Business

Trade controls on South Korea to hit exports of Japan's chip-making gear, lawmaker says

Reuters

Japan’s plan to drop South Korea from its “white list” of nations with minimum trade controls will probably hit ¥630 billion ($5.8 billion) in annual exports of microchip-making equipment to its neighbor, a Japanese lawmaker said on Wednesday.

Semiconductor-making equipment is Japan’s top export item to South Korea, amounting to about 11 percent of its total exports by value to the country last year.

But Japan is already factoring in the short-term drawback, and aims to focus more on the long-term upside in the form of improved security in Asia, ruling party lawmaker Norihiro Nakayama said.

“We are aware that the sanctions against South Korea will deliver a short-term blow to both South Korea and Japan,” Nakayama said by telephone. “Nonetheless, it is a necessary step to ensure long-term security in Asia.”

Recent tensions between the two countries, largely over the issue of compensation for South Koreans who worked in Japanese factories, some of whom were forced, during its occupation of the Korean peninsula from 1910 to 1945, worsened this month, when Japan tightened procedures for exports of high-tech materials to South Korea.

Japan also plans to strip South Korea from a “white list” giving preferential treatment in trade.

Tokyo has denied that the laborers’ compensation dispute is behind the export controls, and cited “inadequate management” of sensitive items sent to South Korea, with its media saying some items ended up in North Korea, which South Korea has denied.