South Korea Announces Export Restrictions on Japan, Escalating Trade Dispute

South Korea said it will remove Japan from its so-called white list of trusted trading partners in apparent retaliation for Japan’s similar announcement last week, Reuters reported Aug. 12. The removal from the list, which gives countries a “fast-track trade status,” further escalates tensions between the two countries that have been locked in a trade dispute since early July (see 1908080039).

South Korea’s move will tighten export restrictions and may include potentially lengthy permit application processes, Reuters said. The country is dropping Japan down to a newly created classification in its export control system that will tighten controls on more than 1,700 exports to Japan, according to an Aug. 12 report from Nikkei Asian Review. "I want to say that we are doing this legitimately in line with both domestic and international laws,” South Korea’s Trade, Industry and Energy Minister Sung Yun-mo told reporters. South Korea’s announcement will take effect in September, Reuters said. Japan is scheduled to remove South Korea from its whitelist on Aug. 28 (see 1908020023).

The South Korean change will force companies that export “strategic materials” to Japan to submit two additional documents to complete the export, which may take up to 10 more days, Nikkei Asian Review said. South Korea is focusing on restricting exports such as “chipmaking machinery, network security equipment and telecommunications gear,” Nikkei Asian Review reported, citing a ministry source.

Masahisa Sato, Japan’s foreign affairs minister, said that if South Korea’s move is a “countermeasure” against Japan’s recently announced export restrictions, it would be a violation of the World Trade Organization rules, according to an unofficial translation of his Aug. 12 tweet.

South Korea said it is planning to increase production of certain goods in the technology sector to reduce reliance on Japanese exports (see 1908090020). “The government will pursue an elaborate and detailed strategy to more substantively develop our economy by taking Japan’s economic retaliation as a chance to turn good out of evil,” South Korean President Moon Jae-in said Aug. 12 while meeting with senior aids, according to Reuters.