Fall 2018 represented a turning point in Japan-South Korea ties as an uneasy truce between the two countries gave way to escalating tensions. South Korea’s Supreme Court ruled that two Japanese companies must compensate 10 South Koreans forced into labor during Japan’s occupation of the Korean Peninsula from 1910 to 1945. South Korea’s decision to dissolve the foundation built to implement the 2015 “comfort women” agreement between Seoul and Tokyo, though not unexpected, also added to the general atmosphere of growing tension. As 2018 came to a close, tensions flared as Japan alleged a South Korean Navy destroyer locked onto a Japanese Maritime Self-Defense Force plane with a radar used for targeting weapons – a claim Seoul vigorously denies. On the Japan-North Korea front, Prime Minister Abe’s willingness to meet Kim Jong Un characterized Tokyo’s response to the Trump-Kim summit amid increasing uncertainty concerning Japan’s role in talks on denuclearization of North Korea, but with no real change of Japan’s North Korea policy.

Japan responds to the Trump-Kim summit

Notwithstanding President Trump’s declaration that “there is no nuclear threat from North Korea,” the Trump-Kim summit meeting in June had little impact on Japan’s perception of North Korea. In its 2018 Defense White Paper published on Aug. 28, 2018, Japan assessed that North Korea’s nuclear and missile development programs posed an “unprecedentedly serious and imminent threat.” The same document advocated Japan’s need to “drastically improve Japan’s ballistic missile defense capabilities.” Allocated in the FY 2018 budget, in December 2017 the Abe administration approved the plan to introduce the Aegis Ashore weapons system to be operated by the Ground Self-Defense Force, while seeking to strengthen missile defense cooperation with the United States. In sharp contrast to South Korean measures taken to defuse military tensions with the North, dialogues and engagement with Pyongyang this year did not change any of Japan’s defense policy features or practices.

After the Trump-Kim summit, however, the Abe administration found itself facing the shifting geopolitics and patterns of diplomatic activities surrounding the Korean Peninsula with little room for Japan to play any major part. In September and November, South Korean President Moon Jae-in and US Secretary of State Mike Pompeo each visited Pyongyang to follow up on their countries’ summit meetings with Kim Jong Un held in 2018. The US-North Korea and South-North Korean dialogues changed the regional political dynamics of Japan’s overall foreign policy, in which Tokyo’s hardline approach to Pyongyang was suddenly at odds with those of the United States and South Korea, not to mention those of China and Russia.

In the final months of 2018, Japan shifted its position of relying primarily on pressuring Pyongyang. Seoul and Washington supported that shift. On Sept. 10, South Korea’s National Intelligence Director Suh Hoon, immediately after his trip to Pyongyang as a member of the South Korean special delegation to meet Kim Jong Un, visited Tokyo and explained the results of inter-Korean interactions to Prime Minister Abe Shinzo. During the meeting, Suh shared President Moon’s belief that Abe’s role was “more important than ever regarding the issue of denuclearization and peace on the Korean peninsula,” while Abe expressed his desire to meet Kim Jong Un in person. On Sept. 25 in a speech at the United Nations General Assembly, Abe stated, “Breaking the mold of mutual distrust with North Korea, I am prepared to make a fresh start and come face-to-face with Chairman Kim Jong Un.” In October, Secretary of State Pompeo brought up the issue of Japanese nationals abducted by North Korea during his meeting with Kim. At the request of Abe, Pompeo also delivered the message to Kim that the Japanese prime minister would be interested in meeting with him.

Prime Minister Abe’s willingness to meet Chairman Kim signaled Japan’s openness to employ dialogue along with pressure in its dealings with Pyongyang. Tokyo’s overture to Pyongyang toward the goal of normalizing diplomatic relations, however, does not signal a fundamental shift in Japan’s policy on North Korea. While showing its willingness to have a summit with Kim Jong Un, Japan maintained a policy of seeking to resolve comprehensively the North’s nuclear and missile development programs and the abductee issue. In November, Abe and US Vice President Mike Pence reconfirmed the need to maintain sanctions placed on Pyongyang, even while Prime Minister Abe sought support from other Asian countries on the sidelines of ASEAN Plus Three meeting held in Singapore for his willingness to realize a Japan-North Korea summit.

