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Moon administration should act to repair damaged ties with Japan

Source: The Japan News (The Yomiuri Shimbun) | July 6th, 2019
Location: South Korea
Industry type: Electronics Industry

The South Korean government should take responsible action to restore the collapsed bilateral relationship of trust with Japan.

The Japanese government tightened export controls against South Korea on three items, including hydrogen fluoride needed to produce semiconductors and other devices. Exporters are now required to apply to the government for each shipment, and the screening of the applications will take about 90 days.

Furthermore, the government has started the process to remove South Korea from the list of “white countries” that can receive preferential treatment for streamlining export procedures. It will revise a government ordinance for that purpose as early as August.

Many companies will likely face severe export screenings for a wider range of items that could be diverted to military use, such as carbon fiber and telecommunication devices, in addition to the three items already designated.

Offering a reason, the Japanese government explains that “as Japan-South Korea relations were significantly impaired, it has become difficult to address the export controls under a relationship of trust.”

The Japanese government seems to have judged that it can no longer overlook the current situation in which South Korea does not keep promises between the two countries on issues such as the problem of lawsuits concerning South Korean former wartime requisitioned workers.

Export control authorities of the two countries have rarely met for negotiations. It is understandable that the Japanese government came to a conclusion that the bilateral “relationship of trust” has been impaired.

Formerly, the World Trade Organization ruled that China’s export restrictions on rare earths, which are needed to produce motors and other items, violated WTO agreements. Japan’s action this time, which is only a tightening of the export procedure, is different from the export restriction.

Prepare for ROK strategy

Criticizing Japan’s action as “a retaliatory measure defying common sense,” the South Korean side is considering filing a case with the WTO. However, the primary responsibility for deteriorating the situation to this point lies with the South Korean administration of President Moon Jae-in.

Since the South Korean Supreme Court ordered a Japanese company to pay compensation for the former requisitioned workers, the administration has not taken any measures on the issue. It did not listen to the Japanese government, which insists that Seoul is violating the Japan-South Korea Agreement on the Settlement of Problems Concerning Property and Claims and on Economic Cooperation, in which the issue of claims was confirmed to have been settled completely and finally.

Recently, the South Korean government presented a “solution” in which contributions collected by companies of both Japan and South Korea would be provided to the former requisitioned workers, but it is far from being accepted. The Moon administration should reconsider how to deal with the issue.

Japanese companies produce a high share of the three items under the new measure. If the export procedure is prolonged, there is a risk that the production of semiconductor products and displays manufactured by South Korean companies could stagnate.

Consequently, there is also the possibility of a negative influence mainly on Japanese firms’ production of television sets using South Korean-made parts. The Japanese government must carefully monitor how things develop and deal with the issue flexibly. Japan also needs to tenaciously urge Seoul to engage in dialogue and aim to break the deadlock.

It is highly possible for the South Korean side to resort to diplomatic and propaganda strategies on the international stage. It is indispensable that the Japanese government prepare thoroughly for such a situation.

*Original article online at http://the-japan-news.com/news/article/0005856617