As Tokyo excludes South Korea from a “white list” of countries favored in trade, about 1100 items that Korea imports from Japan appear to be subject to the tighter export control, a state-run Korean think tank said.
The regulatory targets will be expanded significantly from three key materials used for semiconductor and display production – fluorine polyimide, etching gas and photoresist – which are already in export regulations.
The Japanese measure isn’t expected to lead to a total export ban, but it can damage South Korean industry as imports of critical parts from Japan may be delayed due to the complicated and more time-consuming import process.
Japan held a ministerial meeting on Friday and decided to exclude Korea from its list of preferred trade partners.
Citing estimates by the Korea Strategic Trade Institute, the Korea Institute for International Economics said in a report published July 1 that some 1,100 sensitive items could be subject to the tightened regulation.
KIET pointed out that among them 707 items are more than 50% dependent on Japan and 82 items are 100% dependent. It added that machine tools, chemicals, electronic parts, and other high-tech materials could be subject to the regulation.
“In particular, advanced materials (chemicals) that can be used for military purposes and secondary ion batteries for vehicles are likely to be included.”
Export ban unlikely
According to KOSTI, Japan’s authorization for exports to Korea is expected to change from a comprehensive process of allowing exports of multiple items to breaking down the exports into individual items.
The validity of export permits will also be shortened to six months from the current three years, and the export licensing process will be lengthened to up to 90 days from the current one week. Documents for export permission will be increased from two, including the application for authorization, to between three and nine depending on the item.
Excluding countries from the white list “is not likely to ban exports of regulated items to Korea,” Kim Kyu-pan, a senior researcher at KIET, told Asia Times. “However, the export process of regulated items can be complicated and prolonged, which can cause disruptions to imports of parts and other products. If we face that situation, Korean industries can be damaged.”
At present, it is difficult to determine to what extent the tougher regulations will be applied. “The biggest issue related to tougher Japanese regulation is that it is hard to determine the extent of the items subject to regulation, and the impact on the Korean economy and the global economy. So the Korean government has difficulties finding countermeasures,” KIET said.
Amid such developments, the government has decided to set up a task force and a team to check and manage the situation related to Japan’s measure. The government also plans to announce measures to nurture the part and material industries and to help damaged companies.