South Korea to remove Japan from preferred trade list
Tit-for-tat decision comes after Tokyo’s move to downgrade Seoul’s status.
SEOUL — South Korea said Monday that it has decided to remove Japan from a list of nations receiving preferential treatment in trade in what was seen as a tit-for-tat move after Tokyo’s recent decision to downgrade Seoul’s trade status amid a diplomatic row.
It wasn’t immediately clear how South Korea’s tightened export controls would affect bilateral trade. Seoul said some South Korean companies exporting to Japan will be able to receive exceptions from case-bycase inspections that are normally applied on sensitive shipments to nations with lower trade status and go through the same fasttrack approval process they now enjoy.
Masahisa Sato, Japan’s vice minister for foreign affairs, said he believes the effect of Seoul’s move would probably be limited as Japan doesn’t import much sensitive material from South Korea.
Japan provided similar exceptions while removing South Korea as a favored trade partner, which eased some of the fears in Seoul about a possible blow to its export-dependent economy, in which many manufacturers heavily rely on parts and materials imported from Japan.
After spending weeks berating Tokyo for allegedly weaponizing trade and vowing retaliation, South Korean President Moon Jae-in struck a more conciliatory tone Monday, saying his government will refrain from “emotional” reactions to Japan over the trade dispute.
“While maintaining unwavering resolve and calmness, we need a long-term approach to look for fundamental countermeasures,” Moon said in a meeting with senior aides.
South Korea’s trade minister, Sung Yun-mo, said Seoul decided to remove Japan from a 29-member “white list” of countries that enjoy minimum restrictions in trade because it has failed to uphold international principles while managing its export controls on sensitive materials. Sung and other South Korean officials did not specify what they saw as Tokyo’s problems in export controls.
Sato said South Korea would be violating World Trade Organization rules if it was retaliating against Japan’s earlier measures. Park Tae-sung, a South Korean trade official, said South Korea is making a legitimate effort under domestic and international laws to improve its export controls.
South Korea divides its trade partners into two groups while managing the exports of sensitive materials that can be used both for civilian and military purposes.
Seoul will create a new inbetween bracket where it plans to place only Japan, which “in principle” will receive the same treatment as the non-favored nations in what’s now the second group, Sung said.
South Korea’s government requires companies to go through case-by-case approvals to export sensitive items to non-favored nations, which typically take 15 days. However, Seoul also plans to grant exceptions to South Korean companies exporting to Japanese partners under long-term deals and allow them to continue using a fast-track approval process that takes about five days.
South Korean officials didn’t clearly explain why they created a special bracket for Japan instead of grouping it with other nonfavored nations. They said Seoul will work to minimize negative effects on South Korean exporters and bilateral trade.
Sung said the changes are expected to take effect sometime in September, after a 20-day period for gathering public opinion on the issue and further regulatory and legal reviews. He said South Korea is willing to accept any request by Tokyo for consultation over the issue during the opinion-gathering period, but officials didn’t say whether Seoul’s decision will be negotiable.
South Korea’s announcement came weeks after Japan’s Cabinet approved the removal of South Korea from a list of countries with preferential trade status, citing an erosion of trust and unspecified security concerns surrounding Seoul’s export controls.