Business

South Korea lodges complaint with WTO over Japan's export controls

Kyodo

The South Korean government on Wednesday filed a complaint with the World Trade Organization over Japan’s tightening of export controls, which has further chilled the countries’ increasingly frosty relationship.

In July, Japan imposed tougher rules on three key materials needed by South Korean companies to produce semiconductors and display panels, citing undermined trust between the countries and issues with South Korea’s export control and regulation.

Seoul has alleged the measure is economic retaliation for South Korean Supreme Court judgments last year that ruled against Japanese companies over wartime forced labor.

The Japanese move, which “directly targets” South Korea, is “discriminatory and was motivated by our court rulings on the forced labor issues,” South Korean Trade Minister Yoo Myung-hee said during a news briefing to explain the government’s decision. Japan denies the allegation.

Before departing his post following a Cabinet reshuffle, Economy, Trade and Industry Minister Hiroshige Seko said in Tokyo that his ministry has received a request to begin bilateral consultations, the first step of the WTO’s dispute settlement process.

“We will appropriately deal with the matter in line with WTO rules,” Seko said.

The feuds over wartime history and trade have seen Japan-South Korea ties plummet to their lowest point since the two countries established diplomatic relations in 1965.

Under the WTO’s dispute resolution process, South Korea will first seek to settle the matter through dialogue with Japan. If it cannot be resolved this way, South Korea will ask the WTO to establish a dispute settlement panel.

Seoul will start the process by sending consultation requests to Tokyo and the WTO by the end of Wednesday, Yoo said. She asked the Japanese government to show a “mature and responsible” attitude so the matter can be settled quickly.

The minister said she expects the WTO to take about 15 months to hand down a ruling if a dialogue-led settlement proves impossible.

Also Wednesday, South Korea’s Trade, Industry and Energy Ministry claimed it has won a case at the WTO over its anti-dumping duties on Japanese pneumatic valves, despite a WTO ruling Tuesday that upheld a decision urging South Korea to take corrective action.

In addition to toughening export controls, Japan last month revoked the country’s preferential status as a trade partner for the purchase of goods that can be put to military use.

Under the tougher export rules implemented July 4, exporters of hydrogen fluoride, photoresist and fluorinated polyimide are required to obtain a license prior to each shipment leaving for South Korea.

Previously, the Japanese government had given three-year preferential permits for exports of the chemicals.

Since the materials are used by such leading South Korean manufacturers as Samsung Electronics Co. and SK Hynix Inc., the rule change has raised concern about possible disruption to global supply chains. While the Japanese government has granted three relevant shipments since its rule change in July, the South Korean government says uncertainty remains because Tokyo can refuse to issue export licenses at any time.

In response to Japan removing South Korea from its “whitelist” of preferred trade partners, Seoul plans to take Japan off its equivalent list by the end of this month