Korea-Japan Relations Trapped in "4 Billion Won"

Forced Repatriation of Japanese Companies' Assets in Forced Labor Case Could Further Worsen Korea-Japan Relations
Japanese Government Hints at Additional Retaliation... Korea Prepares Responses for Various Scenarios
"Technical Solutions Between Both Countries Possible but Conflict Inevitable"

On the 23rd, as Korea-Japan relations continue to deteriorate, the Statue of Peace and the Forced Laborer Statue were installed at Bupyeong Park in Incheon. Photo by Moon Honam munonam@

[Asia Economy Reporter Lim Cheol-young] The seizure order by a Korean court on domestic assets (worth about 400 million KRW) of a Japanese company that forcibly conscripted Koreans during the Japanese colonial period took effect from midnight on the 4th. The Korean and Japanese governments, already entangled in complex issues such as export regulations and the termination of the Korea-Japan General Security of Military Information Agreement (GSOMIA), are highly likely to face a direct confrontation once again.

To untangle the knot of Korea-Japan relations trapped by '400 million KRW,' various diplomatic solutions need to be prepared. For now, the Ministry of Foreign Affairs stated, "We have been closely consulting with the Japanese government to find a resolution and will continue related consultations," while also expressing that "we are closely monitoring the situation and reviewing response directions with all possibilities open." Although the door for dialogue remains open, diplomatic circles believe that if the Japanese government takes additional retaliatory measures, a direct confrontation will be difficult to avoid. Amid the urgent need for a solution through dialogue, the Ministry of Foreign Affairs reiterated, "The government is closely monitoring the situation and reviewing response directions with all possibilities open." However, concerns are rising that a direct clash will be inevitable if Japan proceeds with further retaliatory actions.

As expected, the Japanese side strongly protested. Nippon Steel, which received the seizure order for 81,075 shares of PNR stock (worth about 400 million KRW) corresponding to the compensation claim amount, threatened to immediately appeal before the 11th, stating, "We will respond appropriately considering the diplomatic negotiations between the Korean and Japanese governments." According to the Nihon Keizai Shimbun, a Japanese government official also warned, "We cannot allow the actual sale of assets," signaling a strong response.

With Korea-Japan relations plunging into turmoil again, a clash between the governments seems inevitable. On the 1st, Yoshihide Suga, Chief Cabinet Secretary of Japan, even hinted at additional economic retaliation. On Yomiuri TV, he said, "The direction of (Japan's response) is clearly set," and "We are considering all countermeasures." Possible retaliatory measures Japan might take include ▲ raising tariffs on Korean products ▲ tightening visa issuance ▲ seizing Korean assets in Japan ▲ recalling the Japanese ambassador to Korea. Of course, visa restrictions have little effect due to the impact of COVID-19, and tariff increases could negatively affect Japanese companies and consumers, deepening Japan's dilemma.

Diplomatic circles point out that since immediate progress in dialogue is unlikely, it is necessary to find ways to prepare diplomatic solutions. The amount of Japanese companies' seized assets is only about 400 million KRW, and if compensated, Japan's apology would effectively be out of reach. It should also be considered that the victims place more weight on Japan's apology than actual compensation.

During the 20th National Assembly, the '1+1+α (alpha)' bill proposed by Speaker Moon Hee-sang was reintroduced by independent lawmaker Yoon Sang-hyun, but it remains uncertain whether it will serve as a diplomatic solution. The so-called 'Moon Hee-sang plan' was shelved due to opposition from civic groups. Therefore, there are calls for the political sphere to find more practical and diverse measures and resolve the issue diplomatically. This is based on the analysis that if asset sales actually proceed, it could create a situation favorable to the Abe Shinz? Japanese government.

Professor Hosaka Yuji of Sejong University explained, "Since the actual sale has not occurred, it is ambiguous for Japan to take retaliatory measures immediately," but added, "There is a high possibility of retaliation if the assets are actually sold, and Japan is likely preparing for that." He also pointed out that unlike last year's Japanese export restrictions, this time Korea is the one attacking Japan, saying, "Last year, Koreans united to fight against Japan's attack, but this time, Japanese citizens might feel that way, so the situation could differ from a year ago."

Professor Hwang Jae-ho of Hankuk University of Foreign Studies said, "The deterioration of Korea-Japan relations is an inevitable situation," and predicted, "Korea-Japan relations are likely to flow toward managing the situation to prevent further deterioration rather than solving the piled-up problems." He added, "While the two governments may discuss technical solutions to avoid the worst-case scenario, a clash seems unavoidable."

This content was produced with the assistance of AI translation services.