Coming to the rescue

South Korea said on Monday that it plans to drop Japan from its “white list” of countries with fast-track trade status from September, intensifying the trade rift between the two neighbors and US allies.

The tighter trade regulations will apply to South Korean exports to Japan.

At a meeting with his top aides on Monday, Moon reflected on Japan’s colonization of the Korean Peninsula in the first half of the 20th century to highlight the gravity of the situation.

“As a victim of great suffering from Japanese imperialism in the past, we, for our part, cannot help but take Japan’s ongoing economic retaliation very seriously,” Moon said.

“It is even more so because this economic retaliation is in itself unjustifiable and also has its roots in historical issues,” he added.

South Korea Industry Minister Sung Yun-mo said Seoul will revamp its export list into three groups of trading partners from the current two, placing Tokyo in a newly established bracket.

Tokyo had been on Seoul’s top-tier list of 29 countries subject to preferential export procedures, the ministry said, adding that the newly established bracket, between the two existing groups, is for a country that “violates international trade norms”, according to the ministry.

“We need to put an export control system into operation considering the fact that it is hard to work closely with a country that frequently violates basic rules of export controls or that operates an unlawful system,” Sung said.

Under the revamped criteria, South Korean companies shipping strategic goods to Japan will have to hand in five documents to win individual approval, which is two more than the current three. The approval process will also take around 15 days, which will be significantly longer than the current five.

The new classification will be implemented around next month after gathering public opinion for 20 days, according to the ministry.

While Japan will be the only country under the new category, other nations can also be put under the group in the future depending on circumstances, so the adjustment was not made just to target Tokyo, according to Park Tae-sung, South Korea’s deputy minister for trade and investment.

The trade row between the two Asian neighbors emerged last month as Japan implemented curbs on exports of three key materials crucial for the production of semiconductors and display panels to South Korea, dealing a harsh blow to South Korea’s major export of tech products.

With South Korea removed from Tokyo’s white list, Japanese firms must win their government approval for each shipment to the Asian neighbor, a process that can take around 90 days.

Tokyo claimed that its decisions came in response to what it says was Seoul’s “lax export control of sensitive materials that can be used for military purposes”.

South Korea, however, believes the move clearly came as an economic retaliation after a Seoul court ordered Japanese firms to compensate Korean victims for their wartime forced labor last year.

Japan has been protesting the court’s verdict, rebutting that all reparation issues stemming from World War II were settled under a 1965 accord that normalized bilateral ties.

But the South Korean court said that individual rights to demand compensation are still valid.

The mounting trade row took a breather last week when South Korea held off its decision to drop Japan from its trading white list as Japan permitted the first shipment of extreme ultraviolet photoresist, one of the three materials under restriction to South Korea.

In a bid to cut its reliance on Japanese imports, South Korea last week also announced plans to invest about 7.8 trillion won ($6.48 billion) in research and development for local materials, parts and equipment over seven years.