Timeline: How the Japan–South Korea trade dispute escalated

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Historical conflicts have resurfaced and increased tensions between the two Asian neighbors.
South Korea
15 December 2019

Japan and South Korea share close bilateral ties. In 2018, US$52.5 billion (€47.8 billion) worth of Japanese goods and services were sold into South Korea, making it Japan’s third-largest trading partner. During the same period, South Korea sold US$30.6 billion in goods and services to Japan.

However, relations between the two north-east Asian neighbors have long been strained by disagreements over various historical issues. One concerns the legacy of Japan’s 1910–45 colonization of the Korean Peninsula, especially during World War II.

In late 2018, simmering tensions over this issue worsened, resulting in a trade dispute that has also hit security cooperation, tourism, and cultural links. Here is a timeline of the major flashpoints.

2018

October 30: South Korea’s Supreme Court orders Japanese companies Nippon Steel and Sumitomo Metal to offer reparations to South Korean plaintiffs forced to work in their wartime mines and factories.

The ruling sparks outrage in Japan, which reiterates its belief that wartime compensation matters were settled in a 1965 treaty that normalized economic and diplomatic relations between the two countries. In its October verdict, South Korea’s Supreme Court rules that the treaty should not impede individuals’ rights to seek redress.

November 21: South Korea announces it will dissolve the Japanese-funded Reconciliation and Healing Foundation, established under a 2015 bilateral agreement to pay compensation to women systematically forced to work in Japan’s military brothels during World War II. Japan argues that Seoul’s actions violate the 2015 agreement.

November 29: South Korea’s Supreme Court orders Mitsubishi Heavy Industries to compensate individuals forced to work in its factories during World War II.

2019

January 8: After Nippon Steel refused to pay awarded compensation, as per the October 2018 Supreme Court verdict, Daegu District Court approves the plaintiffs’ request to seize some of the company’s South Korean corporate assets.

January 18: Seoul High Court dismisses an appeal brought by Japanese company Nachi-Fujikoshi against a 2014 Seoul Central District Court decision that it must compensate South Korean plaintiffs for their wartime forced labor.

March 7: Daejeon District Court approves a plaintiff’s request to seize Mitsubishi Heavy Industries trademark and patent assets.

June 19: In a conciliatory move, South Korea proposes the establishment of a joint fund with Japan to compensate forced labor victims. Japan rejects the offer.

July 1: Japan announces that it will tighten export controls on three vital chemicals used to make smartphone display panels and computer chips by South Korean firms. Under the new restrictions, Japanese companies must seek specific licenses to export the chemicals to South Korea. The screening process per license application will also require a lengthy bureaucratic process.

Seoul condemns the move as “outright economic revenge,” in light of the simmering tensions between the two countries.

South Korean protesters participate in a rally to denounce Japan’s new trade restrictions in May 2019
South Korean protesters participate in a rally to denounce Japan’s new trade restrictions in May 2019.

Japan’s Chief Cabinet Secretary Yoshihide Suga denies the move is “retaliation” against South Korea, saying that it is because the “mutual trust” underpinning the exports system has been eroded.

Amid anti-Japan protests in South Korea, consumers launch boycotts of Japanese companies and products, from clothing to cars, cosmetics, and beer.

July 12: Representatives from Japan and South Korea meet in Tokyo to discuss the worsening diplomatic relations between the two countries, but they fail to resolve the issue.

July 24: Senior officials from both countries discuss the issue of high-tech exports restrictions at a World Trade Organization meeting in Geneva, but they fail to resolve it.

August 2: Tokyo drops its neighbor from a so-called ‘white list’ of countries eligible for fast-track exports.

August 23: South Korea announces it will scrap a military intelligence-sharing pact with Japan. The General Security of Military Information Agreement enables the two countries to share information on North Korea’s missile and nuclear program.

September 11: South Korea says it will file a complaint with the World Trade Organization over Japan’s tightened export controls.

Japanese automakers say sales in South Korea fell 57 percent in August from a year earlier, while Japanese beer sales in the country show a year-on-year decline of more than 97 percent.

October 24: On a more encouraging note, South Korea’s Prime Minister, Lee Nak-yon, and Japan’s Prime Minister, Shinzo Abe, meet in Tokyo and agree to continue dialogue to prevent bilateral relations from worsening.

November 20: Japan’s two-way trade with South Korea is revealed to have sunk by 41 percent, with both exports and imports falling.

November 28: More proof emerges that the trade dispute is taking a toll. DHL’s Global Trade Barometer (GTB) shows that over the past three months, Japan’s overall growth dropped by five points to 48.

DHL Global Trade Barometer 2019_11_Ranking

The GTB also shows that over the same period, South Korea’s growth outlook decreased by two points to 43. This is the first time in more than three years that each country’s GTB outlook has fallen below 50, indicating a declining growth outlook.

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