Japan Warns South Korea That Ties Are in ‘Severe State’ Amid Labor Dispute

(Bloomberg) -- Japan’s top government spokesman said ties with South Korea were in a “severe state,” signaling that simmering tensions between the neighbors and U.S. security allies could worsen.

Tokyo and Seoul have sparred over decisions in South Korea’s top court requiring two of Japan’s biggest companies to pay compensation to Koreans forced into labor during Japan’s 1910-45 colonial rule. On Sunday, Prime Minister Shinzo Abe said he would consider countermeasures to protect Nippon Steel & Sumitomo Metal Corp. assets from seizure by South Korean courts.

“Relations between Japan and South Korea are in a severe state,” Japanese Chief Cabinet Secretary Yoshihide Suga told a regular news conference Monday in Tokyo, calling recent moves by Seoul “regrettable.”

Mistrust between the two neighbors has also grown as both sides trade accusations about who was in the wrong over a December incident in which Japan claimed a South Korean naval vessel used a target-lock radar on its patrol aircraft. Seoul argued the plane was flying in a “provocative” manner and called on Tokyo to apologize.

The two sides have long wrangled over whether Japan has properly atoned for its occupation of the Korean Peninsula, which ended with the Japanese Empire’s defeat in World War II. The disputes have flared anew since the 2017 election of South Korean President Moon Jae-in, whose administration has moved to disband a fund to compensate women forced to work in Japanese brothels and backed Koreans’ efforts to pursue the forced labor claims. has said it plans to disband a fund to compensate women forced to work in Japanese brothels and Koreans’ efforts to pursue the forced labor claims.

Abe told national broadcaster NHK’s “Sunday Debate” program that he had “requested relevant departments to study specific measures based on international law” to prevent South Korea from seizing company assets. He called a bid by plaintiffs to get the court to confiscate company property “very regrettable.”

The prime minister said a 1965 treaty that normalized relations between the countries resolved all matters regarding compensation claims.

Before Suga spoke, South Korea’s Foreign Ministry said they expected a sincere response from Japan and declined to directly address Abe’s comment.

Compensation Claims

Foreign ministers from the two countries talked last week by telephone, South Korea said. Last month, officials from both countries said they were speaking with each other on ways to address the court’s decisions.

Mitsubishi Heavy Industries Ltd. was ordered to pay as much as $134,000 to each of the 10 people subject to forced labor while Nippon Steel was ordered to pay $88,000 each to four plaintiffs. There are more than a dozen such cases pending in South Korea involving about 70 companies, according to the Japanese Ministry of Foreign Affairs, which refers to the claimants as “former civilian workers from the Korean Peninsula.”

Lawyers representing South Korean conscript laborers applied to a Pohang city court to seize Nippon Steel assets, the Associated Press reported Thursday. The court may decide in two or three weeks whether to accept the request to seize the 2.34 million shares -- worth about $9.7 million -- Nippon Steel holds in its joint venture with South Korean steelmaker Posco, the AP said.

Japan and South Korea were each other’s third-largest trading partners in 2017, with more than $82 billion in total trade between the two sides.

Public Opinion

Although simmering tension between Japan and South Korea has led to protests on Seoul’s streets and calls to boycott Japanese products, the previous disputes have never escalated to the point where they caused serious economic damage. Still, the political situation in both countries provides little incentive to reach a speedy resolution this time around.

A Dec. 14-16 poll by the Yomiuri, Japan’s biggest daily newspaper, found 86 percent of respondents agreed that all forced labor claims were settled under the 1965 treaty. Public opinion will become increasingly important for the conservative Abe in the run-up to an upper house election in July.

Moon, a progressive, saw his disapproval rate exceed his approval rating for the first time since taking office in May 2017, with many respondents saying the president lacked the ability to solve South Korea’s economic issues.

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