South Korea restores Japan to trade white list amid warming ties
Seoul is restoring preferential trade status three years after neighboring countries restricted trade over historical grievances.
South Korea has formally reinstated Japan on its list of countries it gives preferential trade treatment, three years after neighboring countries downgraded each other’s trade status amid a diplomatic spat fueled by historical grievances.
Announcing the move via a government gazette on Monday, South Korea’s Ministry of Commerce, Industry and Energy also said Seoul will further limit technology and industrial exports to Russia and its ally Belarus to avoid the US-led pressure campaign. to Moscow about the war in Ukraine.
After years of friction, Seoul and Tokyo are trying to mend relations as they tighten their three-way security cooperation with Washington to counter the threat posed by North Korea. Pyongyang has used the war-induced distractions to speed up nuclear missile testing.
South Korean officials expect Tokyo to also reestablish Seoul as a favored trading partner, but anticipate that move will take more time based on procedures to review Japan’s export rules.
In September 2019, South Korea removed Japan from its “white list” of countries receiving accelerated trade approvals, in response to a similar move by Tokyo. Japan had also tightened export controls on key chemicals South Korean companies use to make semiconductors and displays, prompting South Korea to file a complaint with the World Trade Organization (WTO).
Seoul accused Tokyo of weaponizing commerce in retaliation against South Korean court rulings that ordered Japanese companies to pay reparations to South Koreans forced into slave labor before the end of World War II, when Japan colonized the Korean peninsula.
The 2018 rulings irked Japan, which insists all compensation issues were settled by a 1965 treaty that normalized relations.
Relations between United States allies began to thaw in March when the administration of South Korean President Yoon Suk-yeol, who took office in May 2022, announced plans to use South Korean funds to compensate the forced laborers without Japanese to demand contributions. Yoon traveled to Tokyo to meet Japanese Prime Minister Fumio Kishida and they pledged to rebuild the countries’ security and economic ties.
Yoon’s attempt to mend ties with Tokyo has drawn criticism from some forced labor victims and from his political rivals. They have called for direct compensation from Japanese companies that employed the forced labourers. But Yoon has defended his decision, saying closer ties with Japan are essential to meet a slew of regional challenges, most notably North Korea’s growing nuclear threat.
Following the Yoon-Kishida summit, South Korea withdrew its WTO complaint against Japan, while Tokyo confirmed that it was lifting export controls on a range of chemicals considered essential to South Korea’s technology industry.
The Japanese restrictions related to fluorinated polyimides, used in OLED (organic light-emitting diode) displays for TVs and smartphones, and to photoresist and hydrogen fluoride, used to make semiconductors.
With Japan’s status restored, South Korea now gives preferential treatment to 29 countries – including the US, UK and France – over the export of sensitive “strategic” materials that can be used for both civilian and military purposes.
South Korea divides its trading partners into two groups when managing export approvals of sensitive materials. The waiting period is usually five days for whitelisted countries, while other countries have to go through a case-by-case review, which can take up to 15 days.
Announcing its new rules on the export of strategic materials, South Korea’s Commerce Ministry also said that starting this week, the country will place hundreds of industrial products and components under its export restrictions against Russia and Belarus.
Seoul’s controls so far have covered 57 items, including those related to electronics and shipbuilding, with authorities banning their shipments to Russia and Belarus unless the companies receive special approvals. The list will increase to 798 items as of Friday, including exports related to construction, machinery, steelmaking, automobiles, semiconductors and advanced computers.
“(We) intend to work with relevant ministries to strengthen crackdowns and enforcement to prevent (the restricted items) from reaching Russia or Belarus through third countries,” the ministry said in a statement.