North Korea, for its part, did not show much eagerness toward a summit with Japan either. Reportedly, Kim Jong Un did not give any clear positive reply when Secretary Pompeo urged Kim to meet Abe. According to Japan’s major daily Asahi Shimbun, in late October, Ishikawa Shoichiro, Japan’s head of the Secretariat of the Headquarters for the Abduction Issue met Song Il Ho, North Korea’s ambassador for normalizing relations with Japan in Mongolia, but failed to narrow down their differences. Tokyo continued to emphasize the need for resolving the abductee issue first before any assistance, while Pyongyang pushed for compensation for Japan’s colonial rule of Korea, 1910-1945.

Japan’s responses to the Trump-Kim summit in Singapore showed that Pyongyang-Tokyo bilateral dynamics remained more or less the same as during the Six-Party Talks negotiations years ago. That is, signs of progress in Japan-North Korea dialogue in 2018 were byproducts of the political momentum created by Presidents Trump and Moon, rather than the Japanese and North Korean pursuit of independent strategies and initiatives toward the other. It would not be surprising if the Abe administration stops calling for a summit with Pyongyang if Washington drops its efforts for negotiations with Kim Jong Un.

Seoul-Tokyo interactions amid bubbling tensions

October 2018 marked the 20^th anniversary of the landmark partnership declaration between then-Japanese Prime Minister Obuchi Keizo and then-South Korean President Kim Dae-jung in 1998. The joint anniversary passed without a significant commemoration, however. On the one hand, there are reasons to be optimistic about the promise of “future-oriented” Seoul-Tokyo bilateral relations. Compared to the years between 2012 and 2015 – when leaders of the two countries did not hold a summit under the leadership of then-President Park Geun-hye and Prime Minister Abe – the two countries did have a range of bilateral engagements between September and December. President Moon’s decision to send National Intelligence Service Director Suh Hoon to visit Prime Minister Abe prior to his summit with Kim Jong Un was a clear sign of bilateral coordination. Around the same time, Abe met South Korea’s Prime Minister Lee Nak-yeon on the sidelines of the Eastern Economic Forum in Vladivostok on Sept. 11. On Sept. 25, Abe and Moon met in New York on the sidelines of the UN General Assembly, while Foreign Ministers Kono Taro and Kang Kyung-hwa also met. During these meetings, Seoul and Tokyo reportedly discussed a range of bilateral issues, including North Korea and other history issues, including the “comfort women” issue.

By December, bilateral relations were headed downhill over bubbling tensions. Japanese and Korean parliamentarians met in Seoul and had a 40-minute meeting with President Moon, which came after a South Korean court ruling on forced laborers during Japan’s colonial rule. Japanese parliamentarians expressed concerns to their South Korean counterparts. Notably, Prime Minister Abe declined to follow the longstanding tradition of sending a congratulatory message to the joint parliamentary meeting.

Until this fall, Japan-South Korea tensions had bubbled beneath the surface, but more pressing issues like uncertainty in the US-Japan and US-South Korea alliances following the election of US President Donald Trump and last year’s high-level diplomatic engagement with North Korea – coupled with various domestic pressures on both Prime Minister Abe and President Moon –largely overshadowed the South Korea-Japan relationship. Perhaps because these factors completely consumed the energies of the two governments, or because they encouraged the governments to maintain stability in Japan-South Korea relations to avoid heightening risks in an uncertain time, bilateral tensions remained relatively low profile throughout the first year and a half of the Trump administration.

Many of these key stabilizing incentives changed this fall. Prime Minister Abe and President Trump agreed on Sept. 26 to launch negotiations on a bilateral US-Japan trade agreement, shielding Japan from potential US tariffs. Together with Abe’s re-election as the leader of Japan’s ruling party six days prior, this development relieved tremendous political pressure on Abe. In October, Abe and Chinese President Xi Jinping held a successful summit that marked warming Japan-China ties. Thus in the space of two months, Abe gained greater political capital, certainty, and options both at home and abroad.

On the South Korean side, inter-Korean engagement became more firmly established as President Moon visited Pyongyang for his third inter-Korean summit of the year. Japan’s largely unenthusiastic response to the inter-Korean process as well as lack of major movement in Japan-North Korea ties also limited the utility Japan and South Korea could find in cooperating with each other on North Korea issues. Moon faced pressures at home, too, as public discontent in South Korea with the economy and other domestic challenges mounted. The net result of these developments in Japan and South Korea was to reduce the incentives for both countries to maintain stability in South Korea-Japan ties to focus effectively on alliance and North Korea challenges.

