Korea seeks exemptions from some Russia export restrictionsKorea will seek close consultations with the United States to receive an exemption from Washington's recently expanded sanctions against Russia to minimize the impact of the restrictions on local firms and the economy, the country's top trade official said Monday.
Last week, the U.S. government announced the Foreign Direct Product Rule (FDPR) for "all of Russia" as part of sweeping export controls over its recent invasion of Ukraine, which requires companies to receive a license from the U.S. for tech-related items using U.S. technology before they can be shipped to Russia.
The FDPR aims to block Russia's access to global high-tech products and other major items, such as semiconductors. The measure is feared to affect major Korean exporters, including leading global chipmakers Samsung Electronics and SK hynix, as they use U.S. technology and software.
During a meeting with trading company officials, Trade Minister Yeo Han-koo said that the government will hold director-level consultations with the U.S. Commerce Department this week to seek exemptions from the rules for local firms.
"To prevent possible damage to our companies, we will expedite efforts to secure exemptions to the restrictions," Yeo told the officials.
"We will also swiftly wrap up ongoing consultations with the U.S. regarding our active joining of the international sanctions against Russia."
The government will focus on minimizing the impact of financial sanctions against Russia on local firms as it has decided to join the global move to remove some Russian banks from the SWIFT financial transaction network.
The U.S. and its allies have tightened sanctions against Russia over its invasion of Ukraine, as they agreed to exclude some Russian banks from SWIFT, an international messaging system.
But a list of selected Russian banks subject to the sanctions and the timing of the implementation of the punitive actions have yet to be announced.
Concerns are growing that local firms and Korean nationals in Russia could face difficulties in making money transfers due to the SWIFT exclusionary measure.
The government said last week it plans to allow local firms and banks to use alternative ways for settlements, if needed, in a bid to ensure that trade-related transactions with Russia will not be disrupted.
Local bank exposure to Russia, including potentially risky loans and investment, came to $1.47 billion as of end-September, accounting for 0.4 percent of their total external exposure, according to the Financial Services Commission.
The government said although local banks have minor exposure to Russia, it will strengthen its monitoring of fund flows at local financial institutions due to uncertainty stemming from the financial sanctions.