Thu, Sep 19, 2019 - Page 10 News List

Seoul downgrades Tokyo’s trade status

‘WHITE LIST’:South Korea removed Japan from a list of nations enjoying limited restrictions on exports of sensitive materials following a similar move by Japan


South Korea yesterday dropped Japan from a list of countries receiving fast-track approvals in trade, a reaction to Tokyo’s decision to downgrade Seoul’s trade status amid a tense diplomatic dispute.

The South Korean Ministry of Trade, Industry and Energy said that Japan’s removal from a 29-member “white list” of nations enjoying minimum trade restrictions went into effect as Seoul rearranged its export control system covering hundreds of sensitive materials that can be used for civilian and military purposes.

The change came a week after South Korea initiated a complaint at the WTO over a separate Japanese move to tighten export controls on key chemicals that South Korean companies use to manufacture semiconductors and displays.

The new measures in effect mean it might take up to 15 days for South Korean companies to gain approvals to export sensitive materials to Japan, compared with the five days or less it took under a simpler inspection process provided for favored trade partners, the ministry said.

The change would affect about 100 companies that export items such as telecoms security equipment, semiconductor materials and chemical products to Japan, ministry official Lee Ho-hyeon said.

Seoul would work to minimize disruption to South Korean companies, he added.

Japan for decades has enjoyed a huge trade surplus with South Korea, an economy that is much more dependent on exports.

Many major manufacturers rely heavily on parts and materials imported from Japan.

However, the dispute is taking a toll.

Exports from Japan to South Korea last month fell 9.4 percent, the Japanese Ministry of Finance reported yesterday.

The trade dispute erupted in July, when Japan imposed tighter export controls on three chemicals that South Korean firms use to produce semiconductors and displays for smartphones and TVs, major export items for South Korea.

It cited unspecified security concerns over Seoul’s export controls.

A few weeks later, Japan dropped South Korea from its own trade “white list,” triggering a full-blown diplomatic dispute that took relations between the US allies to their worst in decades.

The dispute has spilled over to security issues, with Seoul declaring it plans to terminate a bilateral military intelligence-sharing pact with Japan that symbolized the nations’ three-way security cooperation with the US in the face of North Korea’s nuclear threat and China’s growing influence.

Following an angry reaction from Washington, Seoul said it could reconsider its decision to end the military agreement, which remains in effect until November, if Japan relists South Korea as a favored trade partner.

South Korea previously divided its trade partners into two groups in managing export controls on sensitive materials.

South Korea now has an intermediate bracket where it placed only Japan, which would mostly receive the same treatment in trade as the non-favored nations in what had been the second group.

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