The Koreas

The South Korea-Japan Trade Conflict: Cui Bono?

South Korea, Japan, and the US are all damaged by the conflict. China, however, stands to gain.

By Sukjoon Yoon for
The South Korea-Japan Trade Conflict: Cui Bono?

The China-Japan- South Korea trilateral summit in 2018.

Credit: Prime Minister’s Office of Japan

At first glance, the current trade conflict between Seoul and Tokyo seems to be rooted in the historical relations between Japan and South Korea. The South Korean Supreme Court has ruled that Japan’s Mitsubishi Heavy Industries should pay compensation to colonial-era forced laborers, so Japanese assets have been seized. The Japanese government asserts that all such claims were settled by a treaty signed in 1965 and has implemented trade sanctions on South Korea, limiting the export of chemicals used in semiconductor manufacturing and removing South Korea from Japan’s preferential “white list.” Japan denies that this obvious retaliation is in any way connected with the forced labor issue.

But to truly understand Japan’s motivation, perhaps we need to look beyond these historical factors. Japan seems to be concerned that it is losing its control over high-tech industrial materials, while also worrying about shifts in the prevailing U.S.-led security framework in Northeast Asia. Tokyo sees China as the source of the problem and mistrusts Seoul’s approach to their mutual neighbor.

The China Factor

Japan sees the escalating trade war between China and the United States as one aspect of a broader regional struggle with serious economic and political and geopolitical implications. For centuries, China has been Japan’s arch-adversary, and thus the ongoing Seoul-Tokyo trade row forms an essential part of Japan’s strategy to prevent Chinese domination of Northeast Asia. Japan wonders whether South Korea is still committed to the existing U.S.-led security framework, or perhaps is getting too close to China and even becoming a tacit collaborator with China’s regional security and geopolitical objectives. Indeed, South Korean President Moon Jae-in’s “Korea Peace Process” is seen by Japan as essentially a pro-Chinese policy.

Japan has always worried that China and South Korea might make common cause, given that Japan invaded and oppressed both nations in the 19th and 20th centuries (though of course Japanese commentators never discuss the issue in such straightforward terms). The recent Seoul-Tokyo trade frictions can therefore be understood as an attempt by Japan to reinforce the prevailing U.S.-led security framework, upon which Japan relies to contain China, by forcing South Korea to “wake up and smell the coffee.”

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Changing Times

U.S. President Donald Trump’s erratic and incoherent foreign policy means that the U.S. regional security commitment has become starkly unreliable, with Trump only interested in short-term transactional relations. The United States understands little and cares even less about the historical dimensions of the current spat between Japan and South Korea, but since both countries are valuable regional allies it would be customary and appropriate for Washington to take private and public steps to reconcile the two. On this occasion, however, the United States failed to do more than simply hope that South Korea and Japan can sort out the issues themselves. That’s a clear signal that the Pax Americana which has stabilized the globe for the last seven decades is now in full retreat, at least from East Asia.

If the dispute between Japan and South Korea continues to escalate then it will likely spread to the General Security of Military Information Agreement (GSOMIA), which boosts cooperation between the military forces of the two countries to counter North Korean military threats and to enhance their common security by trilateral arrangements with the United States. The South Korean people profoundly distrust the current Japanese administration and support abandoning GSOMIA, but in this case the major loser would be the United States, with its Indo-Pacific Strategy now fraying at both edges.

Alternative Strategies for South Korea

Obviously South Korea needs to rely less upon Japanese technology and the Japanese supply chain, and to seek alternative trading partners. Beyond this economic imperative, however, South Korea will likely attempt to preserve its existing role in regional security by sustaining its current cooperation and alliance with the United States, but is this still the best policy? Many see Trump’s isolationism as symptomatic of a continuing decline in U.S. involvement in East Asia, implying an ultimate withdrawal. At some point, then, it is surely sensible for South Korea to plan to thrive without relying upon either the United States or Japan, and instead to establish both economic and security alternatives. A boycott of all things Japanese is currently attracting huge popular support from all strands of South Korean opinion. Though conservatives have until now advocated continuing close relations with Washington, some will surely change their minds if the United States remains intransigent on its proposals for greatly increased burden-sharing to support U.S. troops in Korea.

The popular press is now recalling the extraordinary victories of Admiral Yi Sun-shin against an overwhelming Japanese invasion force, during the 14th century. This was achieved with military support from the Ming Dynasty of China. Many South Koreans now feel that a closer economic relationship with China would be a good substitute for Japanese supply chains; Chinese markets can bridge South Korea’s exports into the wider Asian continent, to Central Asia and the Russian Far East. But some are also proposing a closer security relationship with China, not least because the United States sometimes seems to be taking Japan’s side over South Korea in the current disputes.

Will China Benefit?

Beijing seems set to pick up a variety of strategic and economic advantages from the Seoul-Tokyo trade conflict, and from the resultant trust deficit which is developing between South Korea and the United States. China will certainly be pleased that the United States has been reluctant to make any efforts to reconcile its two most important regional allies. China will surely interpret this as a sign of weakness on the part of Washington and part of the changing times, with U.S. regional hegemony rapidly approaching its use-by date. Meanwhile China is continuing to build up its naval capabilities, with the South China Sea being now effectively Chinese territorial waters, and taking every opportunity to assert its military presence, most recently with China-Russia joint military exercises, which intruded into the both the Korean and Japanese Air Defense Identification Zones in July 2019.

The ongoing Seoul-Tokyo trade conflict arises from unfortunate historical legacies, which continue to blight the region because of inflexible mindsets: in South Korea as well, but most egregiously in Japan. For Japan, China is the enemy, a perspective which Japan wishes the United States and South Korea would share. Fearing that South Korea is getting too close to North Korea, and potentially also to China, Japan is willing to disrupt the regional supply chain, whatever economic damage may result, to try to bring South Korea back into line. That attempt, though, is likely to backfire. China has been very successful in actively outmaneuvering the United States and Japan, but Beijing is now reaping benefits from the current Seoul-Tokyo trade conflict by simply standing back and passively enjoying the spectacle.

Captain Sukjoon Yoon (ROKN, retired) is a senior fellow at the Korea Institute for Military Affairs.