Yi Whan-woo is a Korea Times journalist primarily covering finance. He writes in-depth articles on macroeconomy and financial markets and previously covered sports, politics, diplomacy and inter-Korean affairs, among others. Feel free to contact him at yistory@koreatimes.co.kr.
Korea struggles to cope with Japan's economic retaliation
Merchants affected by Japan's restrictions on high-tech exports participate in a campaign to boycott Japanese products in front of the former Japanese embassy to Korea in downtown Seoul, Friday. Yonhap
By Yi Whan-woo
By Yi Whan-woo
The government's envisioned strategy to fight back against Japan's economic retaliation is drawing skepticism, because it is unlikely to take effect immediately while only hurting Korean enterprises.
Analysts said Friday the government should drop its tit-for-tat plan and instead settle what caused the retaliation ― the Korean Supreme Court's 2018 ruling on wartime forced labor and its consequences.
The court held major Japanese manufacturers liable for forced labor of Koreans before and during World War II and ordered due compensation.
Japan argued all compensation issues were settled in 1965 when diplomatic relations were normalized. It has sought to take corresponding measures after lower Korean courts approved seizure of assets of the disputed Japanese companies this year.
According to Cheong Wa Dae, President Moon Jae-in is considering a meeting with heads of the 30 largest conglomerates, amid growing concerns many Korean enterprises will be affected by Japan's retaliatory measure.
“Every possible measure being mentioned by the government takes time to properly counter Tokyo's retaliatory measure,” said Kang Sung-jin, an economics professor at Korea University.
The government considers filing a complaint with the World Trade Organization (WTO) over Japan's decision to curb sales of key materials used to make semiconductors and multimedia displays, which are among Korea's most important export items.
The government is also considering diversifying import channels as well as spending 1 trillion won ($860 million) every year to cut reliance on imports and foster a home-grown industry for the materials sector.
“Japan may suffer from the government's strategy in the long term, but by then, the damage on our companies will be even greater,” Kang said.
Park Won-gon, an international relations professor at Handong Global University, speculated Korea will “never beat Japan in the economic tit-for-tat.”
“It's apparent Japan has planned its retaliatory measures carefully and meticulously, whereas Korea has come up with a counterstrategy hastily and hurriedly,” Park said. “I bet Japan has more cards to play as the economic showdown intensifies. I'm afraid that's not the case for Korea.”
Shin Yul, a political science professor at Myongji University, said, “Our countermeasures are not very practical.”
The analysts suggested going “back to the beginning” and resolving the dispute diplomatically.
“Everything started from the diplomatic dispute over Japan's wartime past. Korea should resume talks with Japan and concentrate on forced labor,” Park said.
As an option, he cited the need for President Moon to send a special envoy, such as National Security Office chief Chung Eui-yong, to Japanese Prime Minister Shinzo Abe.
Shin Yul voiced a similar view.
“I'm not sure whether sending a special envoy is a good idea, but I'm certain mobilizing all possible diplomatic means is necessary at this point,” he said.
He specifically suggested dialogue within the Japan-Korea Parliamentarians' Union.
“Such a channel can be especially useful when official diplomatic channels are not working well,” he said.
Meanwhile, Cheong Wa Dae said Friday it is listening to Korean enterprises affected by Japan's economic curbs and is seeking solutions accordingly.
“We're aware of concerns that filing a complaint with the WTO is not practical. We're taking opinions from affected companies to come up with better ideas,” a Cheong Wa Dae official said on condition of anonymity.
Korean Ambassador to Japan Nam Gwan-pyo, according to the official, expressed hope for a summit between the leaders of the two countries.
When asked about sending a special envoy, the official said, “It's not time for such discussion at this stage.”