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Seoul again urges Tokyo to rethink export restrictions

WTO dispute process is due to begin with talks later this month
Oct 02,2019
SEJONG - Korea again urged Japan to reconsider its grounds for export curbs on industrial materials as the World Trade Organization (WTO) dispute settlement process kicks off this month.

The Ministry of Trade, Industry and Energy called for a resolution with Japan over the ongoing trade conflict through bilateral consultations - the first step in the WTO’s dispute settlement process, calling the export measures “discriminatory” and responsible for supply uncertainties.

“Japan’s hardly predictable export controls against Korea have increased uncertainties in supply chains and substantively affected the operations of companies,” said Park Tae-sung, deputy minister for trade and investment, at the Government Complex in Sejong.

“The Korean government once again urges the Japanese government to reexamine its position in order to solve this issue through consultations in accordance with the relevant provisions of the WTO in the days ahead.”

Bilateral consultations through the WTO are slated to take place sometime this month, after Korea filed a complaint over the restrictions on Sept. 11.

Seoul’s complaint is directed at Japan’s decision three months ago to strengthen controls of exports to Korea of hydrogen fluoride, photoresists and fluorinated polyimide - essential for semiconductor and display manufacturing.

The Korean government’s announcement was also timed to mark 90 days since Japan introduced its export restrictions on July 4. Under the tightened export processes, shipments can take up to 90 days to be processed in Japan. As today is the 90th day since July 4, Japan should now theoretically begin reducing exports that have been held for processing.

Japan has so far approved exports of the three materials just five times - once for hydrogen fluoride, three times for photoresists and once for fluorinated polyimide. It has also yet to approve exports of a liquid form of hydrogen fluoride, which is used for semiconductor production, heightening supply uncertainties.

While Tokyo maintains that the measure was put into force due to security concerns and an erosion of trust, Seoul has argued that it was motivated by a diplomatic row over a Korean Supreme Court decision on compensation for victims of forced labor during World War II.

The two countries have since entered into a full-blown trade war, downgrading each other from their lists of preferential trade partners and disputing the export measures at the WTO.

The restrictions’ impact on overall trade between Korea and Japan, however, has been limited.

According to Trade Ministry data on Tuesday, exports to Japan declined 5.9 percent last month in line with broader declines in outbound shipments of 11.7 percent.

Park explained that the three restricted materials represent a meager 1.6 percent of imported products from Japan from July to September.

The trade conflict between the two countries seemed to have weighed more on Japan as Korea’s exports to Japan from July to August fell 3.5 percent compared to Japan’s exports to Korea dropping 8.1 percent over the same period, likely influenced by boycott movements in Korea against Japanese goods.

In fact, the Trade Ministry said Korea’s share of Japan’s total exports has increased despite the restrictions, accounting for 6.9 percent of Japan’s global exports in August compared to a 6.3 percent share in June, citing Japanese Finance Ministry data.

BY CHAE YUN-HWAN [chae.yunhwan@joongang.co.kr]