JPRS ID: 10148 KOREAN AFFAIRS REPORT

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• Collection: JPRS
• Document Number (FOIA) /ESDN (CREST): CIA-RDP82-00850R000400080002-7
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• Document Creation Date: November 1, 2016
• Sequence Number: 2
• Content Type: REPORTS

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JPRS L/ 10148
1 December 1981
Korean Affai rs Re ort
p
_ cFOUO si81)
_ FOREIGN BROADCAST INFORMATION SERVICE
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JPRS I,/10148
1 December 1981
KOREAN AFFAIRS REPORT
(FOUO 5/81)
CONTENTS
50UTH KOREA
POLITICS AND GOVERNNSENT
New Political Pipeline With Japan Examined
(Nakagawa Nobuo; ECONCIMISTO, 6 Oct S1) 1
ECONOMY
_ Technological Assistance for P'ohang Steel Mill ftefused
- (NIHON KEIZAI SHIl~tTN, 13 Oct 81) ........................o... 12
- a - [III - ASIA - 109 FOUO]
Fl1R (1RFT('i A T rCF (1Ni .V
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S. KOREA/POLITICS AND GOVERNMENT
NEW POLITICAL PIFELINE WITH J~,PAN EXAMINED
- Tokyo ECONOMISTO in Japanese 6 Oct 81 pp 38-42
[Article by commentator Nakagawa Nobuo: "A New Japanese-Korean Pipeline in the
Making"]
[Text] Tilting to "Economic Cooperation for Security"
"Korea is hopeful regarding the outcome of the general meeting of the Japan-Korea
Parliamentarians Association to be he:d on the 16th. It wants to appeal to the
understanding of the Diet members in the Japan-Korea Parliamentarians Association,
and hopes tihat the association will make the mnst of its ix~fluence on public
opinion in Japan" (correspondent Fu~itaka in Seoul, ASAHI SHIMBUN, 13 September
1981) .
"PresidenC Ken Yasui (Japan-Korea Parliamentarians Association) and other members,
_ a total of aboat 60, will depart for Seoul as s~:heduled on the 15th to attend the
general meeting of. the Japan-Korea, Korea-Japan Parliamentarians Associations.
There is a move toward 'extending 3 helping han~i of aid to Korea since the issue
of economic aid to China found a political solution' which relieves the concern
that the govErnmenL might be dragged by the Diet: members diplomacy" (MAINICHI
SHIMBUN, 12 September).
This news w~s reported itnmediately after the clc~sing of the llth Japan-Korea Regular
Ministerial Conference (10-11 September, Seoul) which failed even to issue a~oint
statement because of the dif�erences: Korea requested economic cooperation valued
at $6 bi].lion with implications for security, w~iiZe Japan refused to yield to "eco-
nomic cooperation for security."
Although tY:e negotiations between the governmenCs failed to achieve a successful
result, these reports candidly indicate the attitude of the Chun Doo Hwan adminis-
tration in placing its h~pe on the work of Diet members friendly to Korea concen-
trated in the Japan-Korea Parliamentarians Association, and the movement of those
related to the Japan-Korea Parliamentarians Association in trying to give a posi-
tive response to that.
At the ninth general meeting of the Japan-Korea, Korea-Japan Parliamentarians
Associations held 16-17 September, the Japanese aide refrained from mentioning
directly "economic cooperation for security01. However, the ~oint statement, which
was issued after the opinions of both sides were successfully ironed out, contained
some big problematic points.
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The first point is the descri~tion: "We recognize that dangera due to the extra-
y or_dinary buildup of military power and ceaseZess provocations by the Democratic ,
People's Republic of Korea (North Korea) are permanently present and bitter ten-
sions continue to exist in the Korean Peninsula. In particular, we 3ointly
acknowledge that it [economic cooperation for securitiy] is extremely important for
peace and stability on the Korean Peninsula."
