Column  Foreign Affairs and National Security  2014.02.06

Japan and South Korea Can Fill Each Other's Needs

Relations between Japan and South Korea have never been so dismal that the two countries' heads have refrained from any direct communications. At the end of the last year, South Korean President Park Geun-hye levied strong criticism at Prime Minister Abe for his visiting the Yasukuni Shrine.

Around the same time, Japan's Ground Self Defense Force provided ammunition to the South Korean military, when both were serving in the U.N. peace keeping mission in the Republic of South Sudan. This, too, became an issue between the two countries, even though it was a small gesture of cooperation on Japan's part, as every military mission there faced danger as the civil war worsened. The South Korean government spokesperson, however, complicated the situation by explaining that although Japan had provided ammunition to the South Korean forces just in case it might be needed, there was, in fact, no shortage of ammunition. In the midst of what was a confusing situation, the South Korean Defense Ministry felt compelled to state that Japan should forget that the South Korean military had made any request to Japan's Self Defense Force that it supply any ammunition.

Japan and South Korea have deep economic relations that benefit both countries. Just to look at bilateral trade, by way of example, last year, South Korea imported nearly $ 60 billion from Japan, equaling about 10 percent of its total imports.

In contrast, South Korea's exports to Japan are under $35 billion, far less than South Korea's imports from Japan. This disparity in bilateral trade has led some in Japan to argue that although South Korea needs Japan, Japan does not need South Korea and, going even further, that South Korea would face difficulties if Japan were to stop exporting to it. This argument is too in-ward looking.

The principal products that South Korea imports from Japan are, first, steel plates, second, integrated circuits, third, plastic products, followed by devices for manufacturing flat displays, semiconductor devices, alloy iron and used iron, steel and other steel products, vessel and marine structures and parts, glass products, and basic oil particles. Most of these are not used in daily life and they are raw materials, parts and equipment. (This is according to Japan External Trade Organization 2009 "Basic Data on Japan-South Korea Economic Relations" and the trend has not changed since then even though the numbers have changed somewhat.)
Although it is true that Japan supplies goods and equipment that South Korea needs, this is only one part of the bilateral trade relationship. Japan imports from South Korea and each needs the other. The two countries can help satisfy the other's respective needs.

Furthermore, the relationship between them cannot be measured solely in terms of each other's needs. South Korea is able to import from any country, but, in considering quality and price, it has chosen to import from Japan. It does so because that is to its economic advantage. Japan exports to South Korea because it is profitable.

As a threshold matter, the principal actors engaged in bilateral trade are the two countries' private sector enterprises - and they know best what to import and export. If the bilateral trade relationship were based on or related to development assistance or to industrial development, then the circumstances driving trade could be different. Here, the companies themselves decide what products are most lucrative and then they make the deals. The cumulation of these individual decisions is what results in import/export statistics. Thus, even if these statistics do not reflect a trade relationship in balance, all of the parties involved in that relationship benefit from bilateral trade.

Furthermore, in the current environment, which reflects the increasing globalization of economic relationships, whether a particular bilateral trade relationship has a surplus or a deficit is largely meaningless. South Korea and Japan, as well as China, the EU, and the U.S., engage in trade for reasons of profit. In these activities, that there are partial trade imbalances does not have much significance. South Korea, for example, itself has a trade deficit with Japan, but it enjoys a big surplus with China.

Everyone is well aware of these fundamentals of global trade. Political issues that resonate with national sentiments tend to make news and attract attention, but it is important to realize that both countries benefit from each other and this should be treasured.

For a long time, Japan and South Korea have filled one another's needs. Japan imported knowledge and technology from Korea (the country's name at that time was different, but "Korea" is used here). When Japanese monks visited China, Korean monks who had arrived there previously were able to help him. Although it may be difficult to draw much of substance from this analogy, undoubtedly Japan has been helped by Korea to no small extent.

The heads of Japan and South Korea should strive to further the relationships that have long existed between the two countries, relationships that have resulted in addressing each other's needs both materially and intellectually. In this regard, they should try to discuss each issue that arises between them with equanimity and without conditions; this would include the so-called historical disputes as well. If Japan and South Korea cooperate, they can, together, exercise considerable power, both in the region and globally.

As I was about to finish writing this essay, I saw a news report that a citizen's group in South Korea had filed a lawsuit against the South Korean government, demanding that it return to Japan a Buddhist statue currently under the control of South Korea's Cultural Heritage Administration. Such a calm and reasoned attitude will undoubtedly contribute to improvements in future relations between Japan and South Korea.