Self-injury, 100 damage to the enemy, 1000 Japan’s sanctions against South Korea, what？

[simulcast+]On July 12th, according to "News Network", representatives of Japan and South Korea held working-level consultations in the Ministry of Economy, Trade and Industry of Japan in Tokyo to discuss the Japanese government’s efforts to strengthen export control of semiconductor materials to South Korea. According to Japanese media reports, the two sides have their own words. Japan insists that export control is based on security, while South Korea criticizes Japan’s actions as political retaliation against labor claims in World War II.

It seems that it is another "party" that broke up in discord.

Let’s first review the trade turmoil between Japan and South Korea.

On the 1st of this month, the Japanese government announced that it would strengthen the examination and control of raw materials for the semiconductor industry exported to South Korea, and exclude South Korea from the "white list" of trade. In the target countries in the "white list", Japan can export products to them through relatively simplified procedures.

On the 4th, Japan’s export control measures came into effect. According to the Korean media, this is the first time that the Japanese government has imposed "economic sanctions" on South Korea since the resumption of diplomatic relations between Korea and Japan in 1965.

Japan’s restrictions on exports to South Korea this time are mainly high-purity hydrogen fluoride, corrosion inhibitors and fluoropolyimide, which are important raw materials in smart phones, chips and other industries. The dependence of Korean enterprises on these three types of Japanese imported materials is as high as 43.9%, 91.9% and 93.7% respectively.

It can be said that this measure of Japan directly hit the semiconductor industry as the pillar of South Korea’s economy, which caused strong concern and anxiety of South Korea. In the short term, although the Japanese move has put the Korean industry in an emergency state, the impact on Korean companies is limited because companies usually reserve raw material stocks for several months. However, in the long run, Japanese measures will adversely affect the normal production of Korean enterprises, and may even aggravate the problem of weak Korean exports.

South Korea has also felt the seriousness and urgency of the problem. South Korean President Moon Jae in repeatedly voiced his hope that Japan would not "go to a dead end" in his public statement on the 8th, otherwise it would not only hurt the economic and friendly relations between South Korea and Japan, but also have a negative impact on the global economy.

On July 10th, South Korean President Moon Jae in met with senior executives of large Korean enterprises.

On the 10th, Moon Jae in also convened a rare meeting of executives from 30 large Korean enterprises in Cheongwadae to discuss the countermeasures. Moon Jae in said that this situation is an "unprecedented crisis". Even at the meeting of the Council for Trade in Goods of the World Trade Organization held on the 9th, the ROK once again asked Japan to withdraw relevant measures.

In addition, South Korean Foreign Minister Kang Kyung-wha telephoned US Secretary of State Mike Pompeo on the evening of 10th to express concern to Pompeo, pointing out that Japan’s measures would not only be detrimental to the "bilateral relations between South Korea and Japan", but also harm the "trilateral cooperation between South Korea, the United States and Japan". From the outside world, this move is undoubtedly that South Korea wants to find the United States to "persuade". As for whether the United States is willing to intervene, many people have reservations.

This series of operations in South Korea does not seem to have settled the dispute. From the head of a big consortium going to Japan to resorting to the World Trade Organization (WTO), from calling on the business community to "tide over the difficulties together" and building an "emergency system for officials and people" to seeking support and mediation from the United States, the South Korean side has almost considered "all countermeasures". In contrast, Japan, with an indifferent attitude, makes South Korea’s response more vague and has no sense of fighting back.

In fact, Japan will not get away with it in this trade war. Some analysts pointed out that Japan’s semiconductor industry is currently in a period of decline. At this time, restricting exports to South Korea is likely to lead to overcapacity and investment in Japanese companies. Secondly, the semiconductor-related materials exported by Japan to South Korea are also used in parts produced by Korean companies for Japanese products such as Sony TV. If South Korea takes countermeasures and restricts the export of such parts to Japan, the related industries in Japan will face tremendous pressure.

So why did Japan choose to provoke this trade dispute of "self-injury 100 and enemy 1000"?

According to reports, the main reason is the labor problem that both sides have been making a lot of noise. Last October, South Korea’s Supreme Court ruled that Japanese steel companies — — "Nippon Steel & Sumitomo Gold" compensated 100 million won (about RMB610,000) to each of the four Korean workers who were forcibly recruited during World War II. In this regard, the Japanese side has shown a very tough opposition.

On July 12th, representatives of Japan and South Korea held working-level consultations.

In the nearly six-hour marathon consultation held on the 12th, the Japanese side denied this reason, and reiterated that the export control was adopted because the South Korean government had problems in export management.

In fact, whether it is some historical issues or so-called "political revenge", various reasons are mutually causal and interactive, and it is an indisputable fact that South Korea-Japan relations have been constantly cold in recent years. Although this dispute is a "new war", its root is still an old dispute, which is a new flashpoint for the accumulated contradictions between the two sides.

According to the latest poll results, South Koreans’ support for Japan has dropped to the lowest level in history, and only 12% of South Koreans surveyed choose to hold a "positive" attitude towards Japan. In addition, 67% of the respondents expressed their willingness to participate in the boycott of Japanese goods.

The victims of this trade friction are not just Japan and South Korea. Many experts said that Japan and South Korea are both deep participants in the global semiconductor industry value chain, and the trade dispute between the two countries will have a greater impact on the global value chain. (Source: Xinhua News Agency, Central Radio and Television General Station)