Business

Japan to revamp trade dispute team amid WTO feud with South Korea

Kyodo

The Foreign Ministry team responsible for handling Japan’s trade disputes will undergo a revamp to better deal with cases brought to the World Trade Organization, government sources said Wednesday.

The move comes after Japan last year lost its bid to overturn a South Korean ban on imports of Japanese seafood in the wake of the 2011 Fukushima nuclear disaster, and as the neighboring countries are locked in a feud over export controls on tech-related materials.

The WTO said the same day it has decided to set up a panel to hear the case on the export spat.

Trade disputes currently fall under the purview of a team in the ministry’s Economic Affairs Bureau called the International Trade and Investment Dispute Settlement Division.

According to the sources, the team will be replaced by a new one in the International Legal Affairs Bureau, which is better equipped to tackle issues concerning international rules.

Japan was shocked by the loss to South Korea in April 2019, especially as the Appellate Body, the WTO’s highest adjudicative entity, overturned an earlier panel ruling that said the ban on seafood from Fukushima and seven other prefectures was “more trade-restrictive than necessary.”

The two countries have another case pending at the WTO, in which South Korea is seeking recourse against Japan’s decision in July last year to tighten export controls on three materials used to manufacture semiconductors and display panels.

In Geneva, the WTO’s Dispute Settlement Body decided Wednesday to set up the panel to hear the case, as requested by South Korea last month after it said bilateral discussions aimed at resolving the issue had reached a dead end.

According to WTO rules, the panel must try to issue a final report, effectively a verdict, within six months of opening a case and under no circumstances should it take longer than nine months.

In practice, however, a panel often takes several years to reach a conclusion. And if either country decides to appeal, the case would remain in limbo as long as the United States continues to block new appointments to the Appellate Body.

It means the feud over export controls could prolong the tension between the neighboring countries, which are also engaged in a spat over compensation for Korean workers at Japanese firms’ factories during Japan’s 1910-1945 colonial rule of the Korean Peninsula.

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