A Japanese government-level announcement also mentions that peace and stability
. on the Korean Peninsula, where tensions exist, are essential to peace and stability
in Japan (a ~oint newspaper announcement of the llth ministerial conference). '
However, the recognition that such tensions are exclusively attributable to "~he
extraordinary buildup of military power and ceaseless provocations by the Democratic
People's Republic of Korea" was announced for the first time i:~ the ~oint statement
on this general meeting of the parliamentarians associations. It is very obvious
that this statement symbolized nothing but total agreement with the Korean side,
which blames the "threat from the north" as the source of the tense situation on
the Korean Peninsula.
The second problem is the point: "In acknowledgement of this, the Japanese side
_ evaluates highly the Korean defense efforts, expresses profound understan.ding of
- the difficult economic situation in Korea which must bear burdensome national
defense expenses, and conf irms our sincere efforts for economic cooperation with
Korea."
In this statement, the resolution to act for the economic cooperation with Korea
~ with "our sincere efforts" is directly connected to the high evaluation of the
Korean defense efforts and to the profound understanding of the hardship of the
Korean economy due to the burdensome national defense expenses. With this point
is viewed in connection with the first point, which recognized the "threat from
- the north" as the source of tensions, the content of the ~oint statement seems to
be in agreement with the theory of "economic cooperation for security" proposed b3~
- the Chon Tu-hwan administration.
' Thus, we can see that the Diet members friendly to Korea, in expressing their posi-
tion, grossly stepped out of the formal posture of the Japanese Government through
the latest general meeting of the Japan-Korea and Korea-Japan Parliamentarians
Associations in regard to the issue of the loan in yen worch $6 billion with an
implication of security.
The wheels turned as the Chon Tu-hwan administration had hoped. This indiGates
that the efforts of the Chon Tu-hwan administration aimed at the creation of a
new political pipeline between Japan and Korea through the parliamenta.rians
association bore the desired fruit.
~
The structure of the parliamenta~rians association, ~ahich serves as a parliamentary
exchange machine-political pipeline, was formally founded on 10 July 1975. The
parent body of this organization was the .Tapan-Korea Parliamentary Social Reunion
established in 1972.
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New Stage of Parliamentarians Association
Through the two organizations, Yi Pyong-hui, known as the "minister in charge of
Japanese affairs," was the man who functioned as a service window for the Korean
side, and Kim Chong-p'il f.unctioned behind the scenes. The ob3ective.of Yi Pyong-
hui and his camp was the building of a new pipeline primarily between members of
the Kim Chong-p'i1 factinn and the mainstay of the Liberal Democratic Diet members,
i�n place of the old pipeline between Yi Hu-rak and otr.er factions against Kim
Chong-p'il and the Japanese old line such as the Japan-Korea Cooperation Committee.
In summation, from the viewpoint of the political pipeline, the Japan-Korea relation
shifted from the f irst stage to the second stage with the evolution from the Japan-
Korea Parliamentary School Reunion to the parliamentariana association.
The second stage was the per{od when Korea overwhelmingly approached Japan because
- of an increase in capital and capital goods dependence on Japan associated with the
cooling of Korea-U.S. relations during both the Nixon and the Carter administra-
tions, which formulated a policy to pull out U.S. Armed Forces resident in Korea,
and it was also associated economically wfth the beginning of heavy chemical ~ndus-
trialization. ~
However, the situation made a complete turnabout in the wake of the assassination
of Pak, post-acsassination unrest and the emergence of the Chon Tu-hwan structure.
Under the discipline and whirlwind restoration of the political, economic social
and cultural worlds enforced by the Chon Tu-hwan structure, almost all Korean
paliticians linked to the old Japan-Korea pipeline disappeared from the frontline.
_ With this as a fact, an effort to rebuild a pipeline to Japan was begun, brandishing
the pretext: "breaking from past sticky re].ations." The third stage of Japan-Korea
relations has started. The centerpiece of the new s~age is the restabliahment of
the parliamentarians association through remodeling.
