South Korean political parties back Moon in Japan trade row

Daniel Fowler
July 18, 2019

Stock prices and the Korean won-US dollar exchange rate have fluctuated considerably, mainly affected by the US-China trade dispute and Japan's export restrictions.

The movement of "Boycott Japan" to encourage people here not to go to Japan for trip nor buy Japanese products spread across the entire South Korea in protest against Japan's export curbs.

Analysts say it is too early to estimate the damage but the curbs could affect South Korea's economy at least by hurting profits at the country's computer chip and smartphone makers as well as hitting sentiment for consumption and investment.

South Korean President Moon Jae-in has said Japan's actions are politically motivated and have caused an "unprecedented emergency" for South Korea's export-driven economy.

South Korea has rejected the Japanese claims and proposed an inquiry by the United Nations Security Council or another global body on the export controls of both countries.

South Korea and Japan are both United States allies, democracies and market economies faced with an overbearing China and nuclear-armed North Korea.

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"The Japanese government should immediately withdraw its economic retaliation measure and clearly understand that additional measures such as the removal from the whitelist would threaten South Korea-Japan relations and the security cooperation in Northeast Asia", said Choi Do-ja, spokeswoman of the conservative Bareun Mirae Party.

Moon's economic policies have faced growing criticism over the past year, while some business figures have questioned his administration's handling of the widening feud with Japan.

The government revised down its growth forecast to between 2.5 percent and 2.6 percent earlier in the month from the 2.6 percent to 2.7 percent forecast in December.

In an earlier survey on Tuesday, 73% of South Koreans said the government's response to Japan's export curbs was appropriate or should be stronger.

Lee Ju-yeol, the bank's governor, said South Korea's exports and domestic investment during the first half of the year were more sluggish than expected and that it's "hard to be optimistic about the (economic) conditions moving forward". Tokyo has stressed that the controls were not retaliation over the forced-labor dispute.

Once the deadline is passed, it would enable Japan to continuously push S Korea for proposals to put an end to the dispute while also preparing for counter-measures, including considering to move ICJ. Tokyo believes the matter of compensation has been settled under a treaty established in 1965.

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