Japan rebuffs Seoul’s calls to scrap export curbs

Members from groups of small merchants declare a boycott campaign against Japanese goods in front of the Japanese Embassy in Seoul, on July 5, 2019. PHOTO: EPA-EFE

TOKYO (REUTERS) - Japan pushed back on Tuesday (July 9) against calls from South Korea to scrap restrictions on high-tech exports to its Asian neighbour, as a diplomatic row over forced wartime labour escalates between the two key US allies.

The dispute threatens to disrupt global supplies of South Korean memory chips and smartphones, with Samsung Electronics and SK Hynix among the key names likely to be affected.

Japan was "not thinking at all" of withdrawing the curbs and they did not violate World Trade Organisation rules, Industry Minister Hiroshige Seko said.

"Whether Japan implements additional measures depends on South Korea's response," he told a news conference after a Cabinet meeting.

In Seoul, a government official said a South Korean foreign ministry official was expected to discuss the curbs with his counterpart in Washington. Its trade minister was also considering travelling to the United States, a spokeswoman said.

Mr Seko's comments were an apparent response to South Korean President Moon Jae-in, who urged on Monday that the restrictions be withdrawn. Seoul could not rule out countermeasures for damage inflicted on its firms, Mr Moon added.

South Korea plans to complain to the WTO.

The row shows no signs of abating, with Tokyo threatening last week to drop Seoul from a "white list" of countries with minimum trade restrictions, hitting supply of a wider range of items used in weapons production.

South Korea's benchmark index fell after the minister's comments, standing down 0.18 per cent at 2,060.38 points by 9.55am.

Japan announced curbs last week on high-tech exports of materials used in smartphone displays and chips to South Korea amid a growing dispute over South Koreans forced to work for Japanese firms during World War II.

Officials from Japan and South Korea plan to hold talks as early as this week on Japanese export restrictions, the Yomiuri newspaper reported on Tuesday. Chief Cabinet Secretary Yoshihide Suga said South Korea had asked Japan for an explanation of the curbs and that working-level officials would respond. The schedule was being arranged, he added.

The talks would take place in Japan, the Japanese daily reported without citing sources. A spokesman at South Korea's trade ministry said it was in talks with its Japanese counterpart about the timing and agenda for bilateral talks but nothing had been decided.

Also caught in the fray are Japanese chemical suppliers such as JSR and Stella Chemifa, which are exploring ways to supply South Korean clients from plants outside Japan.

The countries share a bitter history dating to Japan's colonisation of the Korean peninsula from 1910 to 1945, which saw forced use of labour by Japanese companies and the use of "comfort women", a euphemism for those forced to work in wartime brothels.

The latest dispute stems from a South Korean court ruling last year that ordered Nippon Steel to compensate former forced labourers. Japan says the issue of forced labour was fully settled in 1965, when the two countries restored diplomatic ties.

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