Japan officially removed from ‘white list’

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Japan officially removed from ‘white list’

Korea has removed Japan from its list of preferential trade partners, further heightening trade uncertainties and tensions between the two countries just a week after Seoul took the dispute to the World Trade Organization (WTO).

The Ministry of Trade, Industry and Energy announced Tuesday that Japan will no longer receive preferential trade status effective today, resulting in strengthened export controls on strategic materials to Japan.

The latest announcement deepens the trade feud between the two countries stemming from a diplomatic row over the Korean Supreme Court’s decision on compensation for forced laborers during the colonial period.

Tokyo implemented a similar move to downgrade Seoul’s trade status last month, following its decision in July to tighten controls on three industrial materials exported to Korea.

Seoul has accused Tokyo of being motivated by the diplomatic dispute, filing a complaint last week to the WTO against the export restrictions in July.

The Korean government remained cautious on the implications of the latest move, as it had criticized Japan for doing the same thing, explaining that Korea’s changes were made against countries that it deemed difficult to cooperate with. It emphasized that the downgrade in Japan’s status was not made simply as a response to Japan’s decision to do the same to Korea.

“The most important thing is that this is not a retaliatory measure to Japan’s strengthening on export controls,” said Lee Ho-hyeon, director general for international trade policy, during a briefing at the Government Complex in Sejong. “We determined whether countries [that receive preferential trade status] could be cooperative on the global stage.”

“Japan had a political motive [for Korea’s status downgrade] so the measures are basically different in purpose and direction,” said Lee, explaining that Korea’s changes were merely improvements to manage exports of strategic materials.

According to Korea’s Trade Ministry, it received opinions on Japan’s removal from the list for 20 days until Sept. 3, with 91 percent of submissions approving the measure.

The government added that the Japanese Industry Ministry, industry officials and some Korean industry experts expressed opposition through their submissions, arguing that the measure would be based on a misunderstanding of Japan’s export controls system or that it could lead to losses for Korean firms.

Through Japan’s removal, the approval process for Korean exports of strategic materials in 1,735 categories to Japan could now take up to 15 days, compared to five days under the previous status.

Lee explained that the affected materials include semiconductor materials, petrochemical products and telecommunications network equipment.

The government downplayed the potential impact on Korean companies.

“There are less than 100 companies exporting strategic materials to Japan as of last year,” said Lee, declining to provide specific statistics on Korean exports to Japan. “The exports of such products to Japan account for a small share of the total.”

Lee added that companies that have trusted trade designations will not face changes to their export approval process.

Overall trade between the two countries has dwindled amid the escalating trade feud. Japanese exports to Korea fell 8.2 percent last month from a year earlier, while Korean exports to Japan declined 6.2 percent.

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