LDN - Business

South Korea protests Japan's 'grave' plan to drop it from smooth-trade list

[July 24, 2019] By Ju-min Park

SEOUL (Reuters) - South Korea protested on Wednesday against a Japanese plan to remove it from a list of countries that face minimum trade restrictions, saying it would undermine their decades-old economic and security cooperation and threaten free trade.

Japan's planned revision of a law to take South Korea off its so-called white list comes amid a deepening row over compensation for wartime forced labor and after Japan tightened curbs this month on exports to South Korea of high-tech materials used for making memory chips and display panels.

South Korea's industry ministry said in a statement Japan's removal of South Korea from the list would undermine their economic and security partnership.

It asked Japan to scrap the plan, flagging concerns over wider disruptions of global supply chains involving South Korean chip and screen makers.

"It is a very grave matter that shakes the foundation of South Korea-Japan economic partnership and Northeast Asian security cooperation that has been maintained and developed for more than 60 years," Sung Yoon-mo, the South Korean industry minister, told a briefing.

"Removal of South Korea from the white list of countries is against international norms and we are worried about its serious negative impact on global value chains and free trade," Sung said.

Japan is due to decide on a revision of its list after canvassing public opinion, which was due to be done by Wednesday.

Japan will "steadily progress" with the removal process, Japanese Trade Minister Hiroshige Seko told reporters, adding that each country can make its own decision regarding the white list.

Japanese broadcaster NHK reported that an unusually large number of opinions had been submitted - more than 10,000 - and most were in favor of dropping South Korea.

The government was looking to implement the change as early as next month, NHK said.

Questions over the list come after Japan this month tightened curbs on exports of high-tech materials to South Korea.

The restrictions came as Japan complained of the erosion of trust with South Korea after a South Korean court ruled last year that Japanese companies had to pay compensation to South Koreans forced to work in Japanese factories during Japan's occupation of the Korean peninsula from 1910 to 1945.

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Shingo Yamagami, director-general of the Economic Affairs Bureau at the Ministry of Foreign Affairs of Japan arrives for the General Council meeting where the worsening trade and diplomatic dispute between South Korea and Japan will be raised at the World Trade Organization (WTO) in Geneva, Switzerland, July 24, 2019. REUTERS/Denis Balibouse

Japan believes the issue was settled under a 1965 treaty and the court ruling violated international law.

Japan's top government spokesman said on Wednesday relations with South Korea were in a "very severe" state.

'LONG-TERM HARM'

U.S. tech industry groups with members including Apple sent an open letter on Tuesday to Japan and South Korea calling for a quick resolution of their dispute.

"Non-transparent and unilateral changes in export control policies can cause supply chain disruptions, delays in shipments, and ultimately long-term harm to the companies that operate within and beyond your borders and the workers they employ," the groups said.

Apple is a major customer of South Korean memory chip giants Samsung Elec and SK Hynix.

South Korea has stepped up diplomatic efforts to get Japan to scrap its trade controls, asking the United States to help, though it has not rushed to step in.

South Korean Foreign Minister Kang Kyung-wha discussed the problem with visiting U.S. national security adviser John Bolton in Seoul on Wednesday.

They agreed to continue discussions on a U.S. role in finding a diplomatic solution, Kang's ministry said in a statement.

For years, the United States counted on a united stand with Japan and South Korea to stand up to what all three have seen as North Korean aggression.

Over the past year, U.S. President Donald Trump has sought to resolve the North Korea dispute with a personal approach to its leader, Kim Jong Un.

(Reporting by Ju-min Park; additional reporting by David Dolan, Kiyoshi Takenaka, Makiko Yamazaki in Tokyo and Jane Chung and Heekyong Yang in Seoul; Editing by Robert Birsel and Nick Macfie)

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