Seoul raises restrictions on exports at the WTO

Korea demanded Japan end export restrictions it began last week in a World Trade Organization (WTO) meeting in Geneva Tuesday, raising the issue with the global trade arbiter for the first time.

Paik Ji-ah, the South Korean ambassador to the United Nations and other international organizations in Geneva, said in a meeting of the WTO’s Council for Trade in Goods that Japan “has to make clear the rationale behind” its export restrictions and that the measures should be “retracted as soon as possible.”

Seoul and Tokyo are facing a possibly snowballing crisis in diplomatic relations - involving both trade and security matters - following Japan’s announcement of export restrictions on Korea last week, a response to Korean court rulings ordering compensation for victims of forced labor during World War II.

During the session, Paik noted that Japan’s export restrictions are “against only a single country,” and that “it is inappropriate to take retaliatory economic measures for political purposes,” according to the Korean Ministry of Foreign Affairs.

On Monday, Korea introduced the issue of the export restrictions at the Geneva-based WTO, and the topic was formally included as the final agenda item for a two-day meeting of the Council for Trade in Goods Monday and Tuesday.

Paik said it was “regrettable” that Japan announced the measures just after hosting Group of 20 (G-20) summit in Osaka, which emphasized free and fair trade in a joint statement.

Junichi Ihara, Japan’s ambassador in Geneva, was quoted by NHK as having rejected during the meeting the idea of the measures being a “trade embargo,” and said they are “a revision of export controls based on security reasons” that “does not violate the WTO regulations at all.”

A WTO general council meeting is scheduled for July 23 and 24, which could lead to another clash between Seoul and Tokyo on the matter.

Korean Supreme Court decisions last October and November called for Japanese companies to individually compensate victims of forced labor during World War II, recognizing the illegality of Japan’s colonial rule over Korea. Japanese companies refused to comply with the ruling, and the victims are using legal procedures to seize and attach the companies’ assets in Korea.

Through diplomatic channels, Tokyo has protested the Supreme Court rulings, claiming that a 1965 treaty normalizing bilateral relations settled all compensation matters. Seoul has maintained it respects the independence of its judicial branch.

During Tuesday’s session, Paik shot down Japanese Prime Minister Shinzo Abe’s argument that deteriorated “trust” or some “occurrence of an inappropriate matter” justified the export restrictions under current WTO regulations.

Korea alleges that Japan’s trade restrictions may be in violation of Article 11 of the WTO’s General Agreement on Tariffs and Trade (GATT) of 1994. An exception to the ban on export regulations under the GATT includes protection of national security interests.

On July 1, Japan’s Trade Ministry announced restrictions on export to Korea on three key materials - fluorinated polyimide, hydrogen fluoride and photoresists - needed in the production of semiconductors and smartphones. The export controls on the three high-tech materials were implemented on July 4. Tokyo has denied that the restrictions are a response to the wartime forced labor issue and instead claims a matter of national security.

Japanese politicians have gone as far as to suggest that Seoul may have violated sanctions on North Korea and that high-tech materials that can be used for military purposes may have ended up in North Korea.

Japan has also threatened to remove Korea from its so-called white list of countries with minimal export regulations, which it has been on since 2004.

Korea last week responded that it plans to file a complaint with the WTO, accusing Japan of going against international law and norms. Korea’s Ministry of Trade, Industry and Energy said it could take “corresponding measures” until the restrictions are removed and has also shot down suggestions that any supply of hydrogen fluoride made its way to North Korea.

President Moon Jae-in this week called out Japan for being politically motivated in its export restrictions, but underscored that his government will work to resolve the issue through diplomatic means.

Japanese Trade Minister Hiroshige Seko, however, said Tuesday that Japan’s export restrictions against Korea “are not an issue for negotiation.”

Kim Jung-han, the Foreign Ministry’s director general for Asian and Pacific affairs, is expected to visit Japan later this week, an opportunity to make contact with Japanese officials.

A Foreign Ministry official told the JoongAng Ilbo Wednesday that Kim will be attending a regional meeting for diplomats hosted by Nam Gwan-pyo, the Korean ambassador to Japan.

Kim Hee-sang, a Foreign Ministry director general for bilateral economic affairs, will visit Washington Thursday and holds talks with U.S. officials, where Japan’s export restrictions are likely to be brought up. Korean Trade Minister Yoo Myung-hee is also expected to travel to the United States next week.

BY SARAH KIM [kim.sarah@joongang.co.kr]