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As Japan and South Korea clash at WTO over trade, rest of world reluctant to get involved

Reuters, JIJI, Kyodo

South Korea tried to bring international pressure to bear on Japan by airing its complaint regarding Tokyo’s tightened export controls at the World Trade Organization (WTO) on Wednesday, but the move failed to rally international opposition to the move.

At the meeting before the General Council, the Geneva-based organization’s highest decision-making body, no other WTO members took the floor, and diplomats from several other countries said they preferred not to get involved in the dispute between two nations with an intertwined and complex history.

Japan has enraged South Korea with a plan to “normalize” trade procedures that are currently “simplified,” effectively tightening exports to South Korea and erecting a barrier that could disrupt the global supply of semiconductors.

On July 4, Tokyo tightened export controls on three materials — fluorinated polyimide, hydrogen fluoride and photoresist — used to make semiconductors and display panels for smartphones and TVs.

Companies must now obtain individual licenses for such exports. The process, which can take around 90 days, had previously been waived for South Korea — an advantage it shared with the United States and many European countries.

Japan’s move followed a ruling last year by a South Korean court that Japanese companies must pay compensation to South Koreans forced to work in Japanese factories during Japan’s occupation of the Korean peninsula from 1910 to 1945.

Wednesday marked the end of the public comment period for the Japanese government’s plan to remove South Korea in August from its so-called white list of countries that can buy products, such as electronic devices, that could be repurposed for military use. The Japanese government is expected to decide to take the step at a Cabinet meeting after examining the feedback it has received.

The over 10,000 comments collected include a statement by the South Korean government calling for the plan to be scrapped. But the daily Yomiuri newspaper put the number of public comments at over 30,000 — an unusually high number — and reported that 90 percent or more of them supported the government’s plan.

The move to drop South Korea from the white list will probably affect ¥630 billion ($5.8 billion) in annual exports of microchip-making equipment, ruling party lawmaker Norihiro Nakayama 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, the LDP politician added.

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

For his part, Japanese ambassador Junichi Ihara told the WTO meeting that the change in trade procedures was Japan’s prerogative, was nothing unusual, and reflected Seoul’s failure to maintain dialogue on the mutual streamlining of trade procedures.

It was also based on national security concerns, following “some cases of inappropriate export” to South Korea, the ambassador said.

That national security claim could make it exempt from the rules of the WTO, where South Korea chose to raise the issue on Wednesday, sending deputy trade minister Kim Seung-ho to address the WTO’s top-level meeting short of a ministerial conference.

“It’s not at all a trade measure, it’s not at all a security measure, it’s purely strategically planned to gain the upper hand in the diplomatic rows, I mean the forced labor issues,” Kim told reporters.

Japan sent the director-general of economic affairs at its Foreign Ministry, Shingo Yamagami, to Geneva, and Kim said he had asked for a face-to-face meeting with Yamagami but was flatly turned down.

“That clearly shows that Japan has not the confidence or even the courage to face what Japan has done,” he said. “This evasive attitude shows that Japan tries to close its eyes to what it has done, and Japan tries to close its ears to … Japanese actions’ victims.”

Kim said Japan risked causing disruption to the world economy and undermining the WTO, and called on Japan to return to bilateral talks.

Ihara said Japanese officials had already briefed their South Korean counterparts for five hours and that Japan was not refusing further talks. Yamagami said he had not received an official request for dialogue.

“There is apparently a paucity of dialogue between export control agencies between the two countries, maybe that is where they should start,” Yamagami told reporters.

In Tokyo on Monday, National Security Adviser John Bolton told Japanese Foreign Minister Taro Kono that Washington does not intend to mediate in a dispute between Tokyo and Seoul over wartime labor and trade policy, a Japanese government source said.

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