Prepare for the worst

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Prepare for the worst

Japan may be preparing to drop Korea from a list of countries eligible for preferential treatment in trade at a cabinet meeting on Friday. If Tokyo really makes that decision, the current row will go beyond the realm of a trade dispute and bring about a collapse in bilateral relations. Japan’s restrictions on three key export items starting July 4 could not be justified. Tokyo must withdraw a reckless action that can critically shake the global supply chain.

Our government must exert all diplomatic efforts possible, including persuading Tokyo to delay Friday’s cabinet meeting. It’s possible something can be done on the sidelines of the Asean Regional Forum in Bangkok, which opens on Thursday. In a press briefing Tuesday, ruling Democratic Party Chairman Rep. Lee Hae-chan stressed the need to coexist with our neighbor despite historical grudges. We welcome his remarks given all the hawkish reactions from the ruling party, including the threat to scrap the General Security of Military Information Agreement (Gsomia) — a bilateral military intelligence-sharing agreement — with Japan. The Moon Jae-in administration must not give up diplomatic efforts, which are the only way to avoid a catastrophe.

At the same time, the government must brace for the worst possibility. If Korea is removed from the list, 1,115 strategic items shipped to Korea will have to receive permission from Tokyo from next month. The repercussions will go far beyond Japan’s earlier restrictions on three key materials needed to produce semiconductors and displays.

Japan’s move is aimed at attacking Korea’s mainstay industries through export control, as most of the restrictions target the main engines of our economic growth, including potentially rewarding businesses like hydrogen vehicles. Our chemical and precision machine industries, which heavily rely on Japan, will be the next targets. The government’s rallying cry to raise the competitiveness of our basic industries is pointless. It must do its best to reduce our dependence on Japan for technology.

But we should be wary of some who blame big companies for the crisis. Even President Moon said our conglomerates resorted to Japan’s cooperation after dismissing our ability to produce key industrial materials on our own. In the global supply chain, any company would capitalize on a competitive advantage — particularly when a slight difference in quality is directly linked to the competitiveness of final products. Instead of blaming big companies, the government and the private sector must join hands to foster the competitiveness of our basic industries.

JoongAng Ilbo, July 31, Page 30
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