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Today, Japan declared its decision to reinstate South Korea as a preferred nation with fast-track trade status, effectively ending a prolonged four-year economic row that had exacerbated their bitter historical disputes. The reinstatement is set to commence on July 21, marking a crucial turning point in the relationship between the two countries.
Trade Minister Yasutoshi Nishimura revealed during a press briefing that Japan and South Korea have also reached an agreement to establish a comprehensive framework for reviewing and monitoring the systems as required. This move reflects a concerted effort by both nations to restore economic cooperation and foster bilateral ties.
The swift improvement in relations between Japan and South Korea is closely tied to their deepening three-way security collaboration with Washington, which aims to address the escalating regional threats posed by North Korea and China. This strategic alignment has paved the way for a renewed focus on strengthening economic links between the two Asian nations.
The trade dispute, which had spanned over four years, initially began in July 2019 when Japan removed South Korea from its “white list” of countries enjoying expedited trade approvals. The deterioration in ties stemmed from disagreements over compensation for Japanese wartime actions, with South Korean court rulings in 2018 ordering Japanese companies to provide restitution for abusive treatment and forced labour inflicted upon Korean workers during World War II, when the Korean Peninsula was under Japanese occupation.
Japan retaliated by imposing stricter trade controls on key chemicals utilised by South Korean firms in the production of semiconductors and displays. Consequently, South Korea lodged a complaint with the World Trade Organization and rescinded Japan’s preferred trade status.
Since March, the relationship between Japan and South Korea has experienced a rapid improvement, largely driven by the proactive efforts of South Korean President Yoon Suk Yeol’s administration to resolve the disputes arising from compensation for wartime forced labourers. President Yoon’s visit to Tokyo for discussions with Prime Minister Fumio Kishida led to a mutually beneficial agreement to rebuild the countries’ security and economic ties.
Following these negotiations, South Korea withdrew its complaint at the WTO, and Japan reciprocated by removing export controls on key chemicals. Subsequently, South Korea reinstated Japan’s preferential trade status, marking a significant milestone in their reconciliation.
Concurrently, the Japanese government has been actively seeking South Korea’s understanding regarding its plan to release treated radioactive water from the tsunami-ravaged Fukushima Daiichi nuclear power plant into the sea. This contentious proposal has encountered substantial opposition from South Korea, neighbouring countries, and local fishing communities due to concerns over safety and reputational damage.