Japan's export curbs 'undesirable', South Korean foreign minister tells Pompeo

A shop sign informs customers that it will not sell products from Japan, at a supermarket in Seoul on July 5, 2019.
A shop sign informs customers that it will not sell products from Japan, at a supermarket in Seoul on July 5, 2019.PHOTO: AFP

SEOUL (REUTERS) - South Korea's foreign minister told US Secretary of State Mike Pompeo that Japan's export curbs against South Korea are "undesirable", the Foreign Ministry said on Thursday (July 11), as a trade row between the East Asian neighbours grows.

South Korea’s ruling party also announced on Thursday that up to about 300 billion won (S$346 million) would be included in a supplementary budget bill to cope with Japan’s export curbs.

S&P Global Rating’s Asia-Pacific chief economist Shaun Roache said the dispute was as unpredictable as the US-China trade war and was likely to affect South Korea’s economic growth.

Japan tightened curbs last week on exports of three materials crucial for smartphone displays and chips, saying trust with South Korea had been broken over a dispute with Seoul over South Koreans forced to work for Japanese firms during World War II.

The restrictions will affect companies such as Samsung Electronics Co and SK Hynix, which supply chips to companies such as Apple, and South Korea is stepping up diplomatic overtures to their mutual ally the United States to step in.

South Korean Foreign Minister Kang Kyung-wha told Mr Pompeo in a phone call late on Wednesday that Japan's trade restrictions may not only cause damage to South Korean companies but could also disrupt the global supply chain and hurt US companies.

Ms Kang "expressed concern that this is undesirable in terms of friendly relations between South Korea and Japan and trilateral cooperation among South Korea, the US and Japan", the ministry said.

Seoul hoped Tokyo would withdraw the curbs and that the situation would not deteriorate further, it said.

Mr Pompeo "expressed understanding" and both agreed to continue to cