Japan and South Korea top businesses push to leave behind a difficult history

[March 17, 2023]  By Kiyoshi Takenaka and Ju-min Park

TOKYO/SEOUL (Reuters) -Business leaders from Japan and South Korea pledged on Friday to work more closely on chips and technology, seeking to put behind years of acrimony over wartime history that have stoked South Korean public anger.

South Korean President Yoon Suk Yeol met executives from both countries in Tokyo as he makes the first visit there by a South Korean leader in 12 years. On Thursday, Yoon and Japanese Prime Minister Fumio Kishida promised a reset in relations and dined on a dish of omelette served over rice called "omurice".

The strain between the neighbours and U.S. allies had been a deepening concern for the United States, which wants to present a united front against China's rising power and threats from North Korea's expanding missile programme.

Washington has worked to improve commercial diplomacy with both countries, focusing on areas such as chips, where South Korea and Japan are critical players, in an attempt to blunt China's growing technological might.

There was "a lot of room for cooperation" between Japan and South Korea in semiconductors, batteries and electric vehicles, Yoon said at Friday's meeting.

"Both governments will do everything to create opportunities to interact and do business with each other," he said.

Business lobbies of both countries said they would together finance a "future oriented" fund of about 200 million yen ($1.5 million) for research into securing rare resources, tackling supply chain challenges and youth exchanges.

It is unclear whether those efforts will be able to escape the pull of history, given the backlash in South Korea, where many feel Japan has not sufficiently atoned for abuses during its 1910-1945 colonisation of the Korean peninsula, including the use of forced labour.

The newly announced funding project appeared to allow Japanese companies to help pay for programmes that could benefit South Korea without forcing corporate Japan - or the Japanese government - to backtrack on the long-held stance that the compensation issue was settled under a 1965 treaty.

Lee Jae-myung, the leader of South Korea's main opposition Democratic Party, said Yoon "sold out our country's pride, the victims' human rights, and the justice of history, all of that, in exchange for a bowl of omurice".

LAWSUITS

Relations between the two countries plunged to their lowest in decades when South Korea's Supreme Court in 2018 ordered Japanese firms to pay reparations to former forced labourers. Fifteen South Koreans have won such cases, but none has been compensated.

South Korea's President Yoon Suk Yeol joins Masakazu Tokura, chairman of Keidanren, the Japan Business Federation, and Kim Byong-joon, acting chairman of the Federation of Korean Industries, as they attend a Japan-Korea Business Roundtable meeting in Tokyo, Japan on March 17, 2023. PHILIP FONG/Pool via REUTERS

Companies such as steelmaker Nippon Steel Corp and industrial group Mitsubishi Heavy Industries Ltd have been a target of lawsuits by former labourers.

A turning point came this month when South Korea said its own companies - several of which benefited from the 1965 treaty - would compensate forced labourers.

Yoon's support has fallen since that announcement, with his approval rating now at 33% amid public dissatisfaction over his handling of relations with Japan, a Gallup Korea poll showed on Friday.

"Japan has maintained its position that the wartime forced labour issue has been settled," said Yuki Asaba, a professor at Doshisha University and an expert on Japan-Korea relations.

"It is likely that Japanese companies will show their sincerity by providing funds to the fund created by Japanese and Korean business groups," Asaba said. "This is the biggest goodwill gesture."

U.S. RELIEF

The better ties are undoubtedly a relief for the United States, which has pressed for reconciliation, seizing on the opportunity presented since Yoon's inauguration in May last year. His left-leaning predecessor had taken a harder stance against Japan.

Both Yoon and Kishida had acknowledged that their relationship was "at a fork in the road", U.S. Ambassador to Japan Rahm Emanuel said in a statement.

"The historic events of the last two weeks clearly show the two leaders boldly chose the path of partnership, and they are to be commended for the choice."

The strategic importance of the region was driven home on Thursday as North Korea launched an intercontinental ballistic missile to demonstrate a "tough response posture" to joint U.S. and South Korea military drills.

Japan said its self-defence forces conducted joint air drills with the U.S. military over the Sea of Japan on Friday.

U.S. Deputy State Secretary Wendy Sherman sent thanks to both South Korea and Japan for their efforts to ensure security in the Indo-Pacific, State Department spokesperson Ned Price said.

($1 = 132.9400 yen)

(Reporting by Kiyoshi Takenaka and Ju-min Park; Additional reporting by Satoshi Sugiyama and Kaori Kaneko in Tokyo and Hyunsu Yim and Josh Smith in Seoul; Writing by David Dolan; Editing by Gerry Doyle, Robert Birsel)

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