Korean Companies to Compensate Instead? ... Aftermath of Forced Labor, Remaining Issues

Japan, Will There Be Sincere Measures?
Victim Refuses Compensation Until the End
How Much Economic Benefit?

The aftermath of the forced labor compensation solution, summarized as 'third-party compensation by Korean companies' and 'Japan's comprehensive apology and fund establishment,' is expected to be significant. Since our government has tied up the forced labor solution with a 'bold decision' for Korean companies to pay the compensation on behalf, a corresponding response from Japan is necessary to complete this compensation plan. Achieving a smooth agreement with the victims, who say "we cannot accept money from Korean companies," remains a challenge. How much benefit can be gained from the lifting of export restrictions and the operation of the Korea-US-Japan security consultative body is also crucial. If these follow-up measures are not handled smoothly, the Yoon Suk-yeol administration may face criticism that it conducted a humiliating negotiation in Japan diplomacy, making considerable concessions.

[Image source=Yonhap News]

Will ‘Sincere Response’ Measures Emerge at the Korea-Japan Summit?

According to Kyoto News on the 7th, President Yoon Suk-yeol is reportedly coordinating a plan to visit Japan around the 16th to 17th of this month to hold a summit with Japanese Prime Minister Fumio Kishida. A Korea-Japan summit at the G7 summit in May is also anticipated. Experts believe that Japan should present progressive measures regarding historical issues at this meeting. Since our government has stepped back on historical issues with a bold decision, if Japan again raises issues such as the Dokdo territorial dispute, visits to the Yasukuni Shrine, or offensive remarks related to comfort women, this compensation plan could trigger significant political backlash. A source familiar with Korea-Japan diplomatic affairs said, "Even in the form of behind-the-scenes coordination, Japan must be compelled to take progressive measures on historical issues, such as the separation of war crime companies from the Yasukuni Shrine." Additionally, how sincerely Japan responds to remaining bilateral issues such as the 7th Offshore Development Area, Sado Mine, and Fukushima nuclear power plant is also important.

Complicated Compensation Lawsuits... Potential for Disputes over Deposits

The government's forced labor solution plan focuses on victims who have won lawsuits receiving compensation. However, problems arise if victims reject the government plan until the end. If the foundation ignores the victims' refusal and deposits the compensation to fulfill the obligation, the victims may initiate procedures to invalidate the deposit, leading to prolonged legal disputes again. Lawyer Lim Jae-sung, legal representative for forced labor victims, stated at a press conference the day before, "If deposits are made unilaterally against the victims' will, we will proceed with procedures to confirm the invalidity of the deposit during enforcement." Professor Hosaka Yuji of Sejong University said, "If a lawsuit to invalidate the deposit proceeds, the Japanese war crime companies will be excluded, and it could escalate into a protracted lawsuit between our government and the victims." Moreover, there are criticisms that this government compensation plan overturns the 2018 Supreme Court ruling. There will likely be ongoing criticism that this decision violates the separation of powers.

Foreign Minister Park Jin is announcing a solution for compensation for forced labor victims during Japanese colonial rule on the 6th at the Ministry of Foreign Affairs in Jongno-gu, Seoul. Photo by Dongju Yoon doso7@

How Much Economic Benefit Will There Be?

The Japanese government has begun steps to lift export restrictions on South Korea. Our government has also temporarily suspended its World Trade Organization (WTO) complaint, claiming that Japan's export restrictions were retaliatory measures. Previously, in July 2019, Japan blocked exports of three key semiconductor materials?hydrofluoric acid, fluorinated polyimide, and photoresist?to South Korea. In August of the same year, Japan removed South Korea from its whitelist, which simplified export procedures.

However, opinions differ on the economic benefits that the easing of export restrictions and restoration of the whitelist will bring domestically. During the Moon Jae-in administration, Japan's export restrictions lasted over three years, prompting our government to strongly promote the materials, parts, and equipment (SoBuJang) policy, significantly reducing dependence on Japan in the semiconductor sector. In fact, Japan's share of semiconductor imports decreased from 34.4% in 2018 to 24.9% in 2022, a 9.5 percentage point drop.

Nevertheless, dependence on Japanese intermediate materials remains high, so lifting export restrictions is expected to have a significant effect on diversifying supply chains. According to last month's statistics from the Ministry of Trade, Industry and Energy's SoBuJang comprehensive portal 'SoBuJangNet,' Japan's share of imports related to the top 100 core strategic SoBuJang technologies decreased from 32.6% in 2018 to 21.9% in 2022, a 10.7 percentage point drop, but the import volume actually increased. The share of Japanese imports in electronic components rose from 9.6% in 2018 to 11.8% in 2022. Minister Lee Chang-yang of the Ministry of Trade, Industry and Energy said at a press conference the day before, "If Japan's export restrictions are resolved, (material imports) are expected to become much smoother."

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