Avoiding a catastrophe

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Avoiding a catastrophe

Japan is not relenting in its economic retaliations against Korea. The government of Japanese Prime Minister Shinzo Abe on Wednesday gazetted a revised decree on export and trade to remove Korea from a so-called white list of countries eligible for preferential treatment in trade. The move came five days after his cabinet’s decision to delist Korea. Though the government stopped short of specifying additional items being restricted, the gazetting will certainly cause serious problems for Korean companies if they have to get approval for each of the items they import from Japan from Aug. 28, when the new rules take effect.

If Japan trusts individual Korean companies beyond a certain level, they don’t have to get approval for individual items and they are exempted from any requirement for approval up to three years. But the situation will be different if they import “restricted items” for security reasons. In that case, they must receive permission from Japan’s Ministry of Economy and Industry within 90 days — particularly when they import items that can be converted to military purposes. Under such circumstances, more than 1,100 items — including parts for cars and ships — must get individual permissions. It is difficult to find replacements for 87 items immediately as companies depend on Japan for as much as 50 percent of them.

Tokyo is claiming it’s not economically retaliating for diplomatic disagreements. Instead, it has changed its existing system for classifying its trading partners to groups labeled A, B, C, D and downgraded Korea to the B group.

The problem is that Japan can wilfully delay its export procedures — citing any reasons — after Korea has been removed from the white list. That is a big problem for Korean companies heavily relying on Japanese materials, parts and equipment.

The Abe administration must end such outrageous behavior. It must not forget the massive debts it owes to Korea over the past. Japan could rise from the ashes of World War II by adroitly taking advantage of huge demand from the Korean War. If it turns a blind eye to history, breaks the principle of free trade, and resorts to retaliations against Korea, that’s a self-contradictory — and very dangerous — gamble.

The Korean government must respond calmly. It must encourage localization of materials and components. But that cannot be done overnight. The government must also exert all diplomatic efforts to solve the conflict. Otherwise, it will lead to a catastrophe — for both sides.

JoongAng Ilbo, Aug. 8, Page 30
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