Pompeo hopes to help patch up Japan-South Korea ties

A banner campaigning for the boycott of Japanese products at a market in Seoul, South Korea, on July 12, 2019.
A banner campaigning for the boycott of Japanese products at a market in Seoul, South Korea, on July 12, 2019.PHOTO: REUTERS

WASHINGTON (BLOOMBERG, REUTERS) - A trade dispute between South Korea and Japan is threatening to spiral out of control, and both governments want the White House on their side. Their private messaging has helped spark a reaction from the United States.

US Secretary of State Mike Pompeo said he would encourage Washington’s two biggest Asian allies Japan and South Korea "to find a path forward" from their diplomatic row when he meets their foreign ministers in Bangkok this week.

"We will encourage them to find a path forward," he told reporters on Tuesday (July 30) aboard the plane en route to Bangkok. "They’re both great partners of ours. They’re both working closely with us on our effort to denuclearise North Korea. So if we can help them find a good place for each of the two countries, we’ll certainly find that important for the United States."

Earlier, a senior American official told reporters that the US is urging South Korea and Japan to reach a "standstill agreement", to give the sides more time to negotiate further.

The comments ended weeks of relative quiet from Washington, during which officials from Seoul and Tokyo tried to get clarity on the Trump administration's stance on the dispute, which has implications for global technology companies.

National security adviser John Bolton talked to his Japanese and South Korean counterparts, and Mr Pompeo will meet the foreign ministers from both countries on Thursday, according to the official.

Japan earlier this month announced restrictions on exports to South Korea of some materials used in the production of memory chips and other components vital for smartphones, laptops and servers at US tech giants such as Amazon.com and Microsoft Corp.

The move, which Tokyo justifies as a national-security action, came after tensions flared over whether Japan has sufficiently compensated Koreans who suffered under Japan's 1910-45 occupation of the peninsula.

The Asian nations in recent weeks have dispatched senior officials to Washington to meet US lawmakers and government officials to plead their case, and they have lobbied US media and business executives.

 
 
 
 

They argue that another trade war in Asia - in addition to the US-China conflict - would only further impede the global supply chain and could disrupt the production of the semiconductors and advanced screens that US companies rely on to make their smartphones and tablets.

South Korean Trade Minister Yoo Myung-hee last week sought help from the American private sector and Capitol Hill to get the White House involved in a resolution. Japanese officials are in Washington this week to explain their position, people briefed on the plans said.

It could get even uglier if Japan this week decides to remove South Korea from a so-called "white list" of trusted export destinations.

A public comment period on the matter ended last Wednesday, and if Tokyo moves forward with the plan, hundreds of products could be affected by the removal of the existing blanket approval.

Japanese media said the Cabinet will make the official decision on Friday, which would take effect three weeks later.

CRANES, GYROSCOPES

South Korea is bracing for the impact. On Monday, the government-affiliated Korea Strategic Trade Institute briefed local companies, providing a list of dozens of products that could be affected, including titanium alloys, gyroscopes and crane trucks.

Ms Yoo told reporters Monday in Seoul that US Commerce Secretary Wilbur Ross "fully acknowledges" how Japan's export curbs can affect the global supply chain, and that the US will make an effort for a quick resolution, without further elaborating.

A Korean official said it felt like the US administration and companies shared the country's concerns with Japan's move. A spokesman for Mr Ross declined to comment.

According to a person familiar with the matter, Ms Yoo even pitched to her US counterparts the inclusion of the issue in the bilateral trade talks with Tokyo. Those negotiations are set to resume at the ministerial level between US Trade Representative Robert Lighthizer and Japanese Economy Minister Toshimitsu Motegi later this week.

Ms Seo Jee-yeon, a spokesman for the trade ministry, declined to comment.

Stable relations between Japan and South Korea form a pillar of US influence in Asia - the world's fastest-growing region where North Korea's nuclear arms threaten regional peace and China's territorial claims disrupt order from the South China Sea to the East China Sea.

Both Japan and South Korea host a total of more than 80,000 American troops, while US carriers routinely ply the waters for joint naval operations with the allies.

Ms Wendy Cutler, vice-president at the Asia Society Policy Institute, applauded the US move on Tuesday.

"It's encouraging that the administration is finally getting involved," she said. "A standstill could be a useful first step to de-escalate tensions."

Ms Cutler said an example of the impact of the US influence is when then President Barack Obama in 2014 organised a three-way meeting with Japanese Prime Minister Shinzo Abe and then South Korean President Park Geun-hye to improve relations.

Five of the US' biggest tech industry groups, in a letter to the Japanese and Korean trade ministers, said the dispute could cause "long-term harm to the companies that operate within and beyond your borders and the workers they employ".

US President Donald Trump earlier this month said he got a call from South Korean President Moon Jae-in, who asked him to get involved on his behalf.

"I said, how many things do I have to get involved in? Maybe if they would both want me to, I'll be - it's like a full-time job, getting involved between Japan and South Korea," Mr Trump said on July 19. "But if they need me, I'm there, hopefully they can work it out but they do have tension."

Mr Evan Medeiros, who served on Mr Obama's National Security Council, recounted in a Washington Post op-ed the quiet intervention by Mr Obama in what he called a low point in the Japan-South Korea relationship.

"Washington is the only actor both sides will listen to."