After the US-China trade war, now the world is facing the Japan-Korea trade war. Both Japan and South Korea are key US allies in the Asia Pacific. Experts fear that the Japan-Korea trade war will put bad impacts on the world economy.
There is no permanent friend or enemy in international relations. Currently, liberal democracy is facing a decline across the world. International behaviors keep on changing with time. The US-China trade war created chaos in international markets. The US-China trade war directly threatened trade liberalization. The latest Japan-Korea trade war is also posing threat to the international markets. Both Japan and South Korea are technological giants.
The Korean establishment is trying to focus on human rights and other such issues. Korean administration has highlighted issues like forced labor and gender discrimination. In recent months, the USA decided to decrease its overseas presence in the region. After the US decision, both Japan and South Korea are trying their best to occupy the hegemonic seat in the region.
Nippon Steel is Japan’s largest steel producer. Last year Korean court ordered Nippon steal to pay remunerations to the workers who were hired as forced labor by Japan’s steel giant. Japan’s Prime Minister Shinzo Abe criticized the court verdict. He claimed that the court’s verdict was politically motivated. Japanese authorities claim that $500m has already been paid after the Normalization Treaty of 1965. Japan further claims that all pending dues have been cleared under the treaty.
However, Japan did not remain restricted to the statements. In July, Japan banned exporting semiconductors and electronic chips to Korea. These sanctions were aimed at targeting the electronic industry of South Korea. South Korea’s electronics industry is largely dependent on Japan’s supplies. This ban will give Japan an upper hand in bargaining.
Korean technological entities such as Samsung, LG, and Hynix are dependent on Japanese supplies of semiconductors and electronic chips. In previous years, effective cooperation between the Japanese suppliers and Korean electronic giants benefited both the countries. Currently, Samsung is the number one mobile phone manufacturers in the world.
However, the Japan-Korea trade war can create the worst impacts. Currently, relations between the two countries are deteriorating. Recently South Korea canceled an intelligence-sharing deal with Japan. Experts opine that the cancellation of this deal will threat the US strategy for the Asia Pacific. Furthermore, Japan also imposed sanctions on the export of critical chemicals to South Korea.
According to the new legislation, the exporter will have to wait for three months to start exports. This delay will impact the capacity of Korea’s electronic giants. Currently, Korea supplies about 90 percent of the smartphone screens in the international markets. Similarly, Korea supplies 60 percent of memory chips to the world. The delay in the supply of these components will impact the production of smartphone giants like Apple and Huawei.
Meanwhile, LG and Samsung have already started looking towards Canada, Taiwan, China, and Europe to avoid delay. The trade war is also causing trouble for the Japanese economy. Japan’s conglomerates are struggling to find international buyers. However Korean conglomerates have outperformed their Japanese counterparts in international markets. Experts believe that Japan’s private sector will be affected by the controversial delaying legislation by the Japanese government.
Moreover, Japan also removed South Korea from the white list of its favored nations. As a result of this, the Japanese exporters will have to pass through additional procedures to get a license to export their goods to Korea. The Japan-Korea trade war will force Korean companies to reduce their dependence on Japanese materials. This will eventually diminish the economic interdependence of both countries.
Currently, Japanese companies are leading in the fields of research and production. However Korean companies are leading in the commercialization of consumer goods and international marketing. Korean electronic entities like LG and Samsung have outperformed the Japanese enterprises like Toshiba, Sony, and Panasonic. Korean companies have achieved this milestone by using Japanese materials. This is a matter of pride for Japan.
Currently, the USA did not show any interest in mediating the tensions between its key allies. Meanwhile, China is trying to fill the vacuum created by the US’ absence. China tried to diffuse the tensions by inviting the foreign minister of both countries to Beijing.
Experts believe that both countries have adopted the nationalistic approaches. It seems that none of them will backtrack from its stand. If the Japan-Korea trade war continues, it will badly impact the global economy.
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