Avoiding the worst

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Avoiding the worst

Five Korean business organizations, including the Korea International Trade Association (KITA), filed a joint petition with Japan’s Ministry of Economy, Trade and Industry, asking it to retract its plan to expand export regulations aimed at curbing shipments of key items to Korea. They argued that if Korea is removed from the preferential treatment, it will cause not only uncertainties in trade and industrial relations of the two countries, but also negative ramifications in the global economy through disruption in the value chain.

The Japanese government must not disregard the arguments from its Korean counterpart and businesses. Tokyo may have its reasons to be vexed about the Korean court rulings ordering Japanese companies to make individual reparations for wartime forced labor, although the 1965 basic treaty has a provision that stipulated that the loans and aid covered all the claims “completely and finally.” But resorting to economic retaliation in protest was ill-natured as diplomatic disputes must be resolved through diplomatic means.

Tokyo has mixed a diplomatic issue with the economy. The Tokyo government invited Korean correspondents in Japan to claim that the move does not have any punitive purpose. Still, the action is viewed by overseas media as a retreat from the free trade order Japan has been championing. The Japanese government is underestimating Korean businesses if it thinks that cutting off Japanese imports would wreck Korea’s competitiveness. Korea is the world’s sixth largest exporter holding a central position in the global value chain.

Korean companies rely on materials and equipment from Japan. But Japanese companies also must sell their products to Korean companies to make money. Export curbs won’t just hurt Korean businesses. If Korean components and other key supplies are not delivered in time, production in companies in the United States, Japan and elsewhere also would be disrupted.

Both governments must look to the future. Tokyo must retract its economic pressure and Seoul also must restrain itself and coolly respond to bilateral issues. Chiben Gakuen, a reputable private institution in Nara Prefecture, has been sending its students on field trips to Korea for 45 years and a recent BTS concert drew 210,000 fans in Tokyo. Over 10 million people from both countries have been visiting one another a year. The worst must be avoided between the two neighbors.

JoongAng Ilbo, July 24, Page 30
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