(VOVWORLD) - Trade tension between Japan and South Korea has escalated into an all-out trade war. The two countries have imposed restrictions on technology material exports, consumption, and tourism, raising worries about their impacts on the regional economy.
The relationship between Japan and South Korea has worsened since Japan restricted the exports of high-tech materials used in semiconductor and screen production to South Korea. Seoul described restriction as Tokyo’s retaliatory actions as the two countries are disputed over the compensation for Korean forced labor victims during the Japanese rule on the Korean peninsula from 1910 to 1945.
Restrictions at risk of spreading
Amidst increasing feud, the Japanese cabinet last Friday decided to remove South Korea from the “White List” of trusted trade partners. Under the decision, more than 1,000 Japanese export items to South Korea are subject to more stringent export controls and need the government approval. Tokyo will also adjust the schedule of the approval of export items.
The South Korean government has implemented a wide range of stern response measures. President Moon Jae-in said if Japan attempts to harm the Korean economy, the Korean government also has countermeasures. Hours after Tokyo's move, Seoul’s finance minister Hong Nam-ki announced that South Korea will remove Japan from its “White List" of trusted trading partners. Seoul plans to sue Japan to the World Trade Organization at an earliest time. The Presidential Palace is considering the termination of the joint military intelligence sharing pact - known as General Security of Military Information Agreement (GSOMIA) with Japan. South Korea will also invest 6.5 billion USD in 100 strategic items to ensure sufficient supply for local production by 2024.
South Korean consumers have recently boycotted items imported from Japan like clothing, ramen noodles, cosmetics, beer, and even tours to Japan. Korean tourists are now travelling to Southeast Asia instead of Japan.
The Seoul Metropolitan Government said it’s considering the halt of civil exchanges with Japanese localities. As scheduled, Seoul would invite some Japanese localities to the city’s two major events in September and December. Seoul had also planned to participate in a number of events in Japan in later this month as well as the Asia Junior Sports Exchange Games in Tokyo.
Impact on regional connectivity
Trade tension between Japan and South Korea has also affected the global technology supply chain and the negotiation of the Regional Comprehensive Economic Partnership to which both Japan and South Korea are members. Experts say the RCEP agreement is conducted on parties’ consensus and any bilateral dispute between member countries could affect the negotiation process. Jeong Hyung-gon, a senior expert of the Korea Institute for International Economic Policy, said tension between Seoul and Tokyo could hamper annual meetings between the two countries’ high-ranking leaders to finalize RCEP.
Japan and South Korea are the two major contributors to regional economic integration and market diversification despite mounting anti-free trade sentiment. The two countries’ tension will hurt businesses and economies in Asia.
Trade war between the US and China and escalating tension between Japan and South Korea are affecting the regional and global economy. But signs to ease the tension have not been seen.