Business

Japan defends tighter export controls amid South Korea wartime labor row

Kyodo

The government Tuesday defended its decision to impose tighter controls on technology-related exports to South Korea, amid Seoul’s failure to come up with a “satisfactory” solution to the wartime labor dispute.

Chief Cabinet Secretary Yoshihide Suga said the measure will be imposed for national security reasons, not as retaliation, and claimed that it does not go against the spirit of free trade or World Trade Organization rules.

South Korea “did not show a satisfactory solution over the issue of former workers on the Korean Peninsula before the Group of 20 summit (last week) and we cannot help but say the relationship of trust has been severely damaged,” Suga said at a news conference.

The top government spokesman said the export controls system is founded on mutual trust and it is “difficult” to continue with the current arrangements following moves by South Korea to “deny the friendly and cooperative relationship” between Tokyo and Seoul.

Effective Thursday, manufacturers need to file individual applications for South Korea-bound exports of fluorinated polyimide, hydrogen fluoride and resists, used in the manufacturing process of chips and displays for smartphones and televisions.

The Ministry of Economy, Trade and Industry is also seeking to remove South Korea from its “white list” of countries — those considered to pose no security risk — that are subject to preferential treatment in export procedures.

METI chief Hiroshige Seko also dismissed the view that the tighter restrictions are retaliatory in nature.

“We are proceeding with a review … from the viewpoint of implementing proper export controls for security purposes,” Seko said at a news conference.

All these plans by Japan come despite the pledge Saturday by G20 leaders at the Osaka summit to aim for a “free” and “nondiscriminatory” trade environment amid a tariff war between the United States and China.

After the announcement Monday, South Korea threatened to take Japan to the WTO. South Korea’s trade, industry and energy minister, Sung Yun-mo, called Japan’s decision a retaliatory measure that violates the spirit of free trade.

The restrictions to be put in place will likely affect South Korean chipmakers like Samsung Electronics Co. and there are growing concerns that Japanese exporters will also take a hit.

Asked about the potential downside, Suga said the government will “closely watch the impact on Japanese firms.”

Relations between Tokyo and Seoul have sunk to their lowest point in years and Prime Minister Shinzo Abe, did not sit down for bilateral discussions with South Korean President Moon Jae-in while in Osaka for the G20 summit.

Since late last year, a series of court rulings in South Korea has ordered Japanese firms to compensate people who claimed they were forced into labor during Japan’s 1910-1945 colonization of the Korean Peninsula.

Japan has maintained that the issue of compensation has been settled “completely and finally” under a 1965 bilateral agreement.

After the firms refused to follow the court orders to pay compensation, lawyers for the South Korean plaintiffs seized the firms’ assets through local courts and are now threatening to sell them.

At the governmental level, Japan’s initial efforts to solve the dispute through bilateral consultations failed after South Korea did not respond.

Japan then proposed in May to set up a three-country arbitration panel under the 1965 accord, but South Korea let the deadline for selecting a panel member pass.

In June, South Korea proposed that companies from both countries fund compensation for the plaintiffs, but Japan rebuffed the proposal.