Japan entered a new type of war

05.07.2019

A "quiet" war between Japan and South Korea can destroy an entire industry, and most important for modern industry. At least, it is precisely such conclusions that can be drawn from the extremely drastic decision that Tokyo made in response to the outcome of the trials in South Korea. And the occasion was the events of the Second World War

The cause of aggravation of relations between Japan and South Korea was a long-standing dispute. It concerns the period of the Japanese occupation of Korea, which lasted almost from 1910 to 1945.

The history of oppression and compensation

At that time, the then united Korea did not have sovereignty, and all power on the Korean peninsula belonged to the Japanese governor-general. This period was marked in Korea by rapid urban growth, an almost twofold increase in life expectancy (from 23.5 to 43 years), widespread introduction of modern primary education and the formation of modern Korean culture and industry - but the last decade of the Japanese occupation of Korea was not unclouded.

Throughout the entire period of Japanese rule, also referred to in Japan and Korea as a “tessen,” Koreans were subjected to various forms of discrimination. In addition, after Japan’s entry into the war against China, and then into World War II, Koreans were massively mobilized and forced to work hard at Japanese enterprises in Korea.

In 1965, the Republic of Korea entered into a single compensation agreement with Japan for all claims related to the colonial period. Under this agreement, Japan agreed to pay $ 300 million in reparations (which were called “economic aid”) and provided another $ 500 million in loans.

However, the 1965 agreement did not regulate the issue of individual claims against Japan from Korean citizens, and here, as often happens in interstate relations, each side had its own opinion. According to the South Korean side, the intergovernmental agreement did not take into account individual claims. But Japan insisted that the phrase that “any claims in relations between countries are resolved definitively,” which was included in the agreement, also applies to any citizen of the Republic of Korea.

The question of individual compensations quietly "smoldered" for almost half a century. The situation sharply worsened in the fall of 2018, when the Supreme Court of the Republic of Korea decided to pay compensation to four former employees of a Japanese company (only one of whom was alive) for a claim against Nippon Steel & Sumitomo Metal. Japan refused to admit this lawsuit and stated that it would not implement the decision of the Korean court.

Apparently, the issue of compensation for the colonial period will not be so easy to settle down again. After all, this is not about the individual lawsuit of 98-year-old Lee Chun Shik, who claims to be paid 100 million won (about 90 thousand dollars). Japan fears that the decision of the Supreme Court of the Republic of Korea will become a dangerous precedent for which not only former employees of Japanese companies in Korea, but their relatives and heirs can claim compensation, as happened in the lawsuit of Lee Chun Shik himself, who defended not only his interests, but also the interests of their colleagues.

From here, the sharpest reaction of Japan in this seemingly insignificant question is understandable. On July 1, the Japanese government approved export sanctions for a variety of chemical materials critical to the production of semiconductor products — photoresist, fluorinated polyimide, and etching hydrogen fluoride. And this directly concerns the supply of these substances to South Korea.

Invisible to the world blockade

What are the mentioned photoresist, fluorinated polyimide and pickling hydrogen fluoride? If you do not go into a lot of technical details, then these are chemically pure substances that are used during the manufacture of semiconductor chips, printed circuit boards and LED screens. The market for these chemical compounds is small in physical terms, however, it is significant in cost - in 2018 only photoresist of various brands was sold for about $ 9 billion.

In addition, if for fluorinated polyimide and hydrogen fluoride only its chemical purity is important (these are fairly simple compounds), then for the photoresist the situation looks much more complicated. This chemical component is practically tightly embedded in the technical process and its exact formulas represent the know-how of the manufacturers. Therefore, the South Korean giants, such as Samsung or SK Hynix, really will not envy. For decades they have been working on thin and capricious technological processes, taking into account a certain brand of photoresist, which can now become at least difficult for them.

The situation is further complicated by the fact that Japanese companies such as JSR, TOK Semiconductor, Fujifilm and Shin-Etsu Chemical have practically monopolized the market of the thinnest semiconductor photoresist and dominate the photoresist market for TFT / LCD displays. Formally, the fast-growing Chinese market specializes only in “rough” photoresist for the manufacture of printed circuit boards, and, moreover, is itself controlled by foreign companies, and Japanese as well. Therefore, the only real alternative for South Korean companies is the products of the American concern Dow Chemical. However, the process of changing the photoresist in the debugged process can take years, and stocks of Japanese supplies can run out in up to two to three months.

New reality

So far, the confrontation between Japan and South Korea is far from over. Thus, the South Korean government announced that it would file a complaint with the WTO, since it considers Japan’s actions a violation of the rules of world trade.

Japan’s comment is different. Her representative said that such measures are in compliance with WTO standards and are being taken to ensure national security, since the components for the semiconductor industry technology can be applied for military purposes - and export regulations are completely legal for them.

However, "legal ping-pong" should not be misleading. From a sudden trade war between Japan and South Korea, several fundamental conclusions can be drawn at once.

Firstly, it is already absolutely clear that the slowdown of the global economy again brings to the surface the seemingly forgotten agenda of political confrontation. At the moment of general growth, any political disagreement is retouched and softened - since international economic cooperation offers much more long-term benefits than a “small victorious war”. Today, the benefits of future economic growth are at least not obvious - and the issue of geopolitical confrontation is again on the agenda, in which the economy is not “the king of the hill”, but just one of the tools.

The second factor is the dependence of countries on each other within the global economy.

Today, almost any large enterprise depends to some extent on the international market.

And finally, the third factor is the hidden monopolization of significant sectors of the global technology market. The powerful blow to Huawei, which threatened to bury the entire mobile business of this Chinese IT giant, was dealt with such hidden monopolists who own a critical set of patents, licenses, technologies and designs. Exactly in the same way Japan struck South Korea.

It can be said that we are entering a period of "high-tech wars" - for which the events of the Second World War serve in this case. It’s just that the weapon in them will not be lasers or robots, but patents, licenses, technologies and monopoly in the global market.