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Trump in dilemma over Korea, Japan trade scuffle

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Chip price hike goes against US national interest

By Lee Min-hyung

<span>Japan's Prime Minister and Liberal Democratic Party's leader Shinzo Abe raises his fist as he speaks to voters on the last election campaign day ahead of Sunday's upper house election at Akihabara district in Tokyo, Japan July 20. Reuters-Yonhap</span><br /><br />
Japan's Prime Minister and Liberal Democratic Party's leader Shinzo Abe raises his fist as he speaks to voters on the last election campaign day ahead of Sunday's upper house election at Akihabara district in Tokyo, Japan July 20. Reuters-Yonhap
The United States is in a growing dilemma over whether to actively engage in the intensifying trade row between South Korea and Japan, as Seoul is considering abolishing a major security agreement with Tokyo to deal with the latter's "unilateral economic revenge."

U.S. President Donald Trump and his administration are at a time when he has to win more votes ahead of the upcoming 2020 U.S. presidential election. Trump has touted himself for "making progress on peace of the Korean Peninsula" after holding a series of summits with North Korean leader Kim Jong-un.

It is true that Trump has played a part in stopping the North from carrying out military provocations against the South since last year when the two sides started talks on nuclear disarmament of the peninsula. The peace talks had been suspended since the failure of the Hanoi summit last February, but with both leaders holding a surprise mini summit later last month in the inter-Korean border area, Washington and Pyongyang regained momentum for dialogue.

But starting this month, the Trump administration is facing yet another obstacle in its Northeast Asia security strategy, with Japan initiating the trade revenge against the South due to their conflict on wartime history.

The trade conflict is now showing signs of extending into an "all-out war," with Seoul considering taking more concrete steps to counter Tokyo's restrictions of exports of resource materials to the South. They are in use for manufacturing chips and display panels, so South Korean major chip makers are becoming the biggest victims of the ongoing trade scuffle.

Last week, Cheong Wa Dae hinted at the possibility of abolishing the General Security of Military Information Agreement (GSOMIA), signed by the two countries in 2016.

In response, the U.S. State Department expressed regret over the Seoul-Tokyo military intelligence-sharing agreement, saying that it is an "important tool" to drive the final, fully verified denuclearization of the North.

On top of that, such a sign or a possible security crack in this region will deal a blow to Trump, as the deepening trade feud is already overshadowing his peace-making efforts on the peninsula.

One noteworthy impact of the trade feud is a hike in memory chip price. Samsung Electronics and SK hynix are the world's biggest providers of memory chips for PCs and smartphones.

According to chip price-tracker, DRAMeXchange, Saturday, the price of DRAM chip surged by up to 25 percent in the past two weeks since Japan started imposing the trade restriction.

The impact is not limited to the South Korean chipmakers, as U.S. tech companies, such as Apple and Amazon, will have to pay more to purchase memory chips in the wake of the trade dispute.

This goes against Washington's national interest, putting the Trump administration in a growing dilemma over how to settle the dispute.

Ever since the scuffle started, Washington did not show any willingness to play an active role in mediating the dispute.

But the U.S. left open the possibility for engagement if the trade feud between the South and Japan pose threats to Washington's national interest and security, according to U.S. Ambassador to South Korea Harry Harris.

On Friday, Trump said he would be "involved in" in the dispute upon requests from South Korean President Moon Jae-in, but did not unveil details over how to play the role.

As Washington has kept a low profile in engaging in the feud, Trump's latest remark is expected to have come amid his concerns that the chip price hike may pose growing impacts on U.S. firms if the scuffle drags on for a longer period of time.

"It remains very tough for Trump to find a middle ground between Seoul and Tokyo and help them settle the dispute," a Seoul-based political analyst said. "Not just President Moon, Japanese Prime Minister Shinzo Abe must have already contacted Trump over the dispute. For Trump, both allies are key Northeast Asian partners."


Lee Min-hyung mhlee@koreatimes.co.kr


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