politics

South Korea-Japan trade fight moves to global dispute panel

11 Comments
By JAMEY KEATEN

World Trade Organization members on Wednesday created a dispute panel to rule on a complaint by South Korea against Japan over restrictions on exports to Korea of products used in semiconductors, mobile phone displays and television displays. Tokyo said it was “deeply disappointed” by the move from Seoul.

In what was largely a formality under WTO rules, its Dispute Settlement Body assented to the request from South Korea despite Japanese claims that the export restrictions are needed for national security. The showdown involves two stalwart U.S. allies and has prompted the Trump administration to try to ease the rising economic and political tensions.

The move sets off what is likely to be months of preparations and discussions before a decision is reached. But even then, Japan could play the clock and appeal any decision against it to the WTO’s top arbitrators - the Appellate Body - which is no longer taking new cases because the United States has blocked appointments to it.

The standoff erupted last July when Japan slapped export controls on fluorinated polyimide, resist polymers, and hydrogen fluoride products and related technologies when destined for South Korea. The products are used in the manufacturing of screens and computer chips and are key inputs for a potent electronics industry in South Korea, home to mobile-phone heavyweight Samsung.

Japan says the exports present a security risk, citing unspecified concerns over South Korea’s export controls on sensitive materials that could also be used for military purposes. Seoul insists that Japan’s move has political overtones and has led to increased scrutiny, higher costs, unnecessary delays and disruptions to global supply chains among other fallout.

The Japanese government said Wednesday it was “deeply disappointed that Korea has chosen to request an establishment of a panel,” and insisted in a statement that it has granted and will grant export licenses for applications on the three items “once confirmed that the goods and related technologies are exported for civil use.”

The two sides differ sharply on whether Japan’s export restrictions abide by WTO agreements.

“In Korea’s view, Japan’s export restrictions on the three products and their related technologies constitute a politically-motivated, disguised restriction on trade,” the South Korean government said in a note provided to The Associated Press.

South Korea had paused its WTO action in November, when it decided to keep a military intelligence-sharing agreement with Japan that it previously threatened to end over conflicts stemming from wartime history and trade. Japan in return agreed to resume talks aimed at settling the dispute, but South Korea said no progress was made - and pressed on with the challenge leading to Wednesday's decision.

© Copyright 2020 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.

©2020 GPlusMedia Inc.

11 Comments
Login to comment

Are they still at it?!

Didn't a certain "expert" told us, (categorically) that replacing Japan was a piece of cake?

That Russian, Chinese and even Surinamese companies would replace Japanese exports in a tick?

That all Korea has to do is mention the Insomnia thingy and Japan would beg for forgiveness?

Confused.com

11 ( +16 / -5 )

SK still whining and crying. Still too "proud" to just hand over the export information as required to be on Japan's White List and problem solved immediately. But no, SK just "has" to fight Japan on anything. What a country.

9 ( +15 / -6 )

Japan has the right to decide who gets her exports. Simple as that. There are rightful concerns from Japan that SK is assisting NK militarily with this super high tech material. If SK can undoubtedly prove this isnt the case, they can resume importing Japanese technology in future.

No doubt the WTO will be bribed to bully Japan as usual, so it would be wise to disregard their judgment.

14 ( +15 / -1 )

I hope this gets resolved with a positive outcome.

This export ban not only hurts Korean companies but also A LOT of Japanese companies as Samsung, LG, SK Hynix and other Korean tech titans were big buyers. In the end, it's the consumers who will have to pay more. Free trade is a good thing for the economy and consumers, folks.

Also, claiming that this is a national security because SK is assisting NK is a grey area to prove for both Japan and Korea. I think Japan will need to provide a more solid, provable reason otherwise it just looks like Korea and Japan are in their petty fights again.

-12 ( +3 / -15 )

@Peeping_Tom

replacing Japan was a piece of cake?

Indeed, replacing Japanese suppliers was a piece of cake for Korean firms.

Desperate Japanese suppliers are fleeing Japan and are moving factories to Korea in order to survive, as Samsung and SK Hynix told until the end of this year to leave Japan or stop doing business with them.

After all, the materials that Abe put on export control can be used in only two countries, Taiwan and Korea, no use in Japan because Japan's semiconductor industry is wiped out.

@Fighto!

No doubt the WTO will be bribed to bully Japan as usual, so it would be wise to disregard their judgment.

WTO judgement is enforceable in the form of retaliatory tariffs.

-11 ( +3 / -14 )

"Indeed, replacing Japanese suppliers was a piece of cake for Korean firms.

Desperate Japanese suppliers are fleeing Japan and are moving factories to Korea in order to survive, as Samsung and SK Hynix told until the end of this year to leave Japan or stop doing business with them."

No need to take the case to the WTO then, is there?

You most probably think people cannot read and understand this article.

11 ( +14 / -3 )

This old chestnut again.

