Unreliable crisis management

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Unreliable crisis management

 The entire country is panicking over an unfamiliar commodity called “urea water solution” (UWS). Korean diesel vehicles are required to inject the solution into exhausts as a catalyst to neutralize and reduce harmful nitrous oxide emissions. Without UWS, trucks responsible for transporting various goods, heavy-duty vehicles, as well as fire-fighting trucks and police vehicles could come to a stop.

When the stock runs out and brings the country to a standstill, as much as 300 billion won ($253 million) in losses per day could occur.

The government has revealed various flaws in addressing the crisis from urea shortages. The outcome was foreseeable as China began curbing its urea exports from Oct. 11. Suspension of shipments from China immediately stoked worry as Korea relies on China for 97 percent of its urea sourcing. Prices have jumped more than 10 to 20 times. Worse, UWS has become impossible to find even with the offering of premiums. Cargo trucks as a result have become nearly immovable.

Yet the government has stayed calm throughout the month. The Korean Embassy in Beijing reported that shipment procedures remained normal at the early stage of the curb. The industry has called for government help, but the government put off a response as it was preoccupied with the regular parliamentary questioning season. On Friday, the Blue House belatedly formed a task force, but it can only rely on relief from Beijing.

Korea suffered an unexpected blow when Japan in 2019 suddenly announced restrictions on shipments of IT materials and components to the country, jeopardizing its key semiconductor industry. Still, Korea has not learned to diversify import channels on items that are overly reliant on a particular market. Of 12,586 import items, 3,941, or 31.3 percent, rely on one particular country for more than 80 percent. About half of commodities whose supplies are shaky, or 1,850 items, including urea water solution, come from China.

Essential raw materials and components have been strategically used for national security as seen with China which attempts to weaponize rare earth minerals amid an escalating conflict with the U.S. Diversification in import channels has become not just important for the economy, but for the well-being of the people. The urea crisis underscores that the government has done little to address our reliance on China for material supply. The government must find a fundamental fix to solve supply problems for our key industries.
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