Japan Withdraws from Fleet Review

Japan did not participate in the International Fleet Review hosted by South Korea in Jeju Island on Oct 11 after Tokyo refused to accept Seoul’s request not to hoist the Rising Sun flag during the event. Instead, Maritime Self-Defense Force (MSDF) officials, including Admiral Yutaka Murakawa, MSDF Chief of Staff, attended the Western Pacific Naval Symposium (WPNS) on Oct 12.[1]

Reconciliation and Healing Foundation

South Korean Foreign Minister Kang Kyung-wha informed Japanese Foreign Minister Taro Kono that Seoul would dissolve the Reconciliation and Healing Foundation by the end of this year. Minister Kono expressed Japan’s disappointment and opposition to this announcement. The Reconciliation and Healing Foundation is a Japanese government-funded organization created to support South Korean victims of Japan’s wartime sexual slavery.[2]

Abe at the Kim-Obuchi Declaration Symposium

Japanese Prime Minister Abe Shinzo participated in the symposium commemorating the 20th anniversary of “Korea-Japan Joint Declaration: A New Korea-Japan Partnership towards the 21st Century” (known as the “Kim Dae-jung-Obuchi Joint Declaration”) held in Tokyo on Oct 9. South Korean President Moon did not attend the commemorative ceremony in Seoul on Oct 1. The Joint Declaration was signed in 1998 between then-President Kim DJ and then-Prime Minister Keizo Obuchi to develop a future-oriented relationship between the two countries based on mutual understanding and trust.[3]

National Assembly in Dokdo

Members of the Education Committee of South Korean National Assembly announced on Oct 10 their plan to visit Dokdo Island on Oct 22. The Japanese government expressed regret and disappointment against this announcement.[4]

Japanese Lawmakers in Yasukuni

Japanese Prime Minister Abe, who is currently on a European tour, sent an offering to the Yasukuni Shrine on Oct 17.[5] A number of Japanese lawmakers also visited the Shrine on Oct 18 for its autumn festival. In response, the South Korean Ministry of Foreign Affairs expressed “deep concern and disappointment” as the Shrine “glorifies Japan’s history of colonial rule and war of aggression.”[6]

Inter- Korean Relations

On Oct 15, the two Koreas held high-level talks in Panmunjom Peace House to discuss the railway connection and separated families. The two sides agreed to hold a groundbreaking ceremony for rail and highway connection some time during the end of November or the beginning of December. The two sides also discussed high-level military talks, Red Cross meetings, and Inter-Korean Joint Committee.[7]

This meeting was not without controversy as the Ministry of Unification (MoU) barred a journalist, who also happened to be a North Korean defector, from attending the meeting. The Korea Copy Editors Association and Korean Association of Newspapers issued a public statement accusing the MoU of infringing on press freedom and demanded an apology from Minister Cho.[8] Minister Cho explained that the exclusion was unavoidable in order to have a successful meeting.[9]

There is also some criticism about the railway project as many observers point out that the ROK and the US remain largely divided on this issue. Some critics point out that the railway project may fail given that the UNC has refused to permit South Korean trains from crossing the DMZ last August. The South Korean public appears split on this issue.

 Public Opinion on the Inter-Korean Rail Project[10]

The US also requested that South Korea provide a detailed list and timeline of all inter-Korean projects. South Korea has yet to provide this list.[11]

May 24 Sanctions

Minister Kang Kyung-wha ignited a nationwide controversy by stating that the government is seeking to lift May 24 measures.[12] In response, US President Donald Trump stated that South Korea would need US “approval” before taking such actions. Some critics argue that Trump’s remarks violated South Korea’s sovereignty. Others criticized the Blue House for its lack of response. Minister Kang later retracted her statement on the May 24 sanctions during an oversight hearing at the National Assembly.[13] Minister of Unification Cho denied any MoU role in lifting the May 24 measures.[14]

End of War Declaration

59.5% of South Koreans support the declaration-for-declaration trade with North Korea where North Korea should submit the nuclear list before the US can agree to the end of war declaration.[15] Only 27.1% agree declaring the end of war before North Korea submits a list of fissile materials.

