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The Rough Pacific

Far from defusing the crisis through an agreeable settlement, Japan has now added yet more restrictions.

The Rough Pacific

Japanese Prime Minister Shinzo Abe (Photo: IANS)

A trade war has roiled the Pacific region no less severely than the trans-Atlantic tariff war between two leading world powers ~ China and the United States of America.

There is no indication yet that Japan and South Korea will back down from a trade dispute that could disrupt global production of smartphones, computers, and other electronic goods.

The raging economic flare-up, rooted in historical disagreements, marks a souring of relations between two important allies of the US.

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The trade war between two Asian powers is bound to have an impact on the Asian economy and in countries further afield. Not the least because the global technological industry and US interests in Asia could suffer if the dispute isn’t resolved soon.

Of which there is no indication quite yet. The effort thus far has been to cripple manufacturing and trade. It thus comes about that last month, Japan placed export restrictions on chemicals and other materials that South Korea’s technological industry needs to produce semiconductors and smartphone screens.

Japanese officials claimed that the materials had been illegally sent to North Korea, where they could be used to make weapons. While this is a serious charge, it is as yet unsubstantiated.

Far from defusing the crisis through an agreeable settlement, Japan has now added yet more restrictions. South Korea will be removed from Tokyo’s list of trusted trading partners, making it difficult for Japanese companies to sell to South Korean buyers.

The decision will not come into force for 21 days, however. Japan produces almost all of the world’s supply of three materials ~ fluorinated polyimides, photoresists, and hydrogen fluoride ~ that South Korean technological giants, Samsung, LG, and SK Hynix rely on.

Japanese exporters will now have to get permission before sending the materials to South Korea, a process that takes about 90 days. There has thus been a near-total dislocation of the bilateral economy in this new chapter of the Asian drama, scripted by Shinzo Abe and Moon Jae-in. Seoul hasn’t retaliated yet, but President Moon has warned the companies to prepare for a prolonged trade dispute and has encouraged them to develop the capability to produce the restricted materials.

South Korean consumers have boycotted Japanese goods, including clothes and beer. There are also worries that the spat could hinder security cooperation in the Pacific between Japan, South Korea, and the United States. Last week, South Korean officials threatened to revoke an intelligence sharing agreement with Japan that experts say is crucial to dealing with North Korea.

The current tensions stem from lingering anger over Japan’s occupation of the Korean Peninsula before World War II. During that time, thousands of so-called comfort women were forced into sexual slavery and many more were coerced to work without pay. Last year, a South Korean court ruled that Japanese companies must compensate Korean workers for forced labour during the war. Japan rejects the ruling, arguing that the reparations issue was resolved in 1965, when the two countries normalized relations.

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