Business

As WTO dispute looms, new trade chief says Japan won't budge in export control row with Seoul

by Satoshi Sugiyama

Staff Writer

Japan won’t adjust its export control measures against South Korea but is considering how it will respond a day after Seoul filed a complaint over the measures at the World Trade Organization, the country’s newly appointed trade minister said Thursday.

“We are going to address the issue appropriately, including whether to respond (to a request for bilateral consultation) or not,” Isshu Sugawara, 57, told a group of reporters.

Sugawara stepped into a ministerial role for the first time amid Japan’s worsening relations with its neighbor, aggravated by the stricter export controls rolled out this summer. He also faces the daunting task of steering Japan in an environment where distrust toward the existing system of global free trade is growing.

The complaint, lodged on the day of a Cabinet reshuffle, is set to entangle both countries in a painstaking dispute settlement process that could potentially take years to be resolved.

Under WTO rules, Japan has 10 days to respond to the request for consultation. If both countries are unable to settle the matter within 60 days, the international trade institution will establish a panel, and the process to reach a decision there takes about two years on average.

Sugawara echoed Japanese officials’ argument that the measures do not violate WTO rules, and asserted that Japan will continue to explain its position to the world.

In July, Japan tightened screenings of exports to South Korea on three chemicals used in chips, television and smartphone screen production, which are among the country’s vital industries. In August, Japan demoted South Korea from its trusted trade partner status and expanded stricter export controls to a wide range of materials that could be used to make weapons.

“From many angles, our stance doesn’t change,” Sugawara said. “We can neither condone the transfer of technology nor its circulation through trade that could result in the technology being used to produce weapons of mass destruction and conventional weapons. Our stance won’t change in the slightest way.”

Tokyo has justified the series of actions by claiming they were caused by a breach of trust related to national security. Seoul, meanwhile, argues they are deliberate attempts to sabotage its economy in retaliation for judicial decisions against Japanese firms related to wartime forced labor.

In addition to taking Japan to the WTO, Seoul has adopted an array of responses, including scrapping an intelligence-sharing pact with Tokyo known as the General Security of Military Information Agreement.

South Korea is also expected to soon downgrade Japan’s trade status. Sugawara said the trade ministry isn’t contemplating specific actions over the potential demotion but nonetheless denounced it, arguing that Japan manufactures and supplies important chemicals used in semiconductors to South Korea while adhering to WTO regulations.

That doesn’t give Seoul a justification to lower Japan’s trusted export partner status, he said.

On global trade, Sugawara underscored the importance of multilateral cooperation. Japan has continued to advocate for free trade amid a trade war between the United States and China, and as protectionism gains momentum.

“As digitalization of the economy, such as 5G technology, is making progress, we must avoid a situation where countries are responding differently,” he said. “Thus, there will be more calls for the necessity of multilateral universal rules in the future.”

The trade minister also expressed his willingness to work on a cross-border rule on data transfers and to promote WTO reform with trade ministers from the U.S. and Europe.

Sugawara, born in Tokyo and first elected to the Lower House in 2003, served as a deputy industry minister from December 2012 to September 2013.

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