As the Korea-Japan conflict shows no signs of coming to an end, some U.S. think tank experts stressed the need to improve relations between the two countries as Japan's export restrictions against Korea plays havoc with the world economy. They also advised the United States to intervene to help Korea and Japan resolve the problem.
“Korea and Japan have used nationalism in a somewhat cynical way,” said Marcus Noland, executive vice president and director of studies at the Peterson Institute for International Economics (PIIE) in the United States in a seminar hosted by the Korea Economic Institute (KEI) and the Korea International Trade Association in Washington, D.C. on Oct. 16 (local time). The seminar focused on the impact of the Korea-Japan conflict on global trade and economy.
“Korea-Japan relations are in a very volatile situation,” Noland said. Referring to Japan’s export curbs and the Korean government’s decision not to renew the Korea-Japan General Security of Military Information Agreement (GSOMIA), he said that U.S. President Donald Trump may need to intervene to solve the problem.
Mentioning Korea’s filing of a complaint against Japan with the World Trade Organization, he said the WTO’s dispute resolution mechanism has limits, adding that it would be better if the United States involves itself in this matter.
“Japan’s export restrictions against Korea affect not only the Korean electronics manufacturing industry but also all of the subordinate industries that depend on integrated circuits,” said Stephen Ezell, vice president of global innovation policy at the Information Technology and Innovation Foundation (ITIF). Ezell expressed concerns over the disruption of the global supply chain.
"TSMC in Taiwan and Intel in the United States will benefit from Japan’s export restriction in the short term," Ezell noted. TSMC is the world's No. 1 foundry company and Intel is the worldwide leader in the non-memory semiconductor sector.
In the long run, Japan’s export restrictions will give Korean chipmakers motivations to significantly reduce material supplies from Japan and lead China to push for self-sufficiency in semiconductors, Ezell forecast. "We need a workable solution to maintain the world’s confidence in the globalization of the semiconductor supply chain and trade liberalization," Ezell said.