A local court in South Korea decided on Monday that it will serve Nippon Steel, a former war crime company of Japan, with a notice of the asset seizure as the company has failed to comply with the court’s ruling for compensation for the victims of forced labor by Japan. The domestic compulsory sales procedures of its assets have begun with the new decision. The South Korean presidential office Cheong Wa Dae kept distance by saying on Thursday that it cannot interfere with a court’s decision while a spokesperson of the Japanese government forewarned retaliatory measures saying that all options will be considered.
Despite the South Korean Supreme Court’s compensation ruling for forced labor victims in October 2018, the Japanese foreign ministry failed to deliver the asset seizure notice to Nippon Steel and later returned the document. As a result, the Daegu District Court recently informed the Japanese company to pick up the document. The court can take follow-up measures after 12 a.m., August 4 when the service period ends. There are a lot of concerns about the liquidation of Japanese companies as it can push the South Korea-Japan relations to the worst. If the remaining nine cases out of 10 applications for asset seizure concerning forced labor also incur asset sales orders, tensions between the two countries will only continue to rise.
As the forced labor issue came to the surface, the Japanese government announced stronger export regulations against South Korea on July 1, 2019, claiming that the South Korean court's decision infringed on the property rights of Japanese companies. Almost a year later, the two countries are yet to find a solution leaving everything to discussions between their respective trade authorities. It seems appropriate that both countries do not have much intention to resolve the issues based on their respective political leadership and diplomatic efforts so far.
Seoul decided to resume the World Trade Organization’s dispute settlement procedures as Tokyo did not accept its request to lift the export regulations. The countries’ foreign ministers simply exchanged words of regret. There are growing concerns that bigger conflicts than after the expiry of the General Security of Military Information Agreement (GSOMIA) last year may arise between the two countries.
As the forced labor issue is a conflict between the South Korean judiciary’s ruling and the Japanese government’s protection of domestic companies, it inevitably requires diplomatic solutions based on the leadership’s political decisions. However, neither Cheong Wa Dae putting forward the separation of the three powers nor the Japanese Cabinet dependent on the far-right after its failure to address COVID-19 seems to jump in anytime. The Japanese reactions are likely to be sharp and heighten South Korea’s antipathy. However, Seoul should avoid using a bad strategy of bringing up the GSOMIA issue again, which is conditionally extended for now, and linking the forced labor issue with security matters. There are two months left for negotiations. There is no one-sided winner in diplomacy. Unless the two countries change their attitude from aggravating the issue to addressing it, there will be no future for the South Korea-Japan relations.