Japan's trade retaliation against Korea over a spat concerning compensation for forced labor victims is drawing criticism from around the world. The Wall Street Journal said Japan could end up harming itself, while the Financial Times said the entire world will end up paying for the consequences if Tokyo restricts exports of vital materials for Korean IT giants. Even Japanese media have warned that the mooted export curbs fly in the face of World Trade Organization rules. Most experts believe the curbs could trigger a chain reaction because the global supply chain is so inter-connected.
Korea and Japan have clashed diplomatically numerous times since the two countries normalized diplomatic relations in 1965, but economic ties had never been damaged. Japan ranks among the top five trade partners for Korea and vice versa. In fact, the two countries virtually form a single economic bloc. Businesses in both countries involved in semiconductors, petrochemical products, steel, fine chemicals and food compete with each other but also supply components to each other, like a complex machine. If a problem develops in one area, another area ends up paying the price. Japan's retaliatory measures are rattling the foundations of half a century's economic trust and cooperation.
The Japanese government claims its latest measures are the result of "damaged trust" with Korea. That is tantamount to admitting that diplomatic friction is the sole reason for political interference in free trade. But under WTO rules, governments must not discriminate against or curb cross-border trade for reasons other than economic ones.
Japan consistently ranks at the top of the world when it comes to its positive image, largely due to its law-abiding culture. But Tokyo's latest moves make the country hard to distinguish from China, which does not think twice about bullying its regional neighbors to protect its own interests. It is true that the 1965 treaty covers reparations for Japan's World War II atrocities, and Japan may have reason to be upset that Korean courts have now ruled that a treaty between governments cannot override individual rights. But the proper response must be political, and economic bullying is totally unacceptable.
