Daily Management Review

Diplomatic Solution For Trade Spat With Japan Stressed By South Korean President


Diplomatic Solution For Trade Spat With Japan Stressed By South Korean President
Stress on finding a diplomatic solution to the most recent trade spat with Japan was given by South Korea's president on Monday. The countries are facing a trade spat after Japan decided to curb exports of three crucial high-tech materials to South Korea which are used in manufacturing of semiconductors and displays by South Korean companies.
While describing the export curb as a politically motivated measure, the South Korean President Moon Jae-in called on Japan to withdraw the measures while also urging the third largest economy of the world to initiate "sincere" bilateral discussions to resolve the issue. He however also threatened that if South Korean companies were to get hit because of the export curbs by Japan, South Korea would be left with no options but to take counter measures.
South Korea was removed from a list of countries with which minimal restriction on trade is conducted by Japan. Instead Japan has issued an order that mandates that export shipment of photoresist and other key materials to South Korea would have to done under a special permission from Japanese authorities every time. The measure by Japan was made as a part of a long standing dispute between the two countries that has its roots in the brutal Japanese annexation and colonial rule of the Korean Peninsula during the Second World War. A recent verdict against Japanese corporations to compensate South Korean plaintiffs for forced labor during the Second World War by a South Korean court had sparked the latest row.  
The so called "unjust" Japanese action would be challenged through a complaint at the World Trade Organization by Seoul, South Korea's Trade Ministry has said earlier.
"The recent trade curbs imposed by Japan have raised concern over disruption in production for our companies and the threat it poses to global supply chains ... there's global concern over the move to limit mutually beneficial trade between civilian companies for political purposes," Moon said.
"A vicious cycle created by measures and countermeasures wouldn't be ideal for both countries. But if South Korean companies begin experiencing actual damages, our government would have no choice but to take a necessary response," he said, adding that he hopes things don't come to that.
The export curb was put into practice last Thursday and primarily include three critical components that are used in the manufacturing of semiconductor chips and display screens - fluorinated polyimides, photoresist and hydrogen fluoride. Polyimides is used in the making of organic light-emitting diode (OLED) screens for TVs and smartphones while photoresist and hydrogen fluoride are crucial in making of semiconductors.
Japan also alleges of improper use of the exported materials by South Korea.  - Japanese Deputy Chief Cabinet Secretary Yasutoshi Nishimura confirmed this without giving any details – even though there have been reports that Japan suspects that the three exported materials in question was sent to North Korea after they reached South Korea.
"Regarding export controls with South Korea, it is true we haven't had sufficient communications or exchanges of opinion with South Korea for at least three years," Nishimura said.