Gwynne Dyer

Nation-states, like four-year-olds, find it very hard to admit they are in the wrong and apologise. Adult intervention often helps, but all Japan and South Korea have is US Secretary of State Mike Pompeo (who tried and failed to mediate a week ago in Bangkok). So the trade war between the two grows and festers.

There are obvious similarities with the trade war that Donald Trump is waging against China, with Japan’s prime minister Shinzo Abe playing the Trump role: blustering bully with no clear game plan. Like the Trump trade war, too, the Japan-South Korea confrontation threatens to destabilise both East Asian security arrangements and the global market.

Yet the confrontation between Tokyo and Seoul is not really about trade at all. It’s about the difficult history of relations between an ex-imperial power, Japan, and its former colony, Korea.

Japan is existentially in the wrong in this relationship, because it seized control of Korea in 1905 and ruled it, sometimes with great brutality, until it was defeated in the Second World War in 1945. But Tokyo claims that it discharged whatever moral debt it owed when it paid US$500 million to Seoul in 1965.

Japan offered to pay compensation directly to Korean individuals who had suffered forced labour and other injustices during the Second World War, but Seoul preferred to take a lump sum (and spend almost all the money on development). Many of the victims got little or nothing. The resentment this caused was easily diverted onto Japan, where anti-Japanese sentiment has deep historical roots.

Fast forward to last October, when South Korea’s Supreme Court ruled that the lump-sum, government-to-government deal of 1965 did not cover damages for the mental anguish of individual wartime labourers. South Korean individuals could claim compensation from the Japanese industries that used them as forced labour during the war.

South Korea’s president Moon Jae-in did not seek this ruling from the Supreme Court, which was clearly stretching the law almost to breaking point, but in practical political terms he could not disown it.

Japan, however, was horrified. Accepting the ruling would open to door to huge claims for compensation from people who suffered “mental anguish’’ from the Japanese occupation in all the other countries Japan invaded between 1937 and 1945. It also felt cheated: half a century ago it paid out a lot of money to end any further claims like these.

Japan and Koreans have almost always managed to keep important issues like trade and national security separate from the emotional flare-ups that make the relationship so fraught. Last month, however, prime minister Abe completely lost the plot. He began imposing restrictions on Japanese exports to South Korea.

They are relatively minor restrictions. Chemicals essential to making semi-conducters that South Korea buys from Japan now require export licences, and South Korea has been dropped from Japan’s “whitelist’’ of countries that are allowed to buy goods that can be diverted for military use with minimal restrictions.

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No big deal, really. Just a few extra hurdle to cross, meant to rebuke and annoy South Korea, not to cause serious injury.

But it has actually enraged South Koreans, who have spontaneously begun boycotting Japanese imports. These long established trading partners, both closely allied to the United States and both anxious about China’s rise and the threat of North Korea, are heading for a real trade war.

Which, with help from the bigger trade war Donald Trump started with China, may be enough to tip the world economy into a deep recession.

• Gwynne Dyer is an independent journalist


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