Japan and South Korea resolve trade dispute as leaders hail ‘new era’


The leaders of Japan and South Korea hailed “a new era” of diplomatic relations at the two countries’ first summit in 12 years as they eased trade tensions and agreed to resume intelligence sharing.

Japan’s prime minister Fumio Kishida and South Korea’s president Yoon Suk Yeol met in Tokyo on Thursday and shared a special dinner of sukiyaki beef and a local fried-rice omelette known as “omurice”.

The meeting raised hopes for a lasting reset of relations between the two US allies, amid rising tensions between the US and China and a growing nuclear threat from North Korea.

The two countries have long struggled with disputes dating back to Japan’s rule over its east Asian neighbour before and during the second world war, with relations reaching a postwar low in recent years.

“President Yoon’s visit to Japan has served as a major step towards normalising relations between Japan and South Korea,” Kishida said at a joint news conference on Thursday evening.

After the news conference, Kishida took Yoon and South Korean first lady Kim Keon-hee to two dinners in Tokyo’s upmarket Ginza district. For their second meal, the Japanese leader chose a 128-year-old restaurant specialising in the country’s soul food, a fried-rice omelette known as omurice – a dish that Yoon remembered fondly from his past visit to the city.

“The vibe between the two leaders was quite good,” said one Japanese government official.

Ahead of the summit, Japan said it would lift export controls imposed in 2019 on chemicals vital to South Korea’s chip industry, while Seoul said it would withdraw a complaint lodged against Tokyo with the World Trade Organization over the restrictions.

Seoul announced last week that victims of Japanese wartime forced labour practices would be compensated through a fund financed by South Korean companies.

The US hailed the move as a “groundbreaking” step to resolve a bitter historical dispute, but it was denounced by representatives of some of the victims and South Korea’s leftwing opposition for failing to secure payments from Japanese companies.

Seoul had hoped Japanese companies would make voluntary contributions to the fund but failed to gain Tokyo’s agreement. Instead, the Japanese and South Korean business lobbies will pay ¥200mn ($1.5mn) into a pair of “future partnership” funds to collaborate in areas including youth exchanges, energy security and global supply chain issues.

“The need for the two countries to co-operate has increased in the wake of Covid-19, deepening US-China competition and global weaponisation of natural resources,” said Kim Byong-joon, acting chair of the Federation of Korean Industries, on Thursday.

South Korean and Japanese companies, particularly in the chip sector, have been squeezed by an escalating US campaign to restrict China’s access to western technology and markets.

The rapprochement has also been driven by mounting concerns in Seoul and Tokyo over the progress of North Korea’s nuclear weapons programme. Pyongyang conducted a barrage of missile launches this week to coincide with US-South Korean military drills.

On Thursday, Yoon said the two countries would upgrade security co-operation and revive a landmark intelligence-sharing deal that Seoul scrapped in 2019.

“If relations between both countries normalise and develop further, that would contribute to responding to our national security challenges,” said Yoon.

Daniel Sneider, a lecturer in east Asian studies at Stanford University, said: “Yoon got nothing from the Japanese on the forced labour issue, but he has got other things that he wanted.”

Relations between Tokyo and Seoul collapsed in 2018 after South Korea’s Supreme Court ordered two Japanese companies, Mitsubishi Heavy Industries and Nippon Steel, to compensate Korean victims of forced labour during the second world war.

Tokyo has insisted that relations could not be restored until the threat of liquidation of the companies’ assets in South Korea was lifted.

That legal threat remains in theory, but analysts said Yoon’s willingness to pursue compensation for plaintiffs through Korean companies appeared to satisfy Tokyo for the time being.

Christopher Johnstone, Japan chair at the CSIS think-tank and a former Pentagon official, said the prospect for a sustained thaw in relations was better than in 2015 following a landmark agreement over wartime sexual slavery, which later collapsed after it was disowned by Moon Jae-in, Yoon’s leftwing predecessor.

“I think the deal will be more sustainable this time since the strategic environment is clearly different from 2015, and the two countries have a broader set of shared concerns, including not only North Korea but China as well,” said Johnstone.

But Wi Sung-lac, a former senior South Korean diplomat who has advised the leader of the leftwing opposition, argued that Yoon’s failure to secure wide domestic support could limit the possibility for deeper co-operation.

“The aftermath will be somewhat detrimental to the Yoon administration’s popularity,” said Wi. “That will sap the government’s energy in building a new relationship with Tokyo.”