Seoul, Tokyo to discuss WTO trade complaint

Japan has agreed to bilateral talks over Korea’s complaint to the World Trade Organization (WTO) about Tokyo’s export curbs, the first step in the trade body’s dispute settlement process.

According to an official at the Japanese Embassy in Korea, Japan’s Ministry of Economy, Trade and Industry said Friday that it will conduct a formal consultation with Korea over a WTO complaint filed earlier this month about Japan’s decision in July to restrict certain exports to Korea.

The bilateral consultation is a step in which countries can reach an agreement by themselves prior to the issue going to a WTO panel.

Korea’s complaint is over Tokyo’s restrictions of exports of three industrial materials - hydrogen fluoride, fluorinated polyimide and photoresists - essential to semiconductor and display manufacturing.

Japan has since approved exports of the materials only three times, heightening supply uncertainties for Korean chipmakers such as Samsung Electronics.

That measure prompted tit-for-tat trade retaliations as the two countries downgraded each other from their lists of preferential trade partners.

Seoul has argued that Japan’s export restrictions violate international trade rules as they are motivated by a diplomatic row over a Korean Supreme Court decision on compensation for victims of forced labor during World War II.

Japan cited an erosion of trust in relations and security reasons for the measures.

Experts believe that the two countries reaching agreement in the bilateral consultation is unlikely.

“Japan is merely following procedures,” said Cheong In-kyo, a professor of international trade at Inha University. “It will likely argue that the issue is not a matter of dispute.”

Under WTO rules, bilateral consultations can take up to two months.

If the discussions fail to reach an agreement, Korea can request a WTO panel to make a decision. In that situation, the trade row is expected to take years before a final decision is made by the trade body.

While a decision by a WTO panel is supposed to take 15 months, the dispute will likely be elevated to its Appellate Body, which would make a final recommendation.

Prior to Japan’s announcement on Friday, Korean Finance Minister Hong Nam-ki described Japan’s export curbs as “damaging the global value chain” and urged their withdrawal.

BY CHAE YUN-HWAN [chae.yunhwan@joongang.co.kr]