The Trade War That No-One Is Talking About

The Trade War That No-One Is Talking About

. 3 min read

Amidst the noise of the US’s engagement with China, Japan and South Korea have recently engaged in their own war of trade. On July 4, this year, while Americans were celebrating their own independence and freedom, South Koreans were reminded of their own colonial history as their neighbour and former coloniser, Japan, began to impose new trade sanctions. What started off as a South Korean Supreme Court ruling has now escalated into a crippling economic war that threatens a key source of technology for Asia and the world.  

Shibuya Nights.
Photo by Andre Benz / Unsplash

Although this particular dispute is now only a few months old, the roots of colonialism began in 1910 when the Japanese Empire invaded and occupied the entirety of the Korean peninsula. Over the course of the next few decades, the Japanese Empire would aggressively expand and control most of South-East Asia and even parts of China, until its ultimate demise at the end of the Second World War. During Japanese occupation of Korea, Japanese companies, such as Mitsubishi and Nippon Steel, often times conscripted Korean men and women for forced unpaid labour.

Recently, however, the South Korean Supreme Court ruled in October and November of 2018 that Japanese companies must pay reparations for these historical injustices. Consequently, on July fourth, the Japanese government retaliated by imposing limitations on the trade of materials essential to the construction of microchips and technological products in South Korea. Incensed by South Korea’s lack of response, Japan reinforced its message by taking South Korea off its “white-list” of favoured trading partners, leading to ramifications beyond the technology industry. South Korea reacted by removing Japan from their equivalent top tier of preferred trading partners. In this deep spiral of sanctions in response, South Korea and Japan have interlocked in a vicious and politically charged trade war. While many trade wars are understood as responses to unequal terms of trade, Japan and South Korea's trade war seems to be particularly coded in political motives, given that its impetus was about reconciling with Japan's colonial past.

And, there seems to be no clear end in sight. Public opinion in both countries are highly supportive of their respective government’s policies, so both Seoul and Tokyo have political incentive to continue their policies or even escalate. With federal elections occurring within the next year for both countries, neither country can afford to buck against public opinion.

Moreover, unlike other disputes like the nuclear threat of North Korea, no foreign power is willing to aid in diffusing the tension and mediate between the two neighbouring countries. The United States has traditionally adopted the role of the mediator but with its own trade worries with China, Washington has no attention that it can spare to Japan and South Korea. Furthermore, the US has historically allied with both Japan and South Korea, so it has little incentive to be involved, lest it risk its relationship with either country.

Indeed, almost every country in the world has a vested interest in the swift resolution of this conflict. The world relies on South Korea for its technology products, ranging from microchips to completely processed smartphones. The Korean technology industry is a necessity even for Western giants, such as Apple and Dell. Korea supplies 60 percent of the world’s DRAM memory chips. However, the Korean technology industry conversely relies on Japan for its chemicals, such as fluorinated polyamides, as an intermediary product for the making of semiconductors and computer chips.  

i was cleaning my laptop and i found it wonderful. see ya.
Photo by Alexandre Debiève / Unsplash

With stakes this high, it is crucial that the economic war be resolved with urgency. The highly politicised nature of this particular trade war clouds rational judgement of politicians. This is detrimental, especially when the chips in play are the economic outlooks of millions of Japanese and Korean citizens, as well as the global technology industry. There is not a trade-off between attention paid to the US-China trade war and that of Japan and South Korea. Both play a crucial role in the global economy and affect billions of people’s day-to-day lives. As some of the biggest economic powers in Asia spiral into economic warfare, international neglect could have ramifications that affect the world at large.