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24 July 2019

With Jonathan Pearlman

The other trade war

In South Korea recently, shoppers have been avoiding Uniqlo, convenience stores have been removing Asahi beer from their fridges, and holiday-makers have been cancelling trips to Tokyo. This unofficial boycott of Japan is part of a new trade war that began on 4 July, when the Japanese government began curbing exports of material crucial to South Korea’s smartphone industry. The feud, underpinned by deep historical rivalries, is a reminder that dangerous faultlines in Asia extend well beyond those caused by China’s rise.

For Australia, the dispute threatens the economies of two of its largest and most important trading partners. And, more worryingly, it suggests that Donald Trump’s weaponisation of trade is spreading, creating new retrograde global norms.

Japan’s trade restrictions apply to three chemicals South Korea uses to make smartphones and semiconductors. The country claimed it was motivated by national security concerns, implying that South Korea may be allowing North Korea to access these chemicals, but has not provided any evidence of this. The controls are apparently in retaliation for recent South Korean court rulings that order firms such as Mitsubishi to compensate Koreans subjected to forced labour during the Japanese colonial occupation from 1910 to 1945.

A prolonged trade war between the two neighbours will hurt both economies and could affect their dealings with Australia. In 2017–18, Australia’s second-largest trading partner was Japan and its fourth-largest was South Korea. The two countries accounted for 16 per cent of Australian trade and almost a fifth of its exports. In 2017, Australia received $344 billion in dealings with Japan, but this flow could stall if Japan’s economy is damaged. For instance, Asahi could lose more than S$35 billion from reduced sales. Last week, the firm bought Carlton & United Breweries from its European owner and flagged long-term plans to revive the local beer industry.

The US has close ties with Japan and South Korea, including large military presences in both, but under Trump its capacity or willingness to resolve trade disputes is limited. Trump has warned he’ll impose tariffs – his preferred foreign policy tool – on everything from Canadian steel to Spanish olives. Japan was copying Trump’s playbook when it cited national security as the reason for its recent trade restrictions, even though there was no discernible risk.

On Monday, the World Trade Organization agreed to consider South Korea’s complaint about the dispute. But tensions have been worsening. In South Korea, President Moon Jae-in said the conflict was undermining the 1965 treaty to re-establish relations following the Japanese occupation. In Japan, the government summoned the South Korean ambassador, and threatened further retaliation if its companies suffered. This could seriously damage South Korea’s technology sector and affect global supplies of consumer goods.

This trade war has been overshadowed by the one between Washington and Beijing, but it could severely disrupt global trade. It also suggests trade punishments are now seen as a natural and acceptable recourse for responding to tensions and resentments. Since Trump’s election, Japan and South Korea have partnered with Australia to defend the flow of global trade from rising protectionism. Their continued commitment is crucial. It is not a battle that Australia can fight alone.


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Boris is finally PM, but will he be the liberal conservative or the reckless no-dealer?

“How ready is Boris for the job for which he has prepared since childhood? His track record does not inspire confidence.” Andrew Grice, The Independent

Hong Kong protests – were triads involved in the attacks?

“Many protesters and pro-democracy legislators accused the police of being slow to act – saying they only arrived at the scene after the attackers had left – long after the first 999 calls were made. The police chief has called the suggestions a ‘smear’, saying that the force is stretched from responding to violent anti-government protests elsewhere.” Helier Cheung and Christopher Giles, BBC News

Karida village killings – violence and the vulnerability of women

“A ready availability of arms can easily overturn the long-standing authority structures that have previously functioned to curb excessive acts of violence in general, as well as acts of violence perpetrated against women. Customary protocols and traditional authority structures can become fragile.” Nicole George, The Interpreter (Lowy Institute)

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Why Thailand stuck with a military government

“Why didn’t the election dislodge the military government? Partly because the military rewrote the rules. And partly because a decisive number of Thai voters prefer the steadiness of military governments to the volatility of civilian governments.” James Wise, The Strategist (ASPI)

China to release new white paper on national defence – what to expect

“The last white paper swiped at US ‘meddling’ in the Asia-Pacific’s hot spots, but I wouldn’t be surprised if the 2019 updated sharpens its tone toward Washington.” Ankit Panda, The Diplomat

Free from Australian Foreign Affairs

In Extremis, book review by Elizabeth Becker

“One reporter has sleek golden hair and wears a black eye patch. She looked gamely into the camera with a half-smile, clearly a figure with pizzazz. She is Marie Colvin, the American war correspondent who was murdered by Syrian soldiers on orders from the government of Bashar al-Assad.” Elizabeth BeckerHERE

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THE SQUAD

Why don’t they go back [from where] they came.

DONALD TRUMP, PRESIDENT (UNITED STATES)

I completely and utterly disagree with him.

JACINDA ARDERN, PRIME MINISTER (NEW ZEALAND)

This is something that contradicts the strength of America.

ANGELA MERKEL, CHANCELLOR (GERMANY)

Sources: Twitter, Radio New Zealand, NBC News



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