The standoff erupted last July when Japan slapped export controls

Look at the language used. In reality, Japan removed South Korea from the fast-tracked export approvals list of countries. It's not an export control. That list includes only one in all of Asia.... South Korea. All other Asian countries go through normal export procedures, which cantake up to 90 days for shipment to be processed. Fast tracked shipments take a week.

So certain 'writers' for media outlets AP, AFP, Reuters etc literally jump at the chance to make Japan look like the aggressor. They simply require South Korea - just like any other country exporting senstitive materials that could be used for weapons manufacture - to confirm that the end-users of those materials are South Korean civilian entities.

South Korea refuses to do this, because it is assumed that they assist North Korea with these materials so any inquiry into the end-users will result in possible sanctions against South Korea.

Instead, they try to take this NORMAL export procedure to the WTO like Japan has done something illegal. There is literally nothing illegal about South Korea having to go through normal export procedures.

Soth Korea should put up, or shut up.

Samit BasuToday  10:57 am JST

Indeed, replacing Japanese suppliers was a piece of cake for Korean firms.

Evidently not.

Desperate Japanese suppliers are fleeing Japan and are moving factories to Korea in order to survive, as Samsung and SK Hynix told until the end of this year to leave Japan or stop doing business with them.

Name these "desperate" Japanese suppliers, when the "fleeing date" is, and the location of these "factories" are. I guarantee you can't.

Also, South Korean companies making threats to the Japanese is a fantasy pipe dream. Anti-Japanese posters make up scenarios and pass them off as reality with zero references. Every. Single. Time.

10 ( +11 / -1 )

Good points Hillclimber.

3 ( +3 / -0 )

@Peeping_Tom

No need to take the case to the WTO then, is there?

There is. While Samsung and SK Hynix sit on a cash reserve of hundreds of billions of dollars and can afford to create replacement materials out of thin-air, other industries can't. The Korean government is trying to protect its less strong industries from Japan's next wave of export control.

@Hillclimber

It's not an export control.

WTO will decide that.

Name these "desperate" Japanese suppliers, when the "fleeing date" is, and the location of these "factories" are. I guarantee you can't.

http://www.businesskorea.co.kr/news/articleView.html?idxno=48459

Japan’s TOK Producing EUV Photoresist in Korea

https://news.infoseek.co.jp/article/toyokeizai_20200730_365754/

Toyokeizai has a much more detailed article on the wave of Japanese exodus to Korea to survive Abe's export control, but it's in Japanese.

-4 ( +2 / -6 )

This old chestnut again. [...]

True. The problem is, that SK is just loud, loud as it can be when it comes to anything against Japan. Examples are endless. And this then is, what most of the foreign press hears, often nicely packed in good English. Japan as the adult stays factual and silent in its explanations, which is not heard since it sounds boring. SK acts like a populist yellow press and does a damn good job. Japan must finally find a way to counter this.

3 ( +5 / -2 )

Samit BasuJuly 30  10:26 pm JST

There is. While Samsung and SK Hynix sit on a cash reserve of hundreds of billions of dollars and can afford to create replacement materials out of thin-air, other industries can't. 

Egocentric pro-Korean hyperbole, although it's intended to be taken seriously. The truth is, South Korea needs Japan, not only for R&D purposes, but also for helping them make their phones and TVs.

WTO will decide that.

....by throwing the case out.

You can see South Korea's allegations here: https://docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=q:/WT/DS/590-1.pdf&Open=True

They forget to mention that South Korea's so-called "unduly stringent export licensing policies and procedures" are in fact NORMAL export procedures that all other Asian nations encounter. It's neither undue, nor stringent.

This is literally South Korea crying that they aren't given special treatment like the US and European countries receive.

http://www.businesskorea.co.kr/news/articleView.html?idxno=48459

Japan’s TOK Producing EUV Photoresist in Korea

One company. Wow.

You said: "Desperate Japanese suppliers are fleeing Japan and are moving factories to Korea".

The reality is that one company - that already had a factory at Incheon - started production there to get around the normalized export procedures.

https://news.infoseek.co.jp/article/toyokeizai_20200730_365754/

Toyokeizai has a much more detailed article on the wave of Japanese exodus to Korea to survive Abe's export control, but it's in Japanese.

"Wave of Japanese exodus to Korea"?? "Exodus"?? Hilarious. This wave and exodus is one company (TOK) and soon to be another (KDK) which already had facilities in South Korea to produce their chemicals. They are merely shifting production as a direct result to hang on to market share due to the normalised export procedures. Don't think for amoment TOK won't shift production back to Japan as soon as South Korea plays ball and gets back on the fast tracked export white list.

3 ( +4 / -1 )

Login to leave a comment

Facebook users

Use your Facebook account to login or register with JapanToday. By doing so, you will also receive an email inviting you to receive our news alerts.

Facebook Connect

Login with your JapanToday account

User registration

Articles, Offers & Useful Resources

A mix of what's trending on our other sites