The parliamentarians association is comprised of two organ.izations, the Japan-
Korea Parliamentarians Assoc~ation and the Korea-Japan Parliamentarians Associa-
tion. The Korean side has proceeded with the remodeling of the Korea-Japan Parlia-
mentarians Association with the progress of the Chon Tu-hwan structure consolidation
process, and it asked the Japan-Korea Parliamentarians Association to take corres-
ponding actions, striving for the reopening of the activities by the parliamen-
tarians association. At the table of the Takeo Fukuda and Chon Tu-hwan meeting
held on 15 September 1980, agreement was reached regarding the reopening of activi-
ties by the parliamentarians association, but it took until June 3.981 for the
abreement to be implemented.
_ Factors such as the restless Korean situation during the 1 and 1/2 years since the
assassination of Pak, and particularly the hesitation of the Japanese side in
getting accustomed to the change inflicted by the deportation of the Korean part-
ners, had considerable influence on bringing a necessary functional halt to the
association's activities during that period.
In June 1981, the parliamentarians association was f inally reestablished as an
organization, after various events and manifeatations--the announcement of an
American policy to support the Chon Tu-hwan administration wholeheartedly at the
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Reagan-Chon Tu-hwan meeting (February 1981), a commutation of the death sentence i
to life imprisonment for Kim Tae-chung ~ust before the meeting, and with that as '
a momentum, tfie starting of.a movement by thQ Japanese Government toward all-out
rapprochemeMt with Korea. .
- On 3 June, the Japan-Korea Parliamentarians Association held a general meeting,
and new officers, beginning with Preaident Yasui, were installed. Subsequently,
on the lOth of the same month, the Korea-Japan Parliamentarians Association held
an executive meeting and installed President Yi Chae-hyong, Secretary General
Kim Yun-hwan and oth~r new officers. On the 22d of the same month, the 3oint
executive meeting of the Japan-Korea and Korea-Japan Parliamentarians Associations
was.held in Tokyo, which marked the relaunching of the parliamentarians associa-
tions. ~
What is notable about the parliamentarians associations that were finally reestab-
lished is the contrast in the fact.that the Korean officers were almost.completely
replaced whereas the Japanese officers were practically all old hands, except for
_ the position of the president, which was filled by Yasui, a new face who was the
_ former chairman of the House of Councilors (see table below).
Consequently, the limit of the association is predictable from its origin, since
the Japanese side officers are occupied by "those who served then" (TOA NIPPO,
Q June 1981), while the Korean side is stressing "breaking from'past sticky ,
relations" and "modernization of diplomatic style toward Japan."
Return to Bilateral Diplomacy
From 26 May to 4 June, Secretary General Kim Yun-hwan (then unoff icially in office)
. visited Japan on the pretext of introducing himself as the new secretary-gen.~ral-.
de~ignate, and talked with political leaders such as former Prime Minister Fukuda; ~
- Chairman ~hintaro Abe of the Policy Affairs Research Council, Liberal Democratic
Party; Chairman Yoshikatsu Takeiri of the Clean Government Party; and Sacretary
General Toshio Yamaguchi of the New Liberal Club. As if taking this opportunity,
a p~litical level Japan-Korea pipeline began zo operate.
As mentioned before, new officers.of Che Japan-Korea Parliamentarians Association
~ were installed on 3 June while Kim Yun-hwan.was in Jagan. On 8-11 June, a party
of Liberal Democratic representatives, Hideyuki Aizawa, Kiyoshi M ri and Hideo
Watanabe, visited Korea. Afterward, Japanese politicians visited Korea one after ,
- another, creating a traffic rush.
Among those visitors, the most notable ones were: a party led by Chairman Abe of
the Liberal Democratic Party's Policy affairs Reaearch Council (15-19 June), a
' party led by President Yasui of the Japan~Korea Parliamentarians Association
(14-16 J~uly), a party led by Chairman Ganri Yamashita of the Stsnding Committee
for House Management (21-24 July), a party led by Liberal�Democratic Representa-
- tive Noboru Takeshita (23-28 August) and a party led by Chairman Takeiri of the
Clean Government Party (25-29 August).
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They all met with President Chon Tu-hwan and talked about substantive matters.
