Business

Japan removes South Korea from list of trusted trade partners as row between neighbors deepens

by Satoshi Sugiyama

Staff Writer

Japan formally downgraded its trade status with South Korea on Wednesday in a move that will put further strain on a crumbling bilateral relationship in which everything from cultural exchange and tourism to security cooperation is now in jeopardy.

The trade-list demotion follows Tokyo’s imposition of enhanced screenings July 4 on shipments of three key chemicals integral to producing semiconductors. They can also be used to produce conventional and other weapons.

Minister of Economy, Trade and Industry Hiroshige Seko told reporters Tuesday that the government’s stance on the decision remains unchanged. The Cabinet greenlighted the move earlier this month. “This is not intended to affect Japan-South Korea relations,” Seko said. “Besides this is not a countermeasure. … We are going to grant exports once we are able to confirm that they are legitimate trade among private parties.”

The move means that starting Wednesday, exports to South Korea of a diverse range of materials that could be used to make weapons are subjected to additional and stricter screenings. Food and lumber have been excluded. South Korea has vociferously pushed back not only with words, but also with actions, including last week’s decision to scrap an intelligence-sharing pact with Tokyo known as the General Security of Military Information Agreement (GSOMIA). The pact allowed the two countries to exchange sensitive information on North Korea.

South Korean Prime Minister Lee Nak-yon said in a parliamentary session Monday that Seoul would reconsider terminating GSOMIA if Tokyo agrees to recant on the stricter export controls.

Seko dismissed the suggestion. The tightening of export controls and intelligence-sharing agreement “are on different levels,” he said. “We can neither comprehend nor accept South Korea’s assertion or remarks tying those two,” Seko added.

On Thursday, Seoul declared it would not renew the pact, saying Japan’s tightening of export controls equated to a “grave change” in security cooperation that diminished national interests. Tokyo protested the decision and Washington described Seoul’s move as “disappointing.”

A top Korean financial regulator announced Tuesday the government is ready to augment financial support for companies affected by the tighter controls, Yonhap news agency reported. Seoul previously said it would remove Japan from its fast-track list of trusted trade partners.

Starting with last year’s South Korean court decisions on wartime forced labor that required Japanese companies to compensate the victims, relations between the two countries, frequently plagued by historical issues, have begun deteriorating at a rapid pace.

Japan has justified the series of actions by claiming they were caused by breach of trust related to national security. South Korea meanwhile argues they are deliberate attempts to sabotage its economy in retaliation for the judicial decisions.