. Obama administration played a key mediating role, but ultimately the agreement became hollow, and the difficulty of intervening in history was keenly felt. Furthermore, considering the current domestic atmosphere in the United States, where international cooperationism is declining and self-centeredness is on the rise, it is unreasonable to expect an active U.S. mediation role.

Towards Reconstructing Korea-Japan Relations

Currently, the governments and political leaders of both countries are engaged in a diplomatic war of emotional confrontation, sharply dividing Korea-Japan relations into 'us and them,' 'friends and enemies,' fueled by nationalistic fervor. This is the essence of the crisis. Even if the time for the confiscation and liquidation of Japanese corporate assets can be extended through stopgap measures, it will be difficult to find a solution to forced mobilization and export controls unless the fundamental approach is to recognize the other party as a legitimate partner, not an adversary, to exercise restraint and patience in the exercise of power, to seek compromise, and to make a rational judgment of the strategic value of the bilateral relationship.

Given the current political situations in both countries, it is unlikely that the anti-Japan and anti-Korea sentiments, based on regressive nationalism, will be resolved through self-regulatory efforts within the political circles. In that case, paradoxically, both countries may find a path to resolution only after fighting more. Perhaps only when the frustration accumulates heavily throughout society through a cycle of emotional confrontation and stopgap measures, and when they inflict severe damage on each other in a chain of second-round retaliations and countermeasures, will self-reflection and transformation emerge from political leaders. Korea-Japan relations await frustration, trials, and reconstruction. ■

■ Author: Son 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 the 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 "Diplomatic Security and Political Economy of Low Fertility and Aging Society" (2019, co-authored), Japan and Asia's Contested Order (2018, with T.J. Pempel), 《한국의 중견국외교》 (2017, 공저), Understanding Public Diplomacy in East Asia (2016, with Jan Melissen) 등이 있다.

■ Management and Editing: Oh Seung-hee, Senior Research Fellow at EAI

문의: 02 2277 1683 (ext. 202) / seungheeoh@eai.or.kr

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