- It is the first time Korea has been canceled from the designation as a White List country.
- In Korea, there is a concern that strengthening export controls could hurt the slowing Korean economy.
- The background to the worsening of this trade dispute is the issue of Koreans being forcibly recruited by Japanese companies during World War II.
The Japanese government cabinet has decided to exclude Korea from the list of “white countries” that can receive preferential treatment in trade control. As a result, the fierce confrontation between Japan and Korea becomes even more serious. The decree takes effect on August 28th. Korea is subjected to new export restrictions. The Japanese side explained that the decision was due to the lack of an export control system in Korea and security concerns.
A spokesman for Korea`s presidential minister Ko Min-chon responded immediately to the expected decision, saying, “The government will deal strictly with Japan’s unfair decisions.” South Korea is reviewing the Comprehensive Information Security Initiative with Japan (GSOMIA) and warned that exclusion from the White List would have a “serious impact” on Japan-Korea relations.
Currently, 27 countries including Germany, the United Kingdom, and the United States are designated as White countries. It is the first time Korea has been canceled from the designation as a White List country. If Korea is excluded, Japanese exporters will have to apply for customs clearance procedures for various products exported to Korea.
The Japanese government has previously lifted the preferential treatment for exports to Korea for three industrial products that are essential for semiconductor, display and memory chip manufacturing. In Korea, there is a concern that strengthening export controls could hurt the slowing Korean economy.
Semiconductor manufacturing is a major industry in Korea. According to information research firm IHS Mark It, about 60% of the global semiconductor market share of last year is Samsung Electronics and SK Hynix, Korea’s leading semiconductor makers. Stronger export controls can also hurt the electronics industry as they can be a threat to the global supply chain.
The background to the worsening of this trade dispute is the issue of Koreans being forcibly recruited by Japanese companies during World War II. There is a complex history between Japan and Korea, including being under Japanese rule from 1910 until 1945, when Japan lost the war. In November of last year, the Grand Court of Korea (equivalent to the Supreme Court) issued a ruling to order Mitsubishi Heavy Industries to pay reparations for former Korean contractors who were forced to work at the company’s military plant during World War II.
The ruling received a backlash from within Japan, which led to the deterioration of tensions between the two countries. The Japanese government maintains that the issue of claims arising during the Korean Peninsula dominance that lasted from 1910 to 1945 was completely and finally resolved by the Japan-Korea claim agreement concluded in 1965.
It is reported that Mitsubishi Heavy Industries, which has been the subject of lawsuits, will not respond to the decision of the Grand Court. Regarding the domestic assets of Japan Steel (formerly Nippon Steel & Sumitomo Metal) and Fujiko’s domestic assets, the Daejeon District Court received an application for sale last month.