Japan restricts exports to South Korea over wartime labour row

Daniel Fowler
July 2, 2019

The Ministry of Economy, Trade and Industry said a review soliciting public comments starts Monday on the move to effectively remove South Korea from a list of so-called "white nations", like the USA and European nations, that have minimum restrictions on trade.

"As trust has been lost, we can not have a dialogue and are unable to ensure that proper export controls are being taken,"he said". A small number of government officials have also been considering measures including narrowing down export items to be restricted for South Korea.

In a landmark ruling in October, South Korea's top court ordered Nippon Steel & Sumitomo Metal Corp.to pay 100 million won ($88,000) each to four plaintiffs forced to work for the company when Japan colonized the Korean Peninsula from 1910-45.

The Yomiuri Shimbun said Tuesday that Tokyo considered the chip export restrictions along with other measures like stricter visa conditions for South Koreans in response to the South Korean Supreme Court's ruling previous year ordering Japanese companies to compensate Korean victims for wartime forced labor during Japan's colonial rule.

Earlier today, Japan announced that local companies who want to export fluorinated polyimide, resist, or hydrogen fluoride to South Korea will need the government's approval starting July 4.

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But Japan's deputy chief cabinet secretary Yasutoshi Nishimura told a regular briefing that the move was "in accordance with worldwide export regulations and World Trade Organisation rules".

"After reviews by relevant ministries, it must be said that the relations of trust between Japan and South Korea have been significantly harmed", METI added.

After the announcement on Monday, South Korea threatened to take Japan to the WTO. The decision decreases exports to South Korea, with some fearing it could have a negative impact on Japanese companies and global manufacturing networks. South Korea hosts mobile and TV manufacturing giants, like the Samsung Electronics Co., the SK Hynix Inc. and the LG Display Co.

Japan has rejected the rulings and proposed the issue be put to arbitration under an agreement signed by the two countries when they normalised ties.

Japan, produces about 90% of the fluorine polyimide and 70 % of the etching gas in the world. Much as the US ban on Huawei could disrupt global supply chains, this decision could make it hard for both Japanese and South Korean technology firms to continue integrating production, with negative effects on worldwide competitiveness.

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