Japan’s colonial rule over the Korean Peninsula ended more than seven decades ago, yet that legacy still roils everyday politics on both sides of the strait. South Korea and Japan, major trading partners and both U.S. military allies, have been at loggerheads over what constitutes proper contrition and compensation for two groups of Koreans: those conscripted to work in factories and mines that supplied Japan’s imperial war machine, and those euphemistically called “comfort women” who were forced to work in military brothels. Japan contends all claims were settled under a 1965 bilateral treaty and a fund set up in 2015. Seoul argues Japan hasn’t atoned enough. Some of Japan’s largest companies and the emperor himself have been dragged into the fray.

1. What are the roots of the forced labor dispute?

Hundreds of thousands of Koreans were conscripted during the 1910-1945 colonial period to work, often in brutal conditions, at dozens of Japanese companies. At the time of the 1965 treaty, which established diplomatic ties between the two countries, Japan paid the equivalent of $300 million -- $2.4 billion in today’s money -- and extended $200 million in low-interest loans. The treaty said all claims are “settled completely and finally.” The then-struggling South Korea invested that money in industries that eventually helped turn it into an economic powerhouse. However, South Korean court rulings since late 2018 said the victims were not compensated for their emotional pain and suffering.

2. What is the fallout for the companies?

South Korea’s Supreme Court ruled in 2018 against two of Japan’s largest companies: Mitsubishi Heavy Industries Ltd. was ordered to pay as much as $134,000 to each of 10 claimants, while Nippon Steel & Sumitomo Metal Corp. was ordered to pay $88,000 each to four plaintiffs. A South Korean court then ordered the seizure of shares valued at about $356,000 that Nippon Steel has in a joint venture with South Korean steelmaker Posco, a move Tokyo calls unlawful and is trying to block.

3. What has Japan done to push back?

Japan has invoked a part of the 1965 treaty that calls for arbitration for disputes that can’t be settled by normal diplomatic means. It rejected a South Korean proposal for a joint compensation fund to resolve the forced-labor dispute, seeing it as a breach of international law. In August, the Japanese government said it would remove South Korea from a list of trusted export destinations, a so-called “white list” of countries that benefit from less stringent trade checks. That followed a move in July to restrict exports of materials vital to South Korean manufacturers of semiconductors and computer displays. South Korea reacted in late August by saying it would withdraw from a military intelligence-sharing agreement with Japan.

4. Are other Japanese companies affected?

There are more than a dozen such cases pending in South Korea involving about 70 companies, according to the Japanese Ministry of Foreign Affairs. An estimated 725,000 Korean workers were sent to mainland Japan, Sakhalin and the southern Pacific islands to work in the mining, construction, and shipbuilding industries, according to a Stanford University research paper. Most of the former laborers have died, but some of their family members have sought legal standing to sue.

5. What about the ‘comfort women’ controversy?

That’s also flaring. Historians say anywhere from 50,000 to 200,000 women -- many of them Korean -- were forced into service in Japan’s military brothels. There are fewer than two dozen known survivors in South Korea. In 2015, Japan and South Korea announced a “final and irreversible” agreement that came with a personal apology to the women from Prime Minister Shinzo Abe as well as about $8 million for a compensation fund. But many South Koreans opposed the deal, which was signed without consulting the victims, some of whom refused the money in protest. Under President Moon Jae-in, who took office in 2017, South Korea said it would shut down the fund, angering Tokyo. Then South Korea’s National Assembly Speaker Moon Hee-sang said in a Feb. 7 interview with Bloomberg News that Japan’s then-Emperor Akihito -- whom the speaker called “the son of the main culprit of war crimes” -- should hold hands with the women and personally apologize to them to end the dispute. Japan demanded an apology and retraction, while Akihito abdicated at the end of April.

6. Has Japan apologized before?

Several times, yet many in South Korea have doubts about its sincerity. In 1990, Emperor Akihito, expressed his “deep regret” for the colonial rule over Korea. In 1991, Japan issued the Kono Statement, where it offered “its sincere apologies and remorse” to the comfort women. The statement has been Japanese government policy since then. The apologies have been undercut by comments from leading Japanese politicians seen as whitewashing the militaristic past and visits made to Yasukuni Shrine in Tokyo, dedicated to Japan’s war dead where convicted war criminals are enshrined.

7. How bad can things get?

It’s not clear what the implications of Japan’s white list decision will be since the government hasn’t explained how strictly it will enforce export controls on the roughly 900 or more products affected. South Korean companies argued that the export curbs that would take about 90 days for screening and raise uncertainties over their business plans, while U.S. companies claimed that could cause a global supply chain disruption. The Japan-Korea friction has never escalated before into a major threat to economic or military ties, although some have warned about dangers associated with the recurring feud. The Japanese and South Korean militaries argued in December over an incident where Japan claims a South Korean ship used a weapons-targeting radar on one of its patrol planes, which Seoul says was flying in a provocative manner. Nevertheless, President Moon has expressed willingness to work with Japan in other areas, including the international push to end North Korea’s nuclear ambitions.

--With assistance from Isabel Reynolds.

To contact the reporters on this story: Youkyung Lee in Seoul at ylee582@bloomberg.net;Sohee Kim in Seoul at skim847@bloomberg.net

To contact the editors responsible for this story: Brendan Scott at bscott66@bloomberg.net, Jon Herskovitz, Grant Clark

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