South Korea and Japan to drop trade dispute as security concerns trump history

Japan and South Korea agreed to drop an almost four-year-old trade dispute on high-tech materials on Thursday, an emphatic sign they aim to rebuild a relationship strained by history and work together against deepening security threats.

The announcement came during Yoon Suk Yeol's visit to Japan on Thursday, the first for a South Korean president in 12 years, as the two neighbours look for common ground in the face of frequent North Korean missile launches.

Japan will remove curbs on its exports to South Korea of critical materials for smartphone displays and chips, while Seoul will drop a World Trade Organization (WTO) complaint against Tokyo, officials from both sides said.

Tokyo imposed the curbs in 2019 as tensions over a decades-old row with Seoul deepened. Thursday's announcement is likely to be seen as a sign of Yoon and Japanese Prime Minister Fumio Kishida's desire to present a united front against growing regional tension and co-operate on supply chains. In doing so, they look to leave behind years of animosity sparked by Japan's 1910-1945 occupation of the Korean peninsula.

The urgency of regional security and the threat posed by North Korea were underscored in the hours before Yoon's arrival, when the North fired a long-range ballistic missile that landed in the sea between the Korean peninsula and Japan.

Yoon has said that he expects to "invigorate" security co-operation and the two leaders are preparing to confirm the restart of a bilateral security dialogue that has been suspended since 2018, according to Japanese broadcaster NHK.

Tokyo and Seoul are also expected to revive "shuttle diplomacy" of regular visits between the leaders, according to a Yomiuri daily report citing Japanese government sources.

Thaw in relationship

Still, Japan remains cautious about immediate improvements in relations, with a Japanese government official who requested anonymity saying that "Japan and South Korea relations are looking up, but it's still a step-by-step process."

Yoon also faces skepticism at home. In a poll by Gallup Korea published Friday, 64 per cent of respondents said there was no need to rush to improve ties with Japan if there was no change in its attitude, and 85 per cent said they thought the current Japanese government was not apologetic about Japan's colonial history.

Despite the strain, economic ties are strong. The two were each other's fourth-largest export markets in 2021, according to the IMF. Japanese exports to South Korea totalled $52 billion US, while South Korean exports totalled $30 billion US, the data showed.

In a fresh reminder of the long-running tensions, two South Korean victims of wartime forced labour filed a lawsuit, seeking compensation from Japanese company Mitsubishi Heavy Industries 7011.T, their representatives said on Thursday.

Relations between the two countries, which have been strained over the wartime labour issue as well as disputed islands, and Korean girls and women forced to work in Japanese wartime brothels, made headway last week when Seoul announced a plan for its companies to compensate former forced labourers. The victims who filed the lawsuit reject that plan.

Kishida has welcomed the labour compensation move and spoke of hopes of "bolstering relations" with Yoon's visit.

Japan's biggest business lobby, Keidanren, said it and its South Korean counterpart, the Federation of Korean Industries, agreed to launch foundations aimed at "future-oriented" bilateral relations.

Park Hong-keun, floor leader of South Korea's main opposition Democratic Party, said Yoon's visit should not stop at "his trip down memory lane," and asked Yoon to earn a true apology and resolution from Japan on forced labour issues during his trip.

The two leaders also met in November on the sidelines of the summit of the Association of Southeast Asian Nations in Cambodia.

South Korea and Japan at the time agreed to exchange real-time intelligence on North Korea's missile launches, which experts say will help both countries better track potential threats.

Japan said the "strategic challenge posed by China is the biggest Japan has ever faced" in a defence strategy paper released in December. Tokyo worries that Russia's invasion of Ukraine has set a precedent that will encourage China to attack self-ruled Taiwan.

China's coast guard entered waters around disputed East China Sea islets on Wednesday to counter what it called the incursion of Japanese vessels into Chinese territorial waters.