Japan has tightened its control on exports to South Korea of several chemicals crucial to the production of chips and displays used in smartphones and televisions. It is also preparing to remove South Korea from “white-listed” countries that face minimum restrictions on high-tech exports with national security implications — just as bilateral relations turn frigid amid the row over wartime labor. The latest development in the troubled Japan-South Korea relationship makes it all the more urgent that steps are taken to get diplomatic relations back on track.
Effective Thursday, South Korea-bound exports of fluorinated polymide, hydrogen fluoride and resist were removed from a list that allows expedited exports. Exporters are now required to file individual applications to sell the chemicals to South Korea and go through a screening process that takes about 90 days. Japanese manufacturers have a large share of each of the three chemicals — accounting for about 90 percent of the global supply of resist, for example — and major South Korean high-tech manufacturers such as semiconductors rely heavily on Japanese imports. The decision has raised concern in South Korea that its industries will face serious damage if the supply of chemicals from Japan gets clogged due to the screening of export applications.
Tokyo explains it is tightening the regulations “for the purpose of implementing proper export controls for security purposes” and rebuffs the charges from South Korea — which has threatened to take the case to the World Trade Organization — that the measure runs counter to free trade principles. At the same time, Chief Cabinet Secretary Yoshihide Suga has acknowledged that the reasons behind the decision include the failure of South Korea to come up with a “satisfactory solution” to the row over Koreans mobilized to work for Japanese companies during World War II.
In an accord accompanying the 1965 treaty that normalized diplomatic relations between Japan and South Korea, the two countries agreed that the issue of compensation arising from Japan’s 1910-1945 colonial rule of the Korean Peninsula was settled with the provision of Japanese economic aid to Seoul. However, South Korea’s Supreme Court in a series of rulings last year ordered major Japanese firms that used wartime labor to pay compensation to the former Korean laborers.
Tokyo-Seoul relations plummeted after the South Korean government refused to take action as Japan protested that the court decisions run counter to the 1965 agreement. Seoul maintained that it would not intervene with the judiciary decision, and took no steps to settle the issue as plaintiffs in the court cases seized the local assets of the Japanese firms — which refused to pay them damages — and threatened to sell them. It has also failed to respond to Japanese calls that the countries hold bilateral talks on the matter as stipulated in the 1965 accord.
The Japanese government denies that the tightening of export controls is a form of retaliation for South Korea’s inaction on the issue, calling the step a part of the process to review the system for adequate export control. It seems undeniable, however, that it’s the row over wartime labor that, as Suga says, “has severely damaged the relationship of trust” between the two countries. The downward spiral of bilateral ties remains unchecked. Talks between Abe and South Korean President Moon Jae-in did not materialize when Group of 20 leaders gathered in Osaka last week for their annual summit.
The alarm over the possibility of South Korean manufacturers suffering heavy damage from the tightened export controls is also proof of the close economic ties between the two neighbors, whose political relationship continues to be strained over issues dating back to the war and colonial past. It’s time to make more serious efforts to restore Tokyo-Seoul relations, and the first step that must be taken is for South Korea to promptly agree to hold talks with Japan over the wartime labor issue, as called for under the 1965 agreement.
In today’s closely interdependent economies, trade measures can be a double-edged sword. If exports of the chemicals to South Korea become clogged up due to the export controls, South Korean manufacturers that use the materials won’t be the only ones hurt: Japanese suppliers will suffer reduced sales, but to what extent remains to be seen. Subsequent rises in the import prices of semiconductors and other products from South Korea, or possible disruptions to the worldwide production and supply of smartphones and other products due to a decline in the output of South Korean devices could, in turn, hurt Japanese businesses and consumers alike (although one business leader says the impact will be minimal). Such possible effects of the measure should be closely monitored.
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