Geta on other foot, olive branch extended to Japan

Economy

Published: 02 Jul. 2020, 17:01

Geta on other foot, olive branch extended to Japan

Finance Minister Hong Nam-ki, second from right, makes an opening speech during the government's emergency economic meeting held at the government's complex in Seoul on Thursday. Hong urged the Japanese government to show sincerity in its attitude toward resolving the trade conflict between the two countries. [YONHAP]

Finance Minister Hong Nam-ki asked the Japanese government to show sincerity in resolving the export-control dispute between the two countries.

“In the past year, as a result of efforts by both the public and private sector [in Korea], not only were we able to overcome the restrictions without facing any production setbacks, but we have also turned the situation into an opportunity to strengthen the local supply network for materials, parts and equipment, including localizing some of the key materials such as the hydrogen fluoride. We have also diversified imports,” Hong said during the government’s emergency economic meeting on Thursday.

“We have acted in sincerity, such as urging the Japanese government to roll back the controls, engaging in bilateral talks and reviewing the related local regulations.”

He said it was Japan’s turn to respond to the efforts made by the Korean government.

“It’s been a year since Japan unfairly restricted exports in relation to the forced labor compensation issue," Hong said. “We urge the Japanese government to show sincerity in rolling back the export regulations and resolving [the issue].”

The finance minister said the government will come up with what it calls “a materials, parts and equipment 2.0 strategy,” which it plans to announce “soon” after ironing out the details.

The measure is expected to include additional government support to major industries affected by Japan’s tighter export controls as well as a restructuring of the supply network affected by the worldwide pandemic and growing protectionism.

“The measure will aim to make Korea into a high-tech manufacturing cluster that would strengthen the stability of supply network for materials, parts and equipment,” Hong said. “Additionally, we will come up with a plan to create a high-tech manufacturing cluster by attracting high-tech industries and reshoring companies.”

The Korean government since last month resumed its complaint lodged with the World Trade Organization (WTO) against Japan regarding export restrictions on three key materials — hydrogen fluoride, photoresists and fluorinated polyimide —essential in the manufacturing of computer chips and displays.

The complaint was halted in November last year, two months after it was first filed. The Korean government in May gave Japan a month to respond, and did not get a response, so it resumed pursuing its complaint.

The Korean government has argued that it has addressed all requests made by the Japanese government.

Japan last year gave three reasons for toughening its export controls on Korea: damaged trust between the two countries resulting from not holding policy discussion for more than three years; a lack of Korean “catch-all” regulations that would limit exports of strategic commodities that could be converted into conventional weapons; and a weakness in Korea’s export inspections and management systems, including a lack of employees.

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