Rising sun flag, court ruling on forced laborers, and radar lock-on incident

These shifts in the underlying incentives for Korean and Japanese leaders coupled with three major disputes this fall led to heighten tensions. It started with South Korea’s hosting of an international naval fleet review at Jeju Island from Oct. 10-14. Domestic concern rose over the expectation that Japan’s warships would fly its classic military flag – “rising sun” flag—closely associated in South Korea with the Japanese empire that occupied Korea and even compared by some Korean commentators to the Nazi swastika flag. This prompted South Korean diplomats to request that Japan not fly the flag. Japanese officials quickly objected, saying that flying the flag was required by Japanese domestic law and that Japan had been able to fly it during South Korea’s two previous fleet reviews in 1998 and 2008. The increasingly high-profile dispute inflamed public opinion across the Korean political spectrum, with the left-leaning Hankyoreh newspaper calling Japan’s position “false victimization” and the conservative Chosun Ilbo warning that “Korean public opinion is turning hostile . . . scores of people have complained on the [Korean presidential office’s] website.”

Within the respective governments, Korean and Japanese officials sought to balance the domestic pressures and the desire to resolve the issue before it escalated further. “Japan must delicately consider the effect that Rising Sun Flag has on the Korean people,” said South Korean Prime Minister Lee Nak-yeon on Oct. 1. But by Oct. 5, both sides had concluded the only viable solution was for Japan to withdraw from the fleet review and participate in other related events where the flag would not be an issue. “Japan was in a position where it could neither ignore our request for it to refrain from flying the rising sun flag at the International Fleet Review at Jeju nor agree to not fly the flag,” a South Korean official explained to Hankyoreh, “So we reviewed the option of Japan participating in the Western Pacific Naval Symposium and other events without sending naval vessels to the fleet review.”

The bitterness of the fleet review dispute presaged an even more significant – and lasting – Japan-Korea dispute shortly thereafter. In a pair of rulings – one in late October and the other in late November – the South Korean Supreme Court held Mitsubishi Heavy Industries and Nippon Steel & Sumitomo Metal liable for employing Korean forced laborers during Japan’s occupation of Korea, ordering the companies to compensate the laborers. The rulings exposed the Japanese companies to potential seizures of their Korean assets; lawyers representing former Korean laborers filed a petition in court Jan. 2 for seizure of Nippon Steel’s 2.34 million shares in a joint venture with Korean steelmaker Posco.

The Japanese government has responded to the forced labor decisions strongly and at a high level. Japanese Foreign Minister Kono Taro said the decision was “extremely regrettable and totally unacceptable” and warned that it “completely overthrows the legal foundation of the friendly and cooperative relationship that Japan and the Republic of Korea have developed since the normalization of diplomatic relations in 1965.”  Japan’s longstanding position has been that all South Korean legal claims for compensation were settled by the 1965 normalization treaty; accepting the South Korean court’s decision could set a precedent that opens up Japanese companies to further claims.

The South Korean Foreign Ministry responded with a statement that the Korean government was “very disappointed by Japanese Foreign Minister Taro Kono’s remarks” and “made it clear that respecting the decision of the judicial branch is the foundation of democracy.”  Korean statements have also sought to demonstrate that the Korean government is trying to “deal with the issue wisely so that the ruling does not cause an obstacle to the future-oriented development” of Korea-Japan relations. South Korean Foreign Minister Kang Kyung-hwa and Foreign Minister Kono spoke on the phone on Dec. 12, according to a South Korean Foreign Ministry statement, and “agreed to continue close communications” while Kang “urged the Japanese side to respond prudently.”  On Dec. 14, President Moon told a delegation of Korean and Japanese parliamentarians that “[the Supreme Court] concluded that while the Treaty on Basic Relations between the Republic of Korea and Japan is valid, the right of individual workers to claim damages from Japanese businesses was not also extinguished.” Legal proceedings over implementing the two forced labor decisions are likely to continue and escalate, with the Japanese government even threatening to take the case to international arbitration. This case has great potential to inflame bilateral tensions throughout 2019.

In November, the South Korean government unilaterally decided to close the Reconciliation and Healing Foundation, the organization funded by Japan to compensate “comfort women” survivors under the terms of a 2015 Korea-Japan agreement on the issue. The move was not unexpected given the unpopularity of the agreement in South Korea and the resignation of all of its civilian board members. It therefore did not rise to the level of a major dispute and did not lead to the escalation of tensions seen in the fleet review and forced labor cases.

