S Korea seeks US help in Japan row, sets extra budget

Reuters, SEOUL

Fri, Jul 12, 2019 - Page 1

South Korea has warned the US of the potential damage from “undesirable” Japanese restrictions on exports of high-tech material to South Korea, as a trade row between the two nations intensifies.

As South Korea sought US help in the dispute, triggered by a disagreement over the issue of compensation for South Koreans forced to work for Japanese firms during World War II, it also took steps to limit the damage to its companies.

South Korea announced that up to 300 billion won (US$255.6 million) would be included in a supplementary budget to cope with Japan’s curbs on exports of three materials crucial for advanced consumer electronics by speeding supply localization.

The Democratic Party said about one-third of the proposed budget would be for supporting South Korean materials and equipment makers to help them get their products to market.

S&P Global Rating Asia-Pacific chief economist Shaun Roache said the dispute is as unpredictable as the US-China trade dispute and is likely to affect South Korea’s growth.

The Japanese restrictions are to affect companies such as Samsung Electronics Co Ltd and SK Hynix Inc, which supply chips to companies such as Apple Inc.

South Korean Minister of Foreign Affairs Kang Kyung-wha late on Wednesday told US Secretary of State Mike Pompeo in a telephone call that Japan’s restrictions might not only damage South Korean companies, but could also disrupt the global supply chain and hurt US firms.

Kang “expressed concern that this is undesirable in terms of friendly relations between South Korea and Japan, and trilateral cooperation among South Korea, the US and Japan,” the South Korean Ministry of Foreign Affairs said in a statement.

South Korea hoped Japan would withdraw the curbs and that the situation would not deteriorate further, it said.

Pompeo said he understood and they agreed to strengthen communication between the three sides, it said.

However, analysts say the US is unlikely to become a mediator.

South Korea and Japan also clashed at the WTO this week.

South Korean National Security Office Deputy Director Kim Hyun-chong arrived in Washington on Wednesday and told reporters he would meet officials from the White House and US Congress to discuss issues that included Japan’s export curbs.

Meanwhile, New US Assistant Secretary of State for East Asian and Pacific Affairs David Stilwell arrived in Japan on the first stop of a 10-day visit to Asia.

He is also scheduled to visit South Korea next week, but did not mention the dispute when he spoke to reporters.

He did say that he was looking forward to talking with Japanese officials about subjects including Iran and North Korea.

“I look forward to some interaction with senior Japanese officials, understanding where we sit today in the free and open Indo-Pacific strategy, as well as discussing topics like Iran and North Korea,” Stilwell told reporters after arriving at Narita International Airport near Tokyo.

Stilwell’s post had been vacant for more than two years, despite major challenges in the region.

He is scheduled to meet senior Japanese diplomatic and defense officials until Sunday, before traveling to the Philippines, South Korea and Thailand.