Ahead of trade meeting, Japan allows shipment

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Ahead of trade meeting, Japan allows shipment

Japan approved the export of liquid hydrogen fluoride to Korea for the first time since the Shinzo Abe administration restricted shipments of key industrial materials in July.

The approval came a few days before Korea and Japan will hold a second round of World Trade Organization (WTO) talks over the trade dispute.

Yonhap on Saturday reported that the Japanese government accepted the request of chemical manufacturer Stella Chemifa to export liquid hydrogen fluoride to Korea, citing multiple industrial sources.

Although Tokyo had approved the export of hydrogen fluoride in gas form, this was the first time for liquid form.

Hydrogen fluoride plays a crucial role in manufacturing high-end computer chips - especially the liquid form. It has been reported that Samsung Electronics and SK Hynix, Korea’s leading semiconductor companies, have repeatedly requested approval for liquid hydrogen fluoride shipments that were denied on grounds of paperwork problems.

One reason the Japanese government may have approved the shipment is a worsening situation at the Japanese company. While Stella Chemifa has 70 percent of the global market share for liquid hydrogen fluoride, its operating profit in the third quarter nosedived 88 percent compared to the previous year to 148 million yen ($1.36 million). Revenue was down 21 percent to 7.46 billion yen.

Korean computer chip companies have been taking emergency steps including cutting back on the use of etching gas and developing Korea’s own hydrogen fluoride supplies.

But more importantly, Korea and Japan are scheduled to hold a bilateral meeting on the dispute on Nov. 19.

On Sept. 11, Korea filed a complaint with the WTO on the Japanese trade restrictions. Before the issue is reviewed by the WTO Dispute Settlement Body (DSB), the two parties can hold one-on-one meetings to settle their difference within 60 days of the filing.

The first round was held last month in Geneva but failed to reach an agreement. The second is to be held on Nov. 19.

If the issue is bought to the DSB, Japan could be in a disadvantageous position. The Japanese government can review an export request for a maximum of 90 days. If it avoids a decision for more than 90 days without specific reason, it can be considered an illegal trade barrier imposed on another country.

Some believe that is why the Japanese government approved the export of the liquid hydrogen fluoride.

In July, Tokyo announced it was restricting exports of three key industrial materials crucial for manufacturing semiconductors and displays ? hydrogen fluoride, photoresist and fluorinated polyimide.

But some exports were approved. In early August, Tokyo approved a shipment of photoresists followed by hydrogen fluoride gas form later that month. Fluorinated polyimide was approved in September.

The Korean government continued to press Japan to retract its trade restrictions.

BY JEONG EUN-HYE, LEE HO-JEONG [lee.hojeong@joongang.co.kr]
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