A final bilateral dispute that emerged in December compounded the steady escalation of Japan-Korea tensions. In the week before Christmas, Japan accused a South Korean Navy warship of locking onto a Japanese patrol aircraft with its fire control radar. This radar is used for targeting weapons and can be considered a prelude to firing. The Japanese government characterized it as “an extremely dangerous act that could cause an unexpected situation.” The Korean Ministry of National Defense responded that “our military carried out a normal operation for the humanitarian rescue operation, and it has never taken any step that would make the Japanese side feel threatened.”

The two sides continued to vigorously debate the facts of the incident. South Korea’s military said its warship was only using an optical camera, not a fire control radar, in the course of a routine operation in international waters to track a North Korean vessel. On Dec. 28, the Japanese government released a 13-minute video of the incident filmed from its patrol aircraft to buttress its claims that the South Korean warship targeted its fire control radar at the aircraft and that the Japanese aircraft acted in accordance with international law. A Korean Defense Ministry spokesperson responded that “The video material made public by Japan contains only footage of the Japanese patrol plane circling above the surface of the sea and the (audio) conversation between the pilots and it cannot by common sense be regarded as objective evidence supporting the Japanese claims,” and that “there’s no change to the fact that our military did not operate tracking radar on a Japanese patrol plane.” Prime Minister Abe reiterated Tokyo’s position in a television interview and urged South Korea to come up with measures to prevent something similar from happening in the future.

There was no clear end in sight to the radar dispute by early January, with the Korean Defense Ministry issuing a statement calling on Japan to “apologize for carrying out a threatening action by flying at low-altitude against our vessel which was carrying out a humanitarian rescue.”  Korean officials indicated that South Korea was preparing to release a video identifying problems with the Japanese video and seeking answers from Tokyo.

Pragmatic Japan-South Korea economic ties

The South Korea-Japan economic and trade relationship remained largely pragmatic and shielded from bilateral political developments, as has historically been the case. South Korean exports to Japan rose 9.1 percent year-on-year according to Korean Customs data from November, reflecting a broad surge in Korean exports globally. Japanese exports to South Korea declined 8.9 percent this year, according to the Financial Times, part of a pattern of falling Japanese exports across the region. Japanese foreign direct investment pledges for South Korea fell nearly 30 percent, a reduction Korea’s Yonhap News Agency credited to “Japanese companies increasingly shift[ing] their focus to China and Southeast Asian nations.”  The two countries remained significant trade and investment partners, with shifts largely attributable to economic dynamics.

One sore spot in the Japan-South Korea trade relationship, the status of Japanese exports to Korea from the Fukushima region, continued to fester. Citing concerns about radiation due to the 2011 earthquake and nuclear disaster in Fukushima, Korean authorities had imposed import bans and testing requirements on Japanese seafood. South Korea lost the case in the World Trade Organization in February but promised to appeal. In early December, two Korean retailers decided to stop selling a brand of ramen noodles from Fukushima after Korean consumers raised concerns.

Internationally, both countries continued negotiations for the Regional Comprehensive Economic Partnership (RCEP) agreement. China was also the key driver of a push in recent months to accelerate negotiations on a trilateral China-Japan-Korea free trade agreement in a bid to offset disruptions caused by trade frictions with the United States. Korean and Japanese trade negotiators joined Chinese counterparts in Beijing on Dec. 6-7 for the fourteenth round of trilateral trade talks.

However, diverging economic interests continued to present challenges in both the RCEP talks and the trilateral negotiations with China. “The three countries each have different sensitivities due to their different industrial structures,” a Korean trade official explained to Business Korea, “China is sensitive to Japanese manufacturing and Japan is sensitive to China’s agricultural products and Korea is sensitive to Chinese agricultural products and Japanese manufacturing. So it’s not easy to find a breakthrough.”

In the United States, South Korea hoped to gain competitive advantages over Japan from its bilateral free trade agreement, having resolved trade disputes with the Trump administration before Tokyo. But these efforts proved complicated. Although the US-Korea trade deal allowed Korean steelmakers continued US market access without tariffs while Japanese producers faced high tariffs, a significantly lower US import quota compared to previous years limited the benefits for South Korea while Japanese steelmakers were able to sell high-tech pipes that are critical for the US oil industry and hard to replicate in the United States. In Europe, Korean trade negotiators were reportedly keen to secure a post-Brexit trade deal with the United Kingdom before China and Japan, hoping this would result in better terms and a Korean competitive advantage.

