METI chief Seko defends tighter Japanese export controls imposed on South Korea

Kyodo, AP, Bloomberg

Industry minister Hiroshige Seko on Tuesday defended Tokyo’s decision to tighten controls on high-tech exports to South Korea, saying President Moon Jae-in’s criticism of the measure is “off the mark.”

The return to tighter export rules, which South Korea believes was in retaliation for its handling of a diplomatic row over wartime labor, come as relations between the neighboring countries sink to their lowest point in years.

“From the very beginning, Japan has made clear we are reviewing our export controls with the goal of ensuring national security. We have explained that it is not a countermeasure (to the row),” the minister of economy trade and industry told reporters in Tokyo.

From July 4, Japanese companies have been required to apply for individual licenses to export three chemicals used to make semiconductors and display panels — fluorinated polyimide, hydrogen fluoride and photoresists — to South Korea. The process, which can take around 90 days, had previously been waived for the country.

On Monday, Moon said the move “destroys the framework” of bilateral economic cooperation and called for its immediate scrapping. He made the comments after working-level officials from both countries held their first meeting on the issue on Friday, only to tell differing stories about what was discussed.

Officials from METI insisted the meeting was held solely to explain the reasoning for the restrictions and the practical aspects of their implementation, but their South Korean counterparts said they negotiated for the measures to be removed.

“It is regrettable that such untrue claims were made. It’s hard to think this won’t hurt our relationship of trust going forward,” Seko said.

Moon on Monday accused Japan of abusing its leverage in trade to punish South Korea over their historical dispute. Seoul sees the recent tightening of export controls for the specialty materials as retaliation for rulings by the South Korean court rulings earlier this year that ordered Japanese corporations to compensate Koreans recognized as being forced to work for Japanese companies before and during World War II.

South Korea says Japan’s strengthened export controls on the sensitive materials could hurt its export-dependent economy and disrupt global supply chains.

Moon also said South Korea will use the dispute as an opportunity to reduce its dependence on Japan by strengthening its technology industry and diversifying import sources.

“Japan’s export restrictions have broken the framework of economic cooperation between South Korea and Japan that had continued over a half-century based on mutual dependence,” Moon said in a meeting of senior aides at the presidential Blue House.

“The shattered credibility of cooperation with Japan in the manufacturing industry will inspire our companies to break out of their dependence on Japanese materials, components and equipment and work toward diversifying import sources or localizing the technologies. I warn that, eventually, it will be the Japanese economy that will be damaged more.”

Analysts say the Japanese measure won’t have any immediate meaningful impact on South Korean chipmakers, which have sufficient supplies of the materials for now, given slowing demand for semiconductors. But there is concern Japan will expand its export controls to other industries.

Moon spoke hours after dozens of owners of small Korean businesses rallied in Seoul and called for boycotts of Japanese goods to protest Tokyo’s move.

Kim Sung-min, president of the Korea Mart Association, urged shop owners to boycott the distribution of Japanese products until Tokyo apologizes for retightening the export controls and withdraws them. Other demonstrators held up signs that read, “Our supermarket does not sell Japanese products.”