Korea ready for Japan’s retaliation over sales of asset
With Japan’s retaliation against a possible liquidation of Japanese corporate assets in the offing, the Korean government has come up with scenario-based countermeasures, according to sources, Monday.
However, it remains to be seen whether its preparation is enough to cushion the impact of Japan’s countermeasures.
In 2018, Korea’s Supreme Court ordered Japanese steelmakers Nippon Steel and Sumitomo Metal which benefited from the use of Korean forced labor during WWII to pay 100 million won ($83,000) in compensation to four surviving South Korean victims of the wartime atrocities. With their continued noncompliance, the Pohang branch of Daegu District Court began the process needed for liquidating their Korean assets in June. Should there be no response from the companies by today, the court can liquidate their assets. However, the process is expected to take several months.
As the deadline approaches, the Shinzo Abe administration has warned of serious consequences like its tightened control in 2019 on exports of three key industrial materials critical for Korea’s chip and display industries.
According to multiple sources, relevant government organizations have comprehensively explored countermeasures in the event of retaliatory actions by Japan since January. Feasible retaliatory options from Japan include tightening visa requirements for Koreans and temporarily recalling the Japanese ambassador to Korea as well as imposing heavy tariffs and seizing Korean assets in Japan.
“Although it is the best way for the two countries to find diplomatic solutions ahead of the possible liquidation, the Korean government thinks it is not easy to do so,” a source familiar with the matter said. “The government has drawn up measures against the worst scenario.”
The government is said to go tit-fortat for tariff hikes or restrictions on visa issuance, while it will file a complaint with the World Trade Organization against any export curbs.
The Korean government’s measures come as there has been no sign of Seoul and Tokyo compromising and reaching an agreement on the issue.
The government reportedly suggested to Japan that it would make up for the sales of Japanese companies’ assets around March or April, but it was rejected. Japan consistently claims the 1965 normalization treaty between the two countries settled individual compensation issues, and nothing further is owed.
Since then, there has been no discussion between the two sides, raising speculation that bilateral relations will continue to decline.
Amid the deteriorating ties, however, there are growing whispers that President Moon Jae-in’s new national security team may step up to resume underthe-table talks with the Japanese side.
Park Jie-won, chief of the National Intelligence Service (NIS), is on intimate terms with Toshihiro Nikai, secretary-general of Japan’s Liberal Democratic Party, while Suh Hoon, director of the National Security Office (NSO), has also built up a network with ranking Japanese officials.
“When it comes to retaliatory measures that Chief Cabinet Secretary Yoshihide Suga has threatened and Japanese media have reported, the Korean government is expected to deal with them without a hitch,” said Park Won-gon, a professor of international politics at Handong Global University.
He said should the sale of the assets be carried out in the end, massive retaliation is likely.
“For example, if Japanese banks and savings banks retrieve their investments in the local stock market, there could be a huge impact,” Park said.
The professor urged the national security team to take actions to settle the matter.
“As far as I know, when Suh was the NIS chief, he was involved in the issue off the radar, contributing to coming up with the so-called Moon Hee-sang proposal together with Japan. Either Suh or Park needs to act for an updated one,” Park said.
The proposal named after the former National Assembly speaker meant creating a foundation to be funded by the involved companies, and the governments and citizens of Korea and Japan, to support the surviving victims of wartime forced labor. But this was scrapped with the expiration of the 20th National Assembly here.