One area that has remained insulated from geopolitics thus far but may be vulnerable to bilateral Japan-South Korea tensions and developments with North Korea is tourism. Korea Tourism Organization statistics show Japanese visits to South Korea increased significantly year-on-year this fall, with a 12.7 percent increase in September, 61.7 percent for October, and 40.5 percent for November. It was not clear whether geopolitical factors, such as a reduction of Korean Peninsula tensions since 2017, contributed to the growth in Japanese tourism. South Korean visits to Japan, on the other hand, declined by 13.9 percent in September and 8 percent in October according to JTB Tourism Research and Consulting Co. This continues a pattern of declining Korean tourism to Japan since July, though visits increased in May and June. There is little evident correlation between the state of the South Korea-Japan political relationship and the recent tourism numbers, though this is a sector worth observing closely if bilateral tensions continue to escalate over the coming months.

Cultural ties that bind

Member of Japan’s Upper House and former wrestler Antonio Inoki visited North Korea for the 70^th anniversary of the founding of North Korea in September. During his visit, Inoki met Vice Chairman of the Korean Worker’s Party Ri Su Yong who told him that North Korea plans to attend the 2020 Tokyo Olympics, reported Asahi Shimbun. Inoki’s connections with North Korea began with Rikidozan, one of the most famous wrestling heroes in Japan and an ethnic Korean born in North Korea who scouted him in 1960 in Brazil. Inoki’s visits to Pyongyang and his attempts at “sports diplomacy” have not been without controversy within Japan’s political circles.

As part of its sanction measures against North Korea, in principle Japan bans North Korean nationals’ entry into the country. In November, however, the Japanese government approved North Korea’s Minister of Physical Culture and Sports Kim Il Guk’s entry into Japan. Kim visited Japan to represent North Korea at a general assembly of the Association of National Olympic Committees. According to Chief Cabinet Secretary Suga Yoshihide, Tokyo made an exception this time on the ground that “discrimination according to nationality is prohibited in the international sports community.”

A K-pop boy band called Bangtan Boys (known as BTS) was embroiled in a Japan-South Korea history controversy over a T-shirt that a member had worn, prompting Tokyo-based TV Asahi to cancel the group’s performance on its show “Music Station.” The T-shirt has two photos – the celebration of Korean independence from Japan’s colonial rule and the atomic bomb exploding over Japan – along with the words, “patriotism,” “liberation,” “our history,” and “Korea.” Many Japanese and some South Koreans criticized the insensitivity of the T-shirt’s images, while others were unhappy with TV Asahi’s decision to cancel the group’s appearance over a T-shirt. South Korean media outlets expressed their suspicions that the cancellation had to do with South Korea’s recent ruling on forced laborers during Japan’s colonial rule. Despite the controversy, the group’s Japanese fans filled the Tokyo Dome concert singing along in Korean, while tickets for BTS’ remaining concerts in Japan are sold out as well. Due to the global popularity of the BTS, the scandal received international media attention, in conjunction with the worsening of Seoul-Tokyo relations in the recent months.

Looking ahead to 2019

Japan and South Korea enter the year 2019 with two major, escalating disputes: the South Korean court ruling on forced labor and the alleged radar lock-on incident. The high-profile nature of the disputes constrains both governments, limiting avenues for de-escalation and saving face. As Korean lawyers seek to implement the forced labor cases and South Korea and Japan continue their public battle over the radar claim, these two disputes pose great risks of spiraling Japan-South Korea tensions out of control in the coming months.

With relatively small exceptions, neither President Moon nor Prime Minister Abe got publicly involved in these disputes. Statements came from high levels of both governments, but the two countries avoided turning the disputes into a war of words between the leaders. Should this occur, it could significantly escalate the disputes and further limit the options for resolution.

The gradual reduction of incentives that may have encouraged both governments to keep the bilateral relationship stable – particularly major uncertainties in US alliance relationships, North Korea policy, and domestic politics – bears close observation. The relative significance of these stabilizing incentives to Tokyo and Seoul may determine whether this fall’s series of unfortunate events leads to further escalation in the months ahead – or provides the impetus for a diplomatic resolution.