Japan’s Agenda behind Its Chemical Export Curb to South Korea

Japan hinted a trade war with its neighbor, South Korea by limiting its exports on fluorinated polyimide, a chemical material often used for semiconductor in chips and for TV or smartphone screens earlier this month. It is known that Japan is South Korea’s largest supplier when it comes to chemicals that are critical for technological products. These components are commonly used by South Korean tech companies. Japan stated that they have been suspicious over the mismanagement of the chemical compounds, worrying South Korea might illegally transfer them to North Korea as the compounds are applicable for weapons too (Lee, 2019).

By putting national security as its main motive to restrict trade relations, Japan has actually demonstrated its
inconsistency in supporting international trade system. Shinzo Abe, Japan’s Prime Minister, just recently expressed the stance of the country in supporting “free, fair, and indiscriminate trade” during G20 Summit held in Osaka last June (Reuters, 2019), only to break his own promise not long after. This sudden change makes us wonder whether or not security is the real reason behind Japan’s chemical compound export restriction to South Korea. The action could be a form of retaliation against the recent South Korea’s decision to request for a redress in a form of financial compensation from Japanese companies that utilized forced labor from South Korea during colonialism era (1910-1945). This causes an economic issue as it consequently requires Mitsubishi Heavy Industries Ltd. to pay $134,000 for each 10 plaintiffs and Sumitomo Metal Corp. to pay $88,000 for each 4 plaintiffs (Lee, 2019). Such measures potentially harm the running of their business as well as the reputation of the companies. Thus, Japan might have seen the export curb policy as the perfect retaliation since it would bring similar harmful effect to South Korean tech companies, considering the country is currently in urgent need to diversify their alternative suppliers for said chemicals (Su-hyun, 2019).

Alternatively, the motive behind the export limitation might be simply a protection towards Japan’s domestic
market. Foreign technological products are currently dominating Japanese market. For instance, Japanese prefers iPhone and Huawei more than local brands for smartphone choices. It is also said that Japanese giant tech companies cannot compete with foreign products including Apple (Statista, 2019). The decline of Japanese technology brands was started since South Korea took over the international market of technological products with its low-cost products and massive business on semiconductors (Osanai, n.d.). Japan has gradually been losing its prowess due to lack of innovation in their product development. They tend to focus more on the hardware improvement and was reported to spend less amount of budget for research and development compared to its major competitor, Samsung (Wakabayashi, 2012). Therefore, the export curb to South Korea can also be seen as an attempt by Japan to protect its domestic market because the cost of South Korean products will rise, and thus limit the product options for Japanese.

In conclusion, seeing how the two countries are retaliating against each other, it is less likely that the trade war will die down anytime soon. The continuous trade war will certainly exacerbate current global trade situation which has been worsened by the larger scale of existing trade war between China and the US. Any conflict between Japan and South Korea surfacing at the present and in the future cannot be separated from their prolonged historical sentiment. Thus, the harmonious relationship between both countries depend heavily on how they will untangle the messy thread from the past and focus on the future collaboration.

References:
Lee, C. Japan-South Korea trade dispute threatens global tech market. Japan Today. Retrieved from https://
japantoday.com/category/tech/japan-south-korea-trade-spatthreatens- global-tech-market
Lee, Y. (2019). Why Japan and South Korea Still Spar Over History. Bloomberg. Retrieved from https://www.
bloomberg.com/news/articles/2019-07-01/why-japan-and-southkorea-still-spar-over-historyquicktake
Osanai, A. (n.d.). Can the Japanese consumer electronics industry resuscitate itself? Rethinking the overblown
approach to product development. Retrieved July 22, 2019, from https://yab.yomiuri.co.jp/adv/wol/
dy/opinion/gover-eco_121009.html
Reuters. (2019). Japan PM Abe calls for strong G20 message on free trade. Reuters. Retrieved from https://www.
reuters.com/article/us-g20-summit-abe/japan-pm-abecalls-for-strong-g20-message-on-free-tradeidUSKCN1TT0DZ
Statista. (2019). Share of smartphone models sold in Japan during the month of April 2019, by model. Retrieved
July 22, 2019, from https://www.statista.com/statistics/755692/japan-smartphone-market-share-bymodel/
Su-hyun, S. (2019). S. Korean biz groups in emergency mode as Korea-Japan feud drags on. The Korea Herald.
Retrieved from http://www.koreaherald.com/view.php?ud=20190715000661&ACE_SEARCH=1
Wakabayashi. (2012). How Japan Lost Its Electronics Crown. The Wall Street Journal. Retrieved from https://
www.wsj.com/articles/SB10000872396390444840104577551972061864692

Writer : Arindha Nityasari

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