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Concrete solutions

July 18,2019
Lee Chul-ho
The author is a columnist of the JoongAng Ilbo.

A government delegation from Korea got the cold shoulder from its Japanese counterpart when they went to Tokyo to discuss Japan’s export curbs on materials used in Korea for chip and display production. I was reminded of bitter memories from Tokyo 22 years ago. As a JoongAng Ilbo correspondent at the time, I watched the embarrassment a deputy prime minister from South Korea suffered after he rushed to Tokyo to meet with his Japanese counterpart on Nov. 28, 1997 to plead for an emergency loan to avoid a national default triggered by massive foreign capital flight following the Asian financial crisis.

On Washington’s advice, the Japanese finance minister flatly refused to help Seoul at the time. He kept repeating that it was difficult for Japan to help South Korea on its own. Last week too, Tokyo may have had prior consultations with Washington before receiving the delegation from South Korea to explain its new restrictions on shipments of strategic items to South Korea.

President Moon Jae-in seems to be sinking deeper into a trap laid by Japanese Prime Minister Shinzo Abe. Tokyo has found South Korea’s weak point, the Achilles’ heel of its biggest company and industries, and Seoul responded with sound, fury and no impact whatsoever. Moon ratcheted up his rhetoric to warn that the Japanese economy will suffer even bigger damages from its retaliation. That sounded tough but not very convincing.

Analysts have warned that the harm done to South Korea from the disruption in supplies of key materials necessary for chipmaking could be more than triple the losses felt by Japanese exporters. That raises the question of whether the government is really aware of the gravity of the situation. State think tank Korea Development Institute has sought help from private researchers after it was ordered from the government to come up with a study on the ramifications of the Japanese export barriers on South Korea in a few days.

Japanese experts predict the spat won’t be resolved easily. “The Korean people still know little about Japan,” said Park Jung-jin, a professor at Tsuda University. Anti-Korean sentiment has been brewing under the Abe government. Yet Koreans didn’t pay attention. Jang Jeong-wook, a professor at Matsuyama University, predicts that Tokyo won’t relent until next July when it holds the Summer Olympics. The Abe administration needs a foreign “scapegoat” to muster conservative support ahead of a planned consumption tax hike in October. It cannot risk hurting ties with China or Russia by stirring up territorial disputes. It cannot pick on North Korea after Abe offered to meet with its leader at any time. Only Seoul is left in the neighborhood to pick on.

The longer the problem is drawn out, the greater the harm done to South Korea. The options are restricted. The liberal front’s idea is more reasonable. A diplomatic solution is the best, they say. The Hankyeoreh Newspaper pointed out that it would take years for the World Trade Organization (WTO) to reach a conclusion on South Korea’s claim versus Japan’s. South Korean companies will suffer in the meanwhile. Even if the WTO sides with South Korea, nothing can be done about the damages already felt.

In an op-ed for a liberal newspaper, Jeong Tae-in, a progressive economist who advised former liberal President Roh Moo-hyun, said the top courts in the two countries delivered opposite rulings on the 1965 Basic Treaty’s provision on individual remunerations for wartime labor. “Tokyo proposed third-party arbitration for an independent judgment on whether the inter-government treaty should cover individual damages. Seoul should have accepted the arbitration proposal and argued its case based on the Korean Supreme Court rulings. Korea also should have consulted with Japan before its courts granted seizures of assets in Korea of the companies in litigation. Keeping to the sidelines did not help anyone,” he wrote.

In a seminar by the ruling Democratic Party, Song Ki-ho, a liberal lawyer, said the Japanese government was right to seek international mediation. He proposed that Seoul first pay South Korean plaintiffs the damages they won in the Supreme Court in their litigation against Japanese companies and later file for repayment from Japan, depending on the international tribunal ruling. The progressive camp also points out the need to set up an arbitration committee. Seoul is asked by Tokyo to present its position on international arbitration before a Thursday deadline. Washington will likely step in if Seoul and Tokyo agree to seek international mediation.

The 2010 standoff between Beijing and Tokyo over territorial conflicts could offer a lesson. Japan arrested a Chinese captain of a fishing boat that entered Japanese waters near the disputed Senkaku (Diaoyu in Chinese) islets on Sept. 7 that year and clashed with a Japanese patrol ship. The New York Times on Sept. 23 reported that Beijing might curb exports of rare earth minerals to Japan, quoting several anonymous sources. Although the two governments denied the report, Tokyo released the captain. The Japanese prosecution announced that the fisherman’s action had been impulsive and without any intention to provoke Japan. The Abe cabinet’s approval rating dipped 10 percentage points for its surrender to Beijing. But Japan learned a lesson and developed alternatives to raw earth minerals to lessen reliance on Chinese imports. Beijing has since stopped playing hardball with Tokyo.

While South Korean politicians were all talk and scant action, businessmen scurried around to find some practical solutions. The Moon Jae-in administration’s economic policy, driven by a so-called income-led growth philosophy, has devastated self-employed businesses. An avoidable trade spat with Japan could destabilize exporters. The government must coolly study the situation and face the adversary holding the sword. Moon could persuade the plaintiffs to delay liquidating assets of Japanese companies until the government settles the trade standoff. He also should send an envoy to Tokyo to propose some kind of compromise. Moon needs to recall U.S. President John F. Kennedy’s famous words in his inaugural speech: “Let us never negotiate out of fear, but let us never fear to negotiate.”

JoongAng Ilbo, July 17, Page 31