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November 10, 2020


JAPAN/SOUTH KOREA: Asset seizures remain sticking point as talks resume

BY Tobias Harris

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Park Jie-won, director of South Korea’s National Intelligence Service (NIS), traveled to Tokyo this week for meetings with Prime Minister Yoshihide Suga, Liberal Democratic Party (LDP) Secretary-General Toshihiro Nikai, and other senior Japanese officials. Park’s visit is the first high-level bilateral meeting since Suga’s accession to the premiership, and Suga’s willingness to meet with Park suggests a new effort on the part of both governments to repair their fraying ties.

However, renewed diplomatic efforts are still unlikely to succeed as long as South Korean courts continue to move towards liquidating assets seized from Japanese firms. Park’s visit coincided with the end of a two-month notification period on 10 November, after which the Daejeon District Court can proceed with the sale of assets seized from Mitsubishi Heavy Industries (MHI) to satisfy a 2018 Supreme Court ruling that the company owes compensation to Korean plaintiffs. This latest step, following a similar process already in motion with Nippon Steel, threatens to derail diplomatic talks, as Suga has warned that liquidating seized assets would trigger swift Japanese retaliation.

Nevertheless, the first two months of Suga’s administration have seen more high-level meetings between formal and informal envoys than during former Prime Minister Shinzo Abe’s final year in office. In mid-October, Takeo Kawamura, an LDP lawmaker who is the secretary-general of the Japan-Korea Parliamentarians’ Union, visited to Seoul for talks with senior political and business leaders. At the end of October, the Asia-Pacific bureau chief at the Japanese Ministry of Foreign Affairs traveled to Seoul for talks with his South Korean counterpart for the first time since February that were focused not only on the forced labor dispute and the export controls Japan introduced in retaliation but also issues related to the relaxation of travel restrictions. These meetings, followed by Park’s high-level visit to Tokyo, suggest that the two governments are trying to stabilize the relationship.

Neither government, however, has dropped its most fundamental demands. President Moon Jae-in’s administration will not – and cannot – intervene in the judicial system to prevent asset sales or block courts from ruling on similar pending lawsuits. The Suga administration, meanwhile, views the court cases as a threat to the integrity of the 1965 treaty – in which all issues related to compensation were deemed “settled completely and finally” – and has been unwilling to compromise if it means that the principle that Korean individuals can seek compensation from Japanese defendants is established. Tokyo has therefore rejected proposals from Moon’s Blue House in which the South Korean government would compensate Japanese businesses for payments to Korean plaintiffs. With the Blue House unwilling to intervene in the judicial system, a move by Korean district courts to liquidate Nippon Steel’s and MHI’s assets could mean another round of tit-for-tat retaliation by Tokyo and Seoul.

If Tokyo and Seoul can avoid another round of retaliatory action, Joe Biden’s victory in the US presidential election raises the prospect for greater US involvement in the bilateral dispute in 2021. The Trump administration has been relatively uninvolved except to pressure Seoul to stay in its intelligence sharing agreement with Tokyo, but the president-elect has prioritized strengthening US alliances in the region and as vice president Biden worked to bolster ties between Japan and South Korea.

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