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[News Analysis] Will trade relations change under new Japanese PM?

Suga seen to continue hard-line stance on Korea, but could face pressure to change tone in trade

Chief Cabinet Secretary Yoshihide Suga (Reuters-Yonhap)
Chief Cabinet Secretary Yoshihide Suga (Reuters-Yonhap)
As Yoshihide Suga, Japan’s chief Cabinet secretary and front-runner to replace outgoing Prime Minister Shinzo Abe, is seen as likely to carry forward his predecessor’s hard-line stance on South Korea, it is difficult to expect a major change in the strained trade relations between the two countries, experts say.

Japan’s ruling Liberal Democratic Party is to hold a leadership election on Monday. Suga is estimated to have secured more than 70 percent of the party’s parliamentary votes, according to Japanese media reports.

On Sept. 2, Suga said during a press conference that he would continue with Abe’s economic policies, known as “Abenomics,” announcing his candidacy in the election to succeed him. On Monday, discussing relations between Korea and Japan, he said he would thoroughly respond to violations of international law. 

Relations between the two neighboring countries deteriorated during Abe’s tenure as he pushed for Japan’s rearmament and denied its culpability in connection with its wartime history. The political conflicts spread to the trade arena when Japan tightened regulations on exports to Korea of three semiconductor-related items in July last year.

“Suga is not much different from Abe in Korea-Japan relations,” said Kim Gyu-pan, senior research fellow of Japanese economy and industry at the Korea Institute for International Economic Policy.

“Considering Japan’s overall political landscape and its status under the international order, the stance is unlikely to change much. Japan is unlikely to lift the export restrictions against Korea voluntarily,” he said.

Judicial procedures concerning Japan’s export controls are currently underway at the World Trade Organization.

In June, Korea requested the formation of a panel at the WTO after the two countries failed to reach a consensus. Once the panel is created, more procedures are carried out, such as the selection of panel members, written disputes and oral arguments. It usually takes one or two years for a panel to reach a final decision.

An official from the Trade Ministry said the Korean government will not change the basic framework of its current trade policies, such as its decision to proceed with the WTO case, regardless of who replaces Abe.

“However, if there is an effort to resolve the issue in a forward-looking manner after the change of the Japanese prime minister, the situation could change,” the official said.

Although many experts shared Kim’s view that Suga will continue to embrace Abe’s stance, some expect Suga to resolve trade issues more reasonably than Abe.

“Although Suga may maintain the underlying philosophy for issues on sexual slavery by the Japanese military and forced labor, export controls are another matter,” said Song Ki-ho, a partner attorney at SoorunAsia Law, which specializes in international trade.

“At a time when trade regulations become a burden for Japan, there are calls from Japanese companies to resolve them reasonably,” he said.

This year, some Japanese media outlets reported that the hostility of the Korean and Japanese governments was adversely affecting Japanese materials companies such as Stella Chemifa and Morita.

Korean companies -- which have since tried to diversify their supply chains and develop original technologies -- have not suffered much damage.

According to survey results released by the Korea Chamber of Commerce and Industry in late July, 84 percent of the companies doing business with Japan said the export controls had caused no damage. Even among the firms that said they had caused damage, 91 percent said there had been no significant impact on corporate competitiveness.

All things aside, “the two countries are still economically important. It is important not to close the door to dialogue, but to try to resolve it actively,” Song said.

On Monday, First Vice Foreign Minister Choi Jong-kun had a meeting with Japanese Ambassador Koji Tomita over the issue of wartime forced labor as well as the export restrictions.

During the meeting, Choi urged Tokyo to promptly withdraw its export curbs and the two shared the view that relations between the two countries face a “very important period” down the road. They reaffirmed that they would explore solutions to pending issues through dialogue, the Foreign Ministry said in a press release.

By Shin Ji-hye (shinjh@heraldcorp.com)

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