Trade deficit suggests Tokyo hitKorea and Japan will meet for talks in a bid to settle their trade dispute at the World Trade Organization in Geneva today.
According to data released by Korea’s Ministry of Trade, Industry and Energy ahead of that meeting, Japan has actually suffered heavily from the trade dispute that started when it introduced restrictions on exports of key industrial materials to Korea in July and excluded Seoul from its “white list” of countries that receive fast-tracked trade approval.
Korea’s trade deficit with Japan in the first 10 months of this year turned out to be the lowest in 16 years.
According to the Trade Ministry and the Korea International Trade Association, in the first 10 months of this year, Korea’s trade deficit with Japan was $16.4 billion. This is a 20 percent drop compared to the same period last year, when it was above $20 billion.
This is the lowest deficit in trading with Japan since 2003, when it was $15.6 billion.
Among Korea’s top 10 trade partners, Japan and Taiwan are the only countries with a trade deficit.
Trade Minister Sung Yun-mo last week said that while Korea’s exports to Japan have shrunk, goods imported to Korea from Japan have fallen at a faster rate.
Korean goods exported to Japan in the first 10 months declined 6.5 percent compared to the same period a year ago to $23.7 billion. Goods imported from Japan have dropped nearly 13 percent to $40.1 billion.
The downsizing of the trade deficit is largely believed to be the result of Korean companies cutting back on importing machinery from Japan, especially related to manufacturing computer chips, while diversifying the countries from which they import key industrial materials. Korean firms have also been speeding up the development of materials that were previously imported from Japan.
According to the Korean Trade Ministry last month, no hydrogen fluoride etching gas for computer chips was imported from Japan in August and September. Japan restricted exports of the etching gas used in manufacturing computer chips. Korean semiconductor companies like Samsung Electronics and SK Hynix heavily relied on Japanese hydrogen fluoride due to its high purity, which is essential in creating high quality chips.
In August and September, Korean manufacturers mainly used etching gas from China and Taiwan, as well as the United States.
On Saturday it was reported that the Japanese government approved the export of liquid hydrogen fluoride to Korea requested by Japanese manufacturer Stella Chemifa, which owns 70 percent of the global market for hydrogen fluoride with high purity.
The Japanese company as of the third quarter has suffered an 88 percent drop in its operating profit while revenue was down 21 percent, largely thought to be due to the Japanese government’s restrictions.
Boycotts against Japanese consumer goods including beer and automobiles are also considered to have been a major factor in lowering the deficit in trading with Japan.
According to the Japanese government, in September, Japanese beer imports to Korea nosedived 99.9 percent compared to the same period a year ago. Last year it exported $7.2 million worth of beer to Korea. In September this year that figure plummeted to $5,400.
Japanese beer since 2010 has been the most popular imported beer in Korea.
BY LEE HO-JEONG [email@example.com]
More in Economy
Tapped out and hunkered down, Korea stares recession in the face
Property owners get big tax shock
Household debt keeps climbing despite gov't efforts
Career interruptions due to marriage and childbirth down 11 percent
Despite vaccine shot in the arm, credit risk remains in markets