President Moon in Europe

President Moon is on a tour of Europe from Oct 13~20.[16] While President Moon sought to establish closer ties with Europe, he failed to gain enough support among European counterparts to support easing international sanctions on North Korea ahead of substantive commitments towards denuclearization. Pope Francis stated during his meeting with President Moon on Oct 17 that he is open to visiting North Korea.[17]

Special Measures Agreement

The negotiations for the 10^th Special Measures Agreement continued as the principal negotiators met for four days without enough progress for an agreement.[18] There appears to be a significant gap in the position of each side regarding the cost of US strategic asset deployment in the Korean Peninsula.

Black Thursday

On Oct 11, KOSPI closed down 98.94 points (4.44 percent) – its lowest level in seven years. Analysts claim that culprit was a combination of factors including the rising US Treasury bond yield, deepening US and China trade conflict, and sluggish earnings in the technology sector.[19]

Employment

According to data released by the National Statistics Office (KOSTAT) on Oct 12, the number of employed workers increased by 45,000 in September. This figure is third from the lowest level recorded for 2018. Employment increase in July and August were 5,000 and 3,000, respectively.[20] Unemployment has exceeded expectations all year. One bright spot was the decline in youth unemployment (15- 29 years old) from 10 percent last month to 8.8 percent.[21]

Currency Manipulation

On Oct 17, the US Treasury Department named South Korea on its watch list of potential currency manipulators. Other countries on this list are Japan, China, India, Germany, and Switzerland. There are three criteria for currency manipulation: surplus in the US trade balance (over $20 billion), current accounts surplus (over three percent of GDP), and foreign exchange market intervention in excess of two percent.[22]

Import Regulations on South Korean Products

According to a report released by the Korea Trade-Investment Promotion Agency (KITA) on Oct 17, 194 import regulations from 25 countries target South Korean products. Import regulations refer to anti-dumping, countervailing duties and safeguards against imports. The report states increasing regulation on imports from emerging countries (which account for 65.6 percent of the total) will impede diversification of export markets.[23]

Income-Led Growth

At the Strategy and Finance Committee’s national audit hearing on Oct 18, major parties debated the merits of the government’s income-led growth policy. Finance Minister Kim Dong-yeon and ruling party members expressed the need to solve the economy’s structural problems by supporting growth in low-income brackets. Many members also stressed the importance of deregulation and exports to encourage industries in traditional manufacturing and innovation. The opposition party stressed that the main driver for economic growth are businesses — not low-income earners — and called for the administration to change its economic policy.[24]

Growth Rate Forecast and Interest Rate

On Oct 18, the Bank of Korea (BoK) lowered its economic growth forecast to 2.7 percent. BoK also announced that the interest rate would remain at 1.5 percent.[25] Major global economic institutions and investment banks have also reduced their outlook.[26]

Several government officials and members of the ruling party have demanded an increase in the interest rate.[27] Many observers predict that the rate will likely increase next month because of the growing imbalance between internal and external financial market.[28]

Household Debt

On Oct 18, the Financial Services Commission (FSC) announced that it would work to lower the debt service ratio (DSR) for household loans. The household debt soared to nearly 1,500 trillion won.[29]

[1] “日, 해상자위대 막료장 해군심포지엄 참석…제주 관함식은 불참,” 조선일보, 2018년 10월 8일.

[2] “요미우리 ‘韓, 지난달 위안부재단 연내 해산방침 전달’,” 동아일보, 2018년 10월 8일.

[3] “’DJ-오부치 선언’ 20주년 행사, 아베는 오늘 참석,” 조선일보, 2018년 10월 9일.

[4] “日 정부, 韓 국회의원 독도 방문 계획에 항의,” 중앙일보, 2018년 10월 12일.

[5] “아베, 유럽순방 중에도 야스쿠니신사에 공물 보내,” 조선일보, 2018년 10월 17일.

[6] “외교부 ‘日 정치인 야스쿠니 참배에 우려와 실망,” 조선일보, 2018년 10월 18일.

[7] “남북 철도·도로 연결 공사, 11월 말~12월 초 ‘첫 삽’,” 경향신문, 2018년 10월 15일.

[8] The Korea Copy Editors Association official website, [Available at: http://edit.or.kr/ ] Korean Association of Newspapers [Available at: http://www.presskorea.or.kr/notice/board_detail.php?m=3&sm=4&tm=23&board_id=FCS&seq=260347&sort=2 ]

[9] “조명균, 탈북기자 취재배제에 “최종 판단은 제가 내렸다”,” 중앙일보, 2018년 10월 16일.

[10] “’선(先)핵물질 신고, 후(後)종전 선언’ 해야(59.5%),” 신동아, 2018년 10월 17일.

[11] “美 “한국, 남북경협 리스트·시간표 달라… 제재 1건만 어겨도 사업 전면 중단해야”,” 조선일보, 2018년 10월 19일.

[12] May 24 measures are sanctions against North Korea imposed by the Lee Myung-bak administration as a response to the sinking of the South Korean naval corvette Cheonan in 2010

[13] “강경화 ‘5·24조치 해제 검토’ 번복 논란…“말 앞섰다면 죄송”,” 동아일보, 2018년 10월 10일.

[14] “조명균 “5·24해제 구체 검토 안해…천안함 관련 조치 있어야”(종합),” 연합뉴스, 2018년 10월 11일.

[15] “‘선(先)핵물질 신고, 후(後)종전 선언’ 해야(59.5%)”, 동아일보, 2018년 10월 17일.

[16] “문대통령, 프랑스 파리 향발…7박9일 유럽 순방 돌입,” 한겨레, 2018년 10월 13일.

[17] “文 대통령, 아셈 개막 만찬 참석…한반도 평화 지지 당부,” 조선일보, 2018년 10월 19일.

[18] “한미 방위비협상 나흘째 ‘밀당’…총액 이견 좁힐지 주목,” 연합뉴스, 2018년 10월 19일.

[19] “’검은 목요일’ 시총 78조 날아갔다,” 경향신문, 2018년 10월 11일.

[20] ‘마이너스’ 면했지만 고용의 봄은 멀었다,” 경향신문, 2018년 10월 12일.

[21] “9월 취업자 수 4만5,000명 증가…실업자 9개월 연속 100만명 상회,” 한국일보, 2018년 10월 12일.

[22] “미 ‘중국 환율조작국 지정 안해…한국 포함 6개국 ‘관찰대상국’,” 한겨레, 2018년 10월 18일.

[23] “美이어 개도국도 수입장벽 무역한국 ‘발목잡힌 수출’,” 매일경제, 2018년 10월 18일.

[24] “여야, 기재부 국감서 소득주도성장•단기공공일자리 공방,” 연합뉴스, 2018년 10월 18일.

[25] “올 경제성장률 2.7%로 또 낮췄다,” 매일경제, 2018년 10월 18일.

[26] “韓銀, 성장률 전망 2.7%로 더 낮췄다,” 문화일보, 2018년 10월 18일.

[27] “한은, 기준금리 11개월째 1.50% 동결…경기둔화 또 ‘발목'(상보),” 아시아경제, 2018년 10월 18일.

[28] “일단 금리동결…내달엔 올릴듯,” 헤럴드경제, 2018년 10월 18일.

[29] “가계부채에 큰 칼 댄다…실수요자•취약층 피해 우려도,” 조선비즈, 2018년 10월 18일.

Contributing Staff (in alphabetical order): Eileen Block, Hong Sang-hwa and Kim Seonkyung 

Editor: J. James Kim