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Time ticking to ease Seoul, Tokyo strain

Cash conversions of Japanese assets could come within this year
Oct 15,2019
Korean Prime Minister Lee Nak-yon is set to attend Japanese Emperor Naruhito’s enthronement ceremony next week in Tokyo as time is pressed to ease diplomatic tensions with the two sides struggling over the wartime forced labor issue.

The Korean Supreme Court in October and November last year ordered two Japanese companies, Nippon Steel & Sumitomo Metal and Mitsubishi Heavy Industries, to compensate victims of forced labor during World War II. The companies have refused to pay, and in turn, victims are taking legal procedures to seize the companies’ assets in Korea and convert them to cash.

Ruling party lawmakers have been raising concerns of the repercussions this may have on already-deteriorated relations with Japan.

Tokyo has indicated that the liquidation of the Japanese companies’ assets based in Korea to secure cash to compensate the victims would be a red line of sorts in bilateral relations with Seoul.

Kim Boo-kyum, a fourth-term lawmaker of the ruling Democratic Party and a former interior minister, asked Foreign Minister Kang Kyung-wha during a parliamentary hearing on Oct. 2 whether there would be any legal issues with the Foreign Ministry conveying concerns to the Supreme Court over the escalation of tense relations with Japan should the procedures to compensate the forced labor victims be taken.

Kang replied that she believes the government should be able to convey its positions, adding “an opinion can be raised as this is not something attempting to change the judicial process.”

The question by a ruling party lawmaker indicates the pressing circumstances amid soured relations with Tokyo.

Likewise, Kang’s response marks a shift from her position back in May, when she told reporters in a press briefing that the “government isn’t considering intervening” in the process.

Seoul maintains that the government cannot intervene in the decisions of the judicial branch because of the separation of powers.

Korean Prime Minister Lee will visit Tokyo from Oct. 22 to 24 and is scheduled to attend a banquet hosted by Japanese Prime Minister Shinzo Abe and meet with political and economic figures.

If Lee holds talks with Abe during the visit, it would be the first high-level meeting between the two countries since the Supreme Court rulings last year siding with the force labor victims.

Tokyo claims that a 1965 bilateral treaty normalizing ties settled all issues of compensation for victims of colonial rule. The Korean Supreme Court ruled that the Japanese government failed to acknowledge the illegality of its colonial rule and that the victims’ rights to individual compensation have not expired.

Since then, Japan has implemented export restrictions and removed Korea from its so-called white list of trusted trading partners. Seoul in turn has announced its plans to terminate the bilateral intelligence-sharing pact, the General Security of Military Information Agreement (Gsomia), set to expire on Nov. 22.

The forced labor victims in January applied to begin legal procedures for the seizure of Nippon Steel’s assets in Korea at a local district court. In May, the district court formally began procedures to sell the seized shares. The court through the Japanese Foreign Ministry requested Nippon Steel to submit an opinion on the order on the sales of the company’s assets. But the Japanese Foreign Ministry returned the court decision without passing it on to Nippon Steel.

Similar legal procedures are underway to seize and liquidate Mitsubishi’s assets.

Thus, there isn’t much time left to diplomatically resolve the issue as the legal procedures to convert the companies’ assets to cash could take place within this year.

BY LEE YU-JUNG, SARAH KIM [kim.sarah@joongang.co.kr]