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South Korea moves to resolve WWII dispute with Japan that troubles tech supply chains

Nations edge closer to an acceptable settlement on reparations for forced labor

Japan and South Korea have edged closer to a resolution of a dispute that has its roots in World War II, and their efforts may also improve tech supply chains.

The dispute centers on Japan's occupation of the then-united Korean peninsula from 1910 to 1945. During World War II, Japan used Koreans for forced labor – including sexual slavery. South Korea has since sought reparations.

But no agreement has ever been reached.

In the absence of a settlement between the two countries, South Korea's Supreme Court ruled in 2018 that Mitsubishi Heavy Industries should pay reparations to Koreans whom it enslaved, or to their descendants.

The company made no payments and Japan protested the decision by removing South Korea from the list of nations it affords preferential access to some exports. That decision was aimed at supplies essential for the manufacture of semiconductors and displays – commodities that South Korean companies excel at producing.

South Korea commenced action in the World Trade Organization (WTO) in response but – as often happens in that forum – years passed without a resolution.

Tech supply chains have been strained since 2019. And the strain in Japan/South Korea relations has remained – and irked allies.

Monday's news that South Korea proposed a fund to pay reparations, thereby removing a source of tension with Japan, therefore went down so well that US president Joe Biden made a statement hailing it as "a groundbreaking new chapter of cooperation and partnership between two of the United States' closest allies."

Korean media, meanwhile, report that the rapprochement will be accompanied by renewed activity at the WTO, and that any talks will likely take place in a more convivial atmosphere.

If that makes for slightly easier trade relations – and more efficient supply chains – Japanese and Korean industry alike will welcome the change.

However that outcome is far from certain. Protests against the proposed reparations fund have already taken place in South Korea, as some feel the plan means Japanese corporations won't have to atone for their past misdeeds. ®

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