released January 15, 2021

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Tensions between two nations could pose threats to regional trade, stability
Seoul-Tokyo ties were at a low ebb in 2019, as disputes rooted in Japan's wartime colonization of the Korean Peninsula resurfaced with a magnitude that damaged the two neighbors' diplomacy as well as their economic and trade relations.
Japan and the Republic of Korea's relations have deteriorated since October 2018 when the ROK's top court ordered a Japanese firm to pay compensation for the forced labor of Koreans during Japan's 1910-45 colonial rule. Disagreements intensified and extended to other fields this year, not only fraying bilateral ties but also threatening regional stability and global economic development.
In July, Japan imposed tighter regulations on exports to the ROK of three materials critical for the production of semiconductors and flexible displays, citing Seoul's lax control system of strategic items that can be diverted for military use.
Japan also removed the ROK from its list of trusted trading partners. Under the new rules, Japanese companies are required to apply for an individual license to export materials to the ROK, a process that can take up to 90 days.
The ROK views the Japanese moves as retaliation against its court ruling. In response to export curbs, Seoul decided in August to terminate the bilateral military pact, the General Security of Military Information Agreement, or GSOMIA, saying exchanging sensitive military information with an untrustworthy partner is not possible.
Many analysts said that the dispute between Japan and the ROK is not just about trade but about an undercurrent of tensions stemming from Japan's wartime atrocities as well as a long-running territorial dispute between Tokyo and Seoul.
Lyu Chao, a researcher of the Liaoning Academy of Social Sciences, said the grudge between Seoul and Tokyo goes back more than a century when the Japanese colonized the Korean Peninsula. Their animosity intensified during World War II when Japan conscripted over 670,000 Koreans as forced laborers.
"Despite the decades that have passed, the Japanese government's attitudes towards war crimes is deeply resented by its neighboring countries. Therefore, as a result of the unresolved historical disputes and unsettled war-torn sentiments, new problems will still emerge today," Lyu said.
Bilateral ties have become further strained following the two neighbors' measures and countermeasures. Antagonism has grown between the two peoples, with the targeting of exports becoming an outlet for the expression of national sentiment. The Japanese are boycotting K-pop singers' albums and refusing to watch ROK TV dramas, while people in the ROK are campaigning against purchases of Japanese cars and electronics.

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