Business

Japan officially approves scrubbing South Korea from 'white list' of countries

by Satoshi Sugiyama

Staff Writer

The Cabinet on Friday formally approved ejecting South Korea from the so-called white list of countries entitled to receive preferential treatment in trade, further aggravating an already highly strained bilateral relationship.

In response, South Korean President Moon Jae-in immediately pledged to take “corresponding” countermeasures for what he described as a “reckless” and “selfish” decision by Japan.

South Korean officials revealed that Seoul would expedite its preparations to challenge the Japanese measures at the World Trade Organization, and also review whether to continue exchanging military information with Japan — a key element in the current tripartite security cooperation with the United States.

“The Japanese government is responsible for having made the situation worse by ignoring the Korean government and the international community’s efforts to diplomatically resolve the issue,” Moon was quoted as saying by the Yonhap news agency at an emergency Cabinet meeting.

“I unequivocally warn that the Japanese government will be entirely held accountable for what will unfold going forward,” Moon said.

South Korean Finance Minister Hong Nam-ki said separately that Seoul will remove Japan’s trusted status on its own “white list” of export counterparts, apparently in retaliation, although according to the Associated Press the minister did not offer any specific details about the significance of its own white list.

Earlier in the day, Japanese trade minister Hiroshige Seko said during a news conference the revised export measures would go into effect on Aug. 28. The decision will introduce additional export control procedures for dozens of items that could potentially be used to produce weapons, following the July 4 introduction of separate screening processes on three key materials needed by South Korean firms to produce semiconductors.

The latest measure by Japan is the second phase of its enhancement of controls on exports to South Korea. Japan claims that removing the preferential export status is strictly because of a loss of trust and national security concerns, whereas South Korea argues that Japan’s motive is to damage its economy because of political and historical grievances.

Japan and South Korea have long had rocky relations but they worsened last year following a series of South Korean judicial decisions on wartime forced labor requiring Japanese companies to pay compensation.

Seko reiterated Friday that the new measures are meant to strengthen Japan’s domestic export control system, and thus should neither affect its relations with South Korea nor hurt Japanese companies trading with South Korea as long as exports are legitimate.

The trade ministry in Tokyo also announced that Japan will stop using the term “white list,” renaming the category of countries as Group A. The countries not presently listed on the white list will, meanwhile, be re-categorized into Groups B, C and D, depending on how strict they are in controlling sensitive materials.

Currently 26 countries are on the Group A list, with South Korea having been downgraded to a Group B country.

“The Ministry of Economy, Trade and Industry will apply strict scrutiny as export control authorities,” Seko told reporters. “Regardless of the export destination or export permission type, the most important point is proper export control by exporters. We ask the exporters to meticulously confirm their exports’ final destinations and the final usage.”

After Aug. 28, exports of dozens of items to South Korea will require individual permission per each contract to ensure they will not be used for the production of weapons — conventional or those of mass destruction.

The screening process could take about 90 days, and South Korean officials say the new procedures could be used as a political tool to curb exports of key materials to the country. Tokyo strongly denies that.

During a public comment period on the proposal to remove South Korea from the white list the Japanese government received a total 40,666 responses, the trade ministry has said, adding that more than 95 percent of them were in favor of the removal plan.

South Korea had been the only Asian nation on the list, from which no entity has ever been removed. The ejection of South Korea will leave 26 countries — including the United States, France and Argentina — on the list.

From July 4, Tokyo had already imposed stricter rules on the export of three chemicals — fluorinated polyimide, hydrogen fluoride and a group of chemicals known as resists. They are vital to the manufacture of smartphone screens and semiconductors, critical sectors for South Korea.

South Korea has warned that the revised export regulations will hurt the global supply chain, but Japan has dismissed the suggestion.

Information from Kyodo and AP added.