TRADE TANTRUMS: JAPAN AND South Korea, SUCH GOOD FRIENDS …

TIA CARR WRITES– In recent times, the frequency of interstate armed conflicts has greatly decreased. However, we are seeing the rapid creation of alternative means of enforcing political will, most notably, the weaponization of trade.

Ever since the waning of liberal orthodoxy in the global political economy, governments have been willing to intervene in markets to achieve desirable outcomes. Up until this point, these interventions have been in the name of stimulating demand or maintaining full employment — domestic political goals called for by their electorates. But now it seems we are staring down the belly of a new beast: the dawn of economic policies targeted at political manipulation.

Most citizens in Western countries are increasingly fixated on the US’ growing struggle with China. As the US is situated at the top of US News and World Reports’ Global Power ranking, inciting conflict with the rapidly expanding #3 country indeed is cause for concern. Trump’s repeated logic for imposing high tariffs on Chinese goods is both a result of market pressures (the ‘trade deficit’), but also because of China’s failure to crack down on intellectual property thieves. Important military information and even plans for equipment have fallen victim to Chinese espionage.

However, the immense press coverage of Trump’s spastic unilateral action leaves another mounting conflict in the shadows: the Japanese-Korean trade war. Japan and Korea are both key US allies in the region, and with the growing tension between the US and China, the US would be ill-advised to ignore the exponentially increasing conflict between the two states.

The Japan/Korea trade war’s more or less “official” starting point was on Wednesday, August 28th, when Japan officially removed Korea from their trading “white list,” or list of safe, approved trading partners. The downgrade leaves South Korea on the same level as states that “violate international norms,” requiring additional screening and other procedures making importing goods much more difficult.

The Japanese move is seen as a clapback to a Korean Supreme Court ruling from last year. Up until then, individual cases demanding reparations for forced labor and sexual slavery during Japan’s occupation of Korea were not heard by the court. However, the recent ruling opened the floodgate, leaving (in theory) Shinzō Abe’s government to answer for years of human rights violations. Because of a bilateral agreement in 1965 outlining $800 million in Japanese reparation payments, Japan considered the matter to be legally settled. Thus, the Korean Supreme Court ruling was not received lightly.

To force Korea to back down on these legal claims, the Japanese went to hit them where it hurts: tech manufacturing. Tech, one of Korea’s largest sectors, is the main reason for their ascendency to #10 on the US News and World Report Power ranking. Two of the largest computer chip manufacturers, Samsung and Hynix, are struggling to import key chemicals to continue production because of the “security” restrictions. A large majority of these manufacturing chemicals are imported from Japan, and finding new sources or finding ways to domestically produce them will undoubtedly take time and effort. If the trade war continues unabridged, Korea’s tech powerhouse will slow. Trade wars may not overtly claim lives, but they are in fact costing many Korean people their livelihoods.

Trade wars implicate serious consequences for not just the citizens of the countries involved, but the entire international community. Without Korean tech manufacturing operating at full capacity, a rift is likely to open in the global supply chain for tech products. Trade “wars” are so named for a reason: they are politically motivated, devastating, and wide reaching in effect. We are entering a new age of international relations, and these trade conflicts need greater scrutiny — and decreasing occurrence.

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