Daily Management Review

South Korea Says Export Curb By Japan Could Be An Extended One


South Korea Says Export Curb By Japan Could Be An Extended One
There are chances of prolongation of the export curb imposed by Japan on key materials used by South Korean technology firms, said South Korea's president on Wednesday. President Moon Jae-in said that his government would try and reduce their reliance on Japanese suppliers and would be making sharp increases in spending to do so.
Restrictions on exports were imposed last week by Japan on three crucial materials exported from Japan to South Korea which is used by South Korean companies to manufacturing of smartphone displays and chips. The reason cited by Japan for the decision was its dispute with South Korea over allegations that South Koreans were forced to work for Japanese firms during World War II.
There is a threat now of supplies of chips and displays from South Korea's tech giants Samsung Electronics and SK Hynix being hit because of the growing trade spat between the two countries. The major makers of chips and displays in South Korea are also the major suppliers for companies like Apple and other major smartphoen makers.
"We can't rule out the possibility that the situation would be prolonged, despite our diplomatic efforts to resolve the issue," President Moon Jae-in said at a meeting with executives from South Korea's top 30 conglomerates.
"It is a very regrettable situation, but we have no choice but to prepare for all possibilities," said Moon. He added that there would be a sharp increase in government spending to aid in sourcing of parts, materials and equipment domestically by South Korean companies.
The president also rubbished a report which quoted a Japanese politician as claiming that hydrogen fluoride imported from Japan had been illegally shipped to North Korea by Seoul which is a violation of international sanctions on North Korea. Hydrogen fluoride which is a chemical that is under the Japanese export curbs, can be used for making weapons.
"It is not desirable at all ... that Japan takes measures that deal a blow to our economy because of political purpose and makes remarks that link the measures to sanctions on North Korea," Moon said. The chip industry of South Korea accounts for 20 per cent of the country’s exports and is a bread and butter industry for the country.
"We will seek international cooperation as the measures will naturally have an adverse impact on the global economy," he said.
However there are scant signs of the raw coming to an end. Last week, Japan threatened that it would put South Korea out of a "white list" of countries with which Tokyo imposes minimum restrictions on trade which would hit exports of products that are used in producing weapons.
According to the exports curbs of the three materials, Japanese exporting companies would be required to seek special permission for the same every for every shipment to they make to South Korea. According to reports, the permission granting process, if given, would need 90 days.