For example, the request for a government loan of $6 billion witi~ the implication
of security was informally conveyed through the talks with Chairman Abe of the
Policy Affairs Research Council, President Yasui of the Japan-Korea Parliamentariane
Association and Chairman Yamashita of the Standing Committee for House Management,
preceding conveyance of the communication by a formai route. (TOA NIPPO,
11 August) In the case of Abe, he met with Prime Minister Suzuki after his return
and deftly requested the improvement of relationship with Korea, with which Prime
Minister Suzuki reportedly agreed (TOA NIPPO, 13 July). .
This vividly characterizes the creation of the new Japanese political pipeline by y
the Choc~ Tu-hwan administration.
The first characteristic is that the parliamentarians association, furnished with
_ new faces, is used as the centerpiece af the structure.
Second, in parallel with the approach to the Liberal Democratic Party's Fukuda
faction as a human reservoir, as seen in the invitations to visit Korea extended
to former Prime Minister Fikuda (September 1980) and subsequently to Abe and Yasui,
the Chun administration is intensifying its effort to approach the Tanaka faction
by inviting Yamashita and Takeshita to Korea. Furthermore, as seen in the invita-
tion to Takeire, it intends to expand the pipeline even to the Clean Government
Party.
This is noteworthy as a new movement to broaden the available human reservoir to
include other influential factions in the Liberal Uemocratic Party and parties
other than the Democratic Socialist Party, while the previous conventional pipeline
was partial to some factions of the Liberal Democratic Party and the Democratic
Socialist Party.
However, the technique used to achieve the ob~ective was none other than an old
familiar tactic whicti aims at encouraging government-to-government formal route
- negotiations in front by exerting pressure through political maneuvering from the
back. This is, therefore, the third characteristic. tJe cannot help but say that
the Korean approach is far from new and refreshing when it seeks to broaden the
pip~line to Japan yet expects mcst from Chairman Abe of the Policy Affairs Resear.ch
Council, who is considered to be the next leader of the Fukuda faction.
The newspaper KYUNG HYANG (dated 16 June), known as siding with the government in
Korea, described Abe as "the Diet member who was elected eight times and who is
known as the 'crown prince' of the Fukuda faction because of his career experiences
in serving as minister of agriculture and forestry in the Miki cabinet and as chief
cabinet secretary in the Fukuda cabinet"; and in a comment--to give an example of
the Korean partisanship for Abe--said: "Chairman (Policy Affairs Research Council)
Abe, who advocates a clean government and a young government and it is hoped will
be the next candidate for prime minister, is expected to work as a(Japanese)
service window to Korea in the future and is recognized as a powerful figure in
t}ie Japanese political arena."
- Thus we got into a mess and were pointedly criticized for "creating noises that
bypass the diplomatic route, and pro~ecting an impression of bilateral diplomacy
once again" (YOMIURI SHIMBUN editorial dated 12 August).
,
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Unilateral Economic Service Window to Japan
- Zn parallel with the building of a political pipeline, efforts are also made to
rpbuild a pipeline connecting Japan and Korea economically.
What the Chon Tu-hwan administration did f irst for that purpose was to make a uni-
lateral service window for economic cooperation with Japan.
The broadest pipeline connecting Japan and Korea economically is the Japan-Korea
Joint Economic Committee of the Private Sector. This committee was created in
February 1967 as a permanent organization which stemmed from the Japan-Korea Joint
Economic Social Meeting of the Private Sect4r held in Fehruary 1966, 1 year after
the conclusior.. of the Japan-Korea Treaty.
In Japan, the Japan-Korea Economic Committee was established by the Keidanren, the
Japan Chamber of Commerce and Industry and the Japan Foreign Trade Council, and
from the beginning it assu~ned an attitude of unilaterally taking charge of the
service window to Korea, including the founding of the 3oint Economic Committee.
In contrast, in Korea, actual contacts with Japan were predominantly handled
- individually by each economic group and each cornoration regardless of the e~cisting '
service window of which the Korea-Japan Economic Com~nittee was in charge.
Incidentall.y, while the Japan-Korea Ecor.omic Committee had a substantive star~ding,
executive~office, namely, the Japan-Korea Economic Association, the Korea-,~apan
Economic Committe~ did not have a similar office. Korean management was quite
different in that the work of an executive off ice was entrusted by turns to the
Federation of Korean Industrialists (Zenkeiren), the Korean Natioiial Committee of ~
the International Chamber of Commerce and the Korean Traders' Association.
The Chon Tu-hwan administration launched a policy to currect these s~tuations and
to make a unilateral service window to Japan, which resulted in the new establish-
ment of the Korea-Japan Econcmic Association (12 February 1981). A total of 10
influential economic leaders were selected, including P~k Tae-chun, president of
the Po Hang Iron Works, who was appointed chairman; and Kim U-chung leader of the
Daewoo group, who was appointed vice chairman.
Chairman Pak Tae-chun was at one time, a~ an army officer, an instructor to Presi-
dent Chon Tu-hwan, and he has also been a key f igure for heavy chemical industriali-
zation as president of the Po Hang Iron Works since 1968, which makes him the
number one industrialist in the spotlight under the Chon Tu-hwan structure. The
Po Hang Iron Works is closely connected both f inancially and technologically to
Japanese iron and steel capital such as the Nippon Steel Corporation, and Pak
would be a suitable man to build human relations with Japan's present financial ~
world, where financiers from the iron and steel industry play leading roles.
At the same time, this creation of a unilateral economic service window to Japan
has been wheeled out, from one paint of view, with the hidden design of placing
the economic cooperation with Japan under the powerful management and control of
the Chon Tu-hwan structure by reforming the conventional practice whereby each
financial group and corporation individually eatablished economic relations with '
Japan in th~ period of President Pak.
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Large-scale heavy chemical industry reorganizattion and the corporate integration
and deintegration policy pursued by Chon Tu-hwan entail the intention to nurture
business groups suitable for the new system by shaving the power of the Hyundai
group snd the Daewoo group, which grew to be the largest and second largest busi-
ness groups in Korea during the Pak administration. A typical example of the new
groups is the Sankyung group, which acquired the right of managemer.t of the Korean
Oil Public Corporation after its denationalization to a private operation.
In any case, the real power acquired by the Hyun Dae and Daewoo groups through
their hitherto rapid growth became too strong for the Cnon Tu-hwan structure to
manipulate at will.
Therefore, the reor~anization of the economic world under the Chon Tu-hwan struc-
ture is still in an unpredictable state, unlike the political field. Chairman
Chong Chu-Yoang of Zenkeiren (a financial group equivalent to Japan's Keidanren),
who is also the leader of the Hyun Dae group was rec~ntly harshly critical of the
government, in apparent defiance o~ the new policy: "Incentive to create profits
will not be furnished no matter what competent human resources, rich capital and
excellent tecnnologies are mobilized as long as government control over business
and interference and restrictions over the economic functions are deep-rooted"
(TOA NIPPO, 8 A~igust) .
ln a nutshell, it is clear that the crack between the government and the economic
world is enlarging behind the Korean eff~rt to create a unilateral. economic window
to Japan.
In contrast, the Japanese economic world has amplified the movement to repair
economic relations with Korea, which started to cool off in 1979, by means of mass
attendance of influential members at the ceremony for the completion of the fourth
equipment expansion work held in February at the Po Hang Iron Works and at the 13th
meeting of the Japan-I:orea Joint Economic Committee of the Private Sector held in
June.
Of course, these movements are associated with the captivating glamor of the large
business talks relating to the new 5-year project work in Korea. However, the
- making of corporate-level intimate pipelines, in current conditions, allows us to
grasp a more accurate picture of the complicated Korean reality.
Rapprochement Lacking in Popular Support
These phenomena disclose th~ fact that the Japan-Korea rapprochement is being put
forward according to a pattern whereby political and financial pipeline rebuilding
precedes and exerts pressure on negotiations through the formal route. That has
� nothing to do with rebuilding Japan-Korea relations on a broad national basis.
Referring to a slightly outdated account, SANKEI SHIMBUN once asked a question in
a survey of opinion in January 1977: "What kind of danger should we expect in
Japan if the U.S. Armed Forces resident in Korea are withdrawn?" Of those
answering this questiun, 58.5 percent said: "There i~ absolutely no danger of
Japan ever being invaded no matter what happens to Korea~"
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Also, according to a poll made public on 20 September of this year by the prime
minister's office, "feel friendly" toward Korea dropped to 35 percent from the
foYmer (1980) 43 percent, whereas "do not feel friendly" increased to 53 percent
, from 47 percent. It is obvious that the critical sentiment toward the trial of
- Kim Tae-chung and discord with the Chon Tu-hwan administration affected the poll.
- Views expressed at the general meeting of the parliamentarians association by the
Diet members friendly to Korea, who took a large step toward the Chon Tu-hwan
administration, which brandishes "the threat from the north", contends that "Korean
defense efforts protect Japan" and requests a gigantic sum for a"defense loan,"
are definitely alienated to a great extent from this trend of public opinion.
Furthermore, it must be pointed out that the security theory advocated by Chon
Tu-hwan indeed encounters divergent views within Korea. ,
Young Nam University in Dae Koo city is known to be one of the prominent private
universities in Korea. There is a"research report" which is assumed to have
been prepared and presented by the Unification Issue Research Institute at Young
Nam University to the authorities of the Pak administration in December 1971. Top
Secret is stamped on the cover page. Incidentally, the director of the research
institute at that time was Sin To-song who later held the post of director of the
National Unif ication Board.
The report pointed out that "the first line of the security of our nation" lies '
"within our territory much more than the ceasefire line or any other border
lines," and that "the enemy that we must defend against is not~a large unit of
regular armed forces attacking us with tanks and heaw guns, but the factor of
instability within our own system." Furthermore, it described the f ollowing as
specific problems.
"The current pbwer structure of our nation has become very rigid and grossly
alienated from the majority of the people. The rul.ing force has become closed to
the public and cannot properly apprehend the trend of public opinion and the ~
. actual living status of the peogle at a11 times. The poXitical leadership ha~
lost moral persuasive power and shows a tendency toward increased dependence on
violence as a means of rule. Thus, the unsatisfied demands of the ma~ority of
the populace centering around the intellectuals, youth and students are daily
intensified and entail the danger of growing b~eyond simple sentiment against the
government to the denial of the system."
The actual threat to the security of Korea, the report concludes, is none other
than the increasing discontent of the people with the inadequate power makeup and
domination.
The fact that in Korea the struggle for democracy, which represented the discontent
of the populace, continuously marched on without bending to suppression in the
seventies, bears witness to the accuracy of this conclusion.
The security theory being insisted upon by ~hon Tu-hwan i~ only a succession to
the already denounced theory which existEd at the time of the Pak administration.
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This further s~ows the vulnerability of the foundation of the Japan-Korea rapproche-
- ment presently being pur.sued.
If Japan-Korea rapprochement, alienated from the broad popular basis, is allow~d to
act as it pleases, a refumigation (f urthermore, amplified) of the black mists that
cling to the sticky relations will be unavoidable. In addition, the Korean economy
will continue to suffer from increasing diff iculty, as seen by its foreign debt
remainder, which will double to $6.1 billion by the end of 1986 from $30.5 billion
- at the end of 1981, even if Japan were to prop it up completely.
COPYRIGHT: MainiGhi Shimbunsha 1981
8940
CSO: 4105/7
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S. KOREA/ECONOMY '
TECHNOLOGICAL ASSISTANCE FOR P'OHANG STEEI' MILL REFUSED
Tokyo NIHON KEIZAI SHIlrBUN in Japanese 13 Oct 81 p 1
[Text] Japan and West Refuse to Cooperate with Korea in Its Seamless Steel Pipe
Plant C~nstruction, Fea~it?g "Boomerang" ~Effect
The P'ohang Steel Mill of Korea, wh:Lch has taken the export offensive against Japan
and in the Southeast Asian market, is now aiming at moving into high-grade ~teel,
seamless steel pipe production. I~ has approached the Nippon Steel Corporation,
Nippon Kokan Kabushiki Kaisha, and Sumitomo Metal Industries Ltd for technical
~ssistance, but the req~iest was refusEd by all three firms, it was learned on the
12th. Acco,rding to insiders in steel business circles, European manufacturers
such as Mannc~sman of West Germany gppear t4 l~ave refused also. The main reason
, c.ited was: "Japanese a~ well as U.S. manufaCturers ot seamless steel pipe are
stepping up their production and adding new facilities today, so there is a danger
~ of oversupply worldwide aft~r 1984." There fe no precedence for Japan's steel
' industries refusing a request for technical assistanee. This event shows the
nervousness of the industry about the boomerang effect, whose impact has begun to
be felt in earnest. We might say that steel techaology cooperation has also
~ entered "an age of selectivity." ~
~ The F'ohang Steel Mill is a new advanced steel planz built with the overall tech-
nical assistance of Japanese manufacturers. It has grown inCo a system which by
February this year was producing 8.5 million ton3 of raw steel a year, and its
' second hot-roll plant will be in full operation this summer. Its main product--
, hnt coils--is comparable in quality with the Japanese product but cheaper by $20
per ton or so. The impact of P'ohang products will be �elt by Japan in the form of
~ a reduction in the export of hot coils to Southeast~Asia during the October to
December period to 250,000 tons, which is less than half that during the same
, period o~ the previous year. In addition, exports to Japan are also increasing
slowly but steadily, and Japan's business circles are receiving a heavy blow:
The request for technical assistance in the construction of a seam].ess steel pipe
plant as well as instruction in operational skilie after the plant ia built was
made by the technical personnel in charge~of the P'ohang Steel Mill in person. It
is the desire of K,oreans to progreas from production of low- to medium-grade steel
centered around hot-rolled thin plate and thick plate to the production of hign-
grade steel. The Koreana believe that, with the Japanese manufacturers' assistance,
construction of a seamless ateel pipe plant can 6e undertaken immediatelq within
the existing steel mill.
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At preaent, seamless steel pipe ia in ghort aupply worldwide ae a result of the oil
_ development boom. However, as a result of facilities being added in Japan alone,
the supply capacity after 1 984 will increase 60.percent, from the present 3.9
million tons a year to 6.2 million tons a year [figures as published]. If the in-
crease in supplq capacity~o f the U.S. manufacturers is added to this, the balance
between supply and demand i s bound to collapse. To build a new seamless steel
y pipe plant, at least 100 bi llion yen c4f capi*_al will be required, an3 thsre is a
strong indication that a re quest fdr a financial assistance will follow. Therefore,
- the Japanese are said to have declined the request on the ground that "they do not
have technical personnel t o spare."
However, the true reason fo r refusing the Korean request by Japan as well as the
West is the fear that it mi ght upset the market situation, like the low cost
_ offensive of hot coils that is taking place today, because more than half of the
seamless steel pipe that c ould be produced by P'ohang would have to be exported.
The Korean Government recently postponed the construction of its second national
steel plant (the second P'ohan~ pro~ect) from 1982 to 1985. It is inevitable that
high-grade steel will have to be dealt with fn the ~econd P'ohang pro3ect. The
steel industries of Japan, which have truly begun to suffer from the boomerang
phenomenon, are forced to c ope witY? thi~ very difficult situation created by the
- request for economic cooperation made by ~he Japanese and Kc~rean Govexnments.
Boomerang effect: As a re sult of capital or technieal as~istance offered over-
seas, the enterprise3 which received assistance become so powerful that their
� merchandise begins to flow back into the cowntry which export~c~ the capital and
technology in the first pla ce, or begins to compete for markets in third countries.
A boomerang is an instrirment used by natives of Australia to hunt sma11 prey such
- as a bird. The word is use d metaphorically to describe its coming back at you.
COPYRIGHT: Nihon Keizai Shimbunsha 1981
9113
- CSO: 4105/12 END
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