Ministers discuss response to export restrictions

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Ministers discuss response to export restrictions

As a swift resolution for Japan’s export restrictions against Korea looks increasingly unlikely, the Korean government convened a ministerial meeting to prepare for the impact on local industries.

The Ministry of Economy and Finance said Tuesday that senior government officials, including Finance Minister Hong Nam-ki, Trade Minister Sung Yun-mo and Financial Services Commission Chairman Choi Jong-ku, met at the Central Government Complex in Seoul to discuss measures against Japan’s export restrictions.

The government explained in a statement that the meeting considered measures to minimize losses to local companies, adding that dialogue with Japan is being maintained, although no official meeting has been confirmed between the two countries.

“The government is consulting with the Japanese government and is actively working toward cooperation at an international level through major countries, investment banks, credit rating agencies and others,” said the Finance Ministry.

In a separate meeting, Minister of SMEs and Startups Park Young-sun expressed the need for Korean industries to reduce their reliance on imported materials.

“We need to prepare for an independent materials industry with small- and medium-sized companies,” said Park on Tuesday. “We need to strengthen policy support to materials and parts companies.”

The government’s preparations come after the first official talks between the two countries last Friday confirmed that Korea will likely be removed from Japan’s list of countries receiving preferential trade status. Tokyo already tightened exports to Seoul on three industrial materials used in semiconductor and display production on July 4.

Since the trade measures were implemented, Seoul has warned of retaliatory measures and is planning to take action through the World Trade Organization.

Analysts and global firms expressed concern that the trade row will become drawn out.

Global credit agency Fitch Ratings forecast Monday that the trade row is expected to hurt not only Korean companies, but also the global market.

“The restrictions threaten not only Korean companies but also companies from many other markets that take part in the global technology ecosystem,” said Fitch in a report.

“Prolonged conflict between the two countries could backfire and hurt Japanese companies in the long-term.”

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