David Kang on the Trade War between Japan and South Korea

David C. Kang is Professor of International Relations and Business at the University of Southern California, with appointments in both the School of International Relations and the Marshall School of Business. He is director of both the USC Korean Studies Institute and the USC Center for International Studies. Kang’s latest book is American Grand Strategy and East Asian Security in the 21st Century (Cambridge University Press, forthcoming autumn 2017).

He has authored four other books, and has published scholarly articles in journals such as International Organization, International Studies Quarterly, and International Security. A regular consultant for U.S. government agencies and the military, Kang has also written opinion pieces in the New York Times, the Financial Times, the Washington Post, and the Los Angeles Times, and appears regularly in media such as CNN, BBC, and NPR. He received an A.B. with honors from Stanford University and his Ph.D. from Berkeley.

On Oct. 15, 2019, he spoke with Lintong Lyu CMC ‘22.

Photograph and biography courtesy of Mr. Kang on behalf of the University of Southern California.

What triggered the ongoing trade war between South Korea and Japan?

It depends on how you see the question. If you are sympathetic to Abe's approach, then what triggered it was a number of moves that South Korea made regarding historical issues, perhaps the most significant being the 2015 Comfort Women Agreement between South Korea and Japan. If you are South Korean, then what triggered it was Abe's unwillingness to address historical realities. On top of that, the Japanese government continued to offer two different explanations of the trade war. At times, for example, people of the trade administration said the current dispute is purely technical and that it has nothing to do with history. But other times, Abe said it's all about historical issues. In other words, they have not agreed on the trigger. What ultimately happened is that the Abe administration decided to mix business and politics. Recall that for decades the Koreans and Japanese disagreed over history, but they kept that separate, and they didn’t let it spill over into the business side of their relationship. So business is always protected from politics, so that they can continue to grow. This is one of the first times that there has been significant economic retaliation for political or historical issues, and it was clearly Japan’s decision to go down that path.

What has been the impact on each country so far? Which side is likely to be damaged the most? How will the trade war affect the long-term commercial relations between the two countries? 

We'll find out. We're now seven weeks from South Korea’s decision to remove Japan from the fast-track trade “white list.” The initial indication is that trade has been affected but less than many expected. That said, it is still too early to truly see the impact. Even with the trade problems between the U.S. and China, it is hard to see the impact yet. We will see how American consumers are affected over Christmas and the extent to which the tariffs will affect consumers. 

How has the Korea-Japan trade spat affected the economies of other Asian countries? Are there potential beneficiaries and victims? The East Asian economies have become highly interdependent through supply chain. The Korea-Japan trade war and the U.S.-China tech war threaten to unravel this sophisticated network. What lies ahead for the region's manufacturers?

These economies are still deeply intertwined. Possible beneficiaries may be third party countries that can become suppliers. Vietnam could be an alternative; many people think that Vietnam can possibly enhance its capacity. There are a whole bunch of capacities just waiting around, ready to be deployed by people who want to use it. But it's very hard to see yet. We'll see whether it is as bad or as good as people say. The politicians are still waiting to see what's going to happen.

The U.S. tried to act as a mediator but without success. Can you explain why?

With any other administration, the U.S. would have intervened much earlier. But it's between Japan and North Korea. U.S. National Security Adviser, John Bolton went over to Japan and South Korea in mid-July, and essentially said the trade war was already too late to pause. The South Korea said they willing to pause, but the Japanese said they can’t. No one thought Bolton in good faith went there to try to intervene in what was going on. There has been nothing from the US since then. Undoubtedly, U.S. leadership in the region is taking a real hit, and we’ll see whether this administration can retain and then regain the influence it lost.

Does China have a positive role to play in mediating in this dispute?

The question is how much China is getting involved when it has its own trade war issue. China, Japan, and Korea have a trade agreement among the three of them, but it has only been discussed and it hasn't gone anywhere. In the past, China has been known for using economic incentives, tariffs, and punishments vis-à-vis South Korea and Japan. For the moment, it's not clear how much China will get involved, but certainly China has an ability to play a role. For now, however, China is now staying far out of this.

What are the possible solutions to the Korea-Japan trade war?

The trade war is part of a larger set of issues. These larger issues are the result of historical relationships and political differences which shape how they want to deal with North Korea and how they view China, and so on. So that’s why it is hard to say why Abe made the decision. I do not see any quick resolution to the issue. I also don't see anybody backing down right away. After all, does anybody really want a way out? Right now, I don’t think either side wants it. They don't care enough. Their aim is to prove a point and to show that they care about more than economic performance, business, or trade. 

 

Lintong Lyu CMC'22Student Journalist

J. Patrick Fischer [CC BY-SA 3.0 (https://creativecommons.org/licenses/by-sa/3.0)]

Share this:

Leave a Reply

Your email address will not be published. Required fields are marked *