South Korea says its own companies will pay to resolve forced labor dispute with Japan

Business
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March 6, 2023
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South Korean Foreign Minister Park Jin speaks during a briefing on March 06, 2023 in Seoul. The South Korean government announced it will no longer seek direct payment from responsible Japanese firms to compensate victims of Japan’s forced wartime labor.

Kim Hong-Ji | Getty Images

South Korea said on Monday that its companies would compensate people forced to work under Japan’s 1910-1945 occupation of Korea, in a bid to improve poor relations that have impeded trade and cooperation between the two countries.

The proposal was welcomed in Tokyo but faced immediate backlash from some victims and South Korea’s main opposition party, who accused the government of capitulating to Japan.

The disagreements over labor and women forced into Japanese military brothels have bedeviled ties between the two pivotal U.S. allies for years, but South Korean President Yoon Suk Yeol has made a push to repair the relationship.

Under the plan, South Korea would compensate former forced laborers through an existing public foundation funded by private-sector companies, Foreign Minister Park Jin told a briefing.

“The soured South Korea-Japan relations should no longer be neglected, and we need to end the vicious cycle for the national interest, for the people,” Park said. He said he hopes Japan responds sincerely, including by “implementing its previous public statements expressing remorse and apology.”

Japanese Prime Minister Fumio Kishida said he welcomed the proposal and said he would work closely with Yoon.

Japanese companies will not be expected to make any payments under the plan, but would not be blocked from donating if they want, said Japan’s Foreign Minister Yoshimasa Hayashi.

“We welcome this as a step that returns Japan-South Korea relations to a healthy one,” he said.

Poor relations between the two have been a point of concern for the United States, which is seeking to present a more unified front with its allies against the rising power of China and threats from North Korea’s expanding missile and nuclear arsenal.

In a statement, U.S. President Joe Biden said the announcements were a “a groundbreaking new chapter of cooperation and partnership between two of the United States’ closest allies” and a “critical step to forge a future for the Korean and Japanese people that is safer, more secure, and more prosperous.”

A Japanese government source close to Prime Minister Fumio Kishida told reporters that the United States has been pressing both countries to reconcile, but that a main factor that triggered Yoon’s push for reconciliation is the geopolitical threat from North Korea.

South Korean funds

When Seoul first raised the proposal in January, it sparked backlash from victims and their families because it did not include contributions from Japanese companies, including those ordered by South Korean courts to pay reparations.

About a dozen protesters demonstrated outside as Park made the announcement.

“It’s a complete victory by Japan, which has said it will not pay a single yen on the forced labor issue,” Lim Jae-sung, a lawyer for several victims, said in a Facebook post on Sunday, citing initial media reports of the deal.

The main opposition Democratic Party denounced the plan as “submissive diplomacy.”

“It’s a day of shame,” An Ho-young, a spokesperson for the party, said in a statement. “Japanese companies embroiled in war crimes received indulgence without even budging, and the Japanese government managed to remove a trouble by having the grace to repeat past statements.”

Asked whether Japanese companies will pitch in to compensate, Park said both Japanese and South Korean businesses were considering a plan to make voluntary payments.

South Korea’s Yonhap news agency, citing unnamed government sources, had said that as part of the deal Seoul and Tokyo had tentatively agreed to create a separate “future youth fund” to sponsor scholarships with funds from companies in both countries.

Two of the companies ordered by South Korean courts to make restitution, Mitsubishi Heavy Industries and Nippon Steel, declined to comment on the agreement, referring to their long-held stance that the issue of compensating wartime laborers had been resolved under the 1965 treaty that normalized relations between South Korea and Japan.

Export curbs

Relations plunged to their lowest point in decades after South Korea’s Supreme Court in 2018 ordered Japanese firms to pay reparations to former forced laborers. Fifteen South Koreans have won such cases, but none has been compensated.

Japan has maintained the compensation issue was settled under the 1965 treaty, and Hayashi said his government’s stance had not changed.

The row spilled over into a trade dispute, with Tokyo tightening curbs on exports to South Korea of high-tech materials used in smartphone displays and chips.

South Korean tech firms such as Samsung Electronics, SK Hynix and LG Display were affected, although the firms found import routes through other countries, worked to diversify sourcing, including investing in local materials firms, and some Japanese firms set up production in South Korea.

Japan’s Yomiuri reported on Saturday that Tokyo could lift the restrictions on exports as part of a deal for Seoul to withdraw its complaint to the World Trade Organization over the trade dispute.

Hayashi said the export curbs are separate from the forced labor dispute, but Yonhap reported that trade officials from both countries could make an announcement on the restrictions as soon as Monday.