Relations between South Korea and Japan have deteriorated to what is arguably their worst point to date as they dispute every inch of ground over Tokyo’s responsibility to compensate the Korean victims of forced labor during World War II.

Foreign Minister Kang Kyung-wha’s meeting with her Japanese counterpart, Taro Kono, in Paris on Friday thwarted hopes that those strained ties would mend anytime soon. 

The two top envoys wrapped up their meeting having only escalated the tension, reaffirming their differing stances on a series of rulings by Seoul’s Supreme Court in 2018, ordering Japanese companies to compensate Korean plaintiffs who were forced to work at factories and mines during Japan’s 1910-1945 colonial rule of the Korean Peninsula.

Kang urged Japan to exercise prudence in word and action in dealing with the thorny problem, in response to Kono’s earlier remark that Korean President Moon Jae-in should take primary responsibility for resolving the issue, saying the Supreme Court rulings violated international law.

“Neither side is yielding an inch, although they both acknowledge the need for problem solving,” Korea National Diplomatic Academy professor Choi Eun-mi told The Korea Herald. “The biggest problem is that Japan is shifting the responsibility to Korea for an issue that should be resolved jointly by the two countries.”

In October 2018, Seoul’s top court ordered Nippon Steel & Sumitomo Metal Corp. to pay 100 million won ($87,680) each to four plaintiffs who had been forced to work at the company during World War II. The court made similar rulings in November against another company, Mitsubishi Heavy Industries, triggering disputes between the two countries.

The Japanese firms have not complied with the court orders, prompting the victims to take legal steps toward seizure or liquidation of the companies’ assets in Korea.

“Japan is taking the problem much more seriously than Korea, as it views this as a case where Japanese companies are facing the confiscation of their assets overseas,” Lee Won-deog, a professor of Japanese studies at Kookmin University, told The Korea Herald.

The major stumbling block between the two sides is Japan’s argument that colonial-era reparations were settled by the 1965 Normalization Treaty, under which Japan provided $500 million to Korea in economic assistance rather than paying formal reparations to individuals. The Korean government maintains that a government cannot meddle in a court decision within a democratic system.

“Japan believes that the individual rights of victims of forced labor to make claims for damages were forgone under the 1965 treaty while Korea’s stance has been accepted by the international community because individual rights cannot be abridged under international law,” Sejong University professor Yuji Hosaka said in an interview with broadcaster YTN on May 26.

On May 20, the Japanese government made a request for Korea to set up an arbitration panel involving a third-country member to address the matter of wartime forced labor under Tokyo. Seoul has not responded to the call, saying it will examine the proposal. The establishment of an arbitration panel would require consent from both countries.



Realistic options for a settlement?

Former Korean envoys and politicians have suggested the establishment of a foundation to compensate forced labor victims and their families who have yet to take legal action against Japanese companies as a potential option.

The idea is that the Korean and Japanese governments, together with companies in both countries, would make monetary contributions to run the foundation if Nippon Steel & Sumitomo Metal Corp. and Mitsubishi Heavy Industries agreed to accept the Korean court rulings and compensate the victims.

Last Thursday, the Korean government denied Japanese news reports that it was considering establishing such a foundation.

The idea was initially proposed by lawmaker Kang Chang-il, chairman of the South Korea-Japan Parliamentarians’ Union, as a compromise that could benefit both countries. It would deter additional lawsuits against Japanese companies, and it would take the pressure off Korea to intervene in domestic civil litigation.

Even if Seoul pushes for the creation of the foundation, experts said Tokyo is unlikely to accept the plan.

“It would be the easy way out, but the Japanese government and companies are determined not to cooperate in fundraising or participate in such a foundation,” Lee of Kookmin University said.

For the Abe administration -- which has continually sought to downplay the brutality of Japan’s colonial rule over the Korean Peninsula -- accepting the Korean Supreme Court decisions would give it an identity crisis. “This is not a matter of money, it is a conceptual problem,” Hosaka said.

While the establishment of a foundation to benefit forced laborers may be part of Korea’s wish list of remedies to tackle this issue, international arbitration is the step that Japan would like to take.

Japan is likely to take the issue to the UN’s International Court of Justice if it fails in its attempt to establish an arbitration panel with a third-country member.

“In the event that the final conclusions between the two are different, it is not a bad idea to bring it to a third judicial body,” Lee said.

While it could take about four years for the International Court of Justice to make a ruling, the two countries could reach a settlement sooner if it seems that a ruling might be disadvantageous to one party, he added.



Retaliatory measures from Japan

The Japanese government is reportedly considering retaliatory measures, such as raising tariffs on products imported from Korea if the Japanese companies in question face the liquidation of their stocks.

“My understanding is that Japan will actually take retaliatory actions if the companies’ assets based in Korea are liquidated to pay the victims. It is not just a threat,” Lee said.

According to a survey conducted by the Federation of Korean Industries, more than half of Korean companies operating in Japan have already been adversely affected by the recent deterioration in Korea-Japan relations.

Survey data released Sunday showed that 53.1 percent of respondents said the chilled relations had taken a toll on business. They said they had difficulty finding new customers and that Japanese customers’ perception of Korean products had been adversely affected. They also said the Japanese government’s discretionary authority over Korean companies had been strengthened.

“I’m worried that our national and strategic interests could be damaged if Korea-Japan relations worsen (further) with the Korean government leaving the problem unsolved by not making certain decisions before the Japanese assets are liquidated,” Lee said.



Will a Korea-Japan summit create a breakthrough?

While it is still unclear whether South Korean President Moon Jae-in and Japanese Prime Minister Shinzo Abe will hold a summit on the sidelines of the G20 meeting June 28-29 in Osaka, analysts said a bilateral meeting would be helpful as a first step forward.

Foreign Ministry deputy spokesperson Kim Deuk-hwan said Tuesday that “nothing has been confirmed for the time being.”

Despite this, Shin Beom-chul, director of the Center for Security and Unification at the Asan Institute for Policy Studies, believes such a meeting is likely because avoiding interaction between the two leaders could further damage the countries’ relationship.

“Bilateral relations in diplomatic matters can be managed in both ‘form and content.’ … It is clear that there is a disagreement between Korea and Japan in terms of content, but if their relations in terms of form such as summit talks deteriorates, the situation could quickly intensify to the worst point,” he said.

Some critics have raised concerns that a Moon-Abe summit, if it takes place, will not be a fundamental remedy for Korea-Japan relations.

But Korea National Diplomatic Academy professor Choi Eun-mi differs. “Even if the two leaders fail to achieve tangible results, just reaching consensus on joint efforts to address the issue will lay the groundwork to overcome the current situation,” she said.

By Park Han-na (hnpark@heraldcorp.com">hnpark@heraldcorp.com)