Seoul still cautious on eased export restrictions

Demands are growing in Seoul that the Japanese government expand its rollback on export controls after it softened its stance last week for the first time in five months.

Late Friday, the Japanese Ministry of Economy, Trade and Industry said it is granting three-year bulk permits on photoresists, which is a crucial chemical in the manufacturing of semiconductors.

However, strict export approval still remains on the two other chemicals that the Japanese government first tightened controls on in July.

The two other chemical materials - hydrogen fluoride and fluorinated polyimide - are also essential in making semiconductor chips and displays, and exports of the pair are still being tightly controlled by the Japanese government.

Tokyo’s change in its stance comes just a few days ahead of a scheduled meeting between Korean President Moon Jae-in and Japanese Prime Minister Shinzo Abe on Christmas Eve during their visit to China.

The announcement also came after Seoul and Tokyo held a director-level meeting on export controls last week, which was the first in three and a half years and a sign of thawing tensions between the two countries that have been at odds since the Korean Supreme Court in November last year ruled that two Japanese companies must compensate victims of forced labor during the occupation period.

The Japanese government, however, denied the easing on the export controls as a gesture ahead of the meeting between Moon and Abe, adding that it was a reflection of the good record between the Korean company and the Japanese supplier.

The Korean government also considers the Japanese government’s action falling short of expectations.

“Among the three materials whose exports have been restricted, only one - photoresist - have seen any action taken,” said Lee Ho-hyeon, director-general for international trade policy at the Korean Trade Ministry. “And only one company has been given a comprehensive license.”

Lee said in the Korean government’s view this move is not enough to be considered a rollback of July’s export restrictions.

Eighty-eight percent of Korea’s photoresist imports are estimated to come from Japan.

Furthermore the recent easing of export controls granted by the Japanese government is still restrictive compared to the general license that had been previously issued that only needed government approval every three years.

The eased restrictions only apply to companies that have had good track records on its imports, and these companies must have more than six approvals from the Japanese government to qualify, meaning the Korean companies are cautious to react to the Japanese government’s latest move.

“It’s a positive signal considering the trade between the two countries and the overall semiconductor market,” said a Korean official in the semiconductor industry, requesting anonymity. “But we will probably have to wait and see as this does not completely resolve the uncertainties.”

One industry official said it seems Japan is trying to solve the situation that Korea and Japan are facing by slowly lifting the controls that don’t have much impact on the chemical material.

Photoresists were also the first item that the Japanese government approved for export to Korea after it applied the strict export regulations in July. On Aug. 4, the Japanese government approved the export of extra ultraviolet (EUV) photoresists to Korea. Samsung Electronics was said to be the only Korean company using EUV photoresists.

Since then it has also approved individual cases for the other two materials.

The tensions between the two countries started to show improvement after the Korean government last month decided not to go through with its earlier threat of not renewing its bilateral military information-sharing pact with Tokyo known as the General Security of Military Information Agreement.

The next director-level meeting between the two countries is to take place in Seoul next month.

BY LEE HO-JEONG, HA NAM-HYUN [lee.hojeong@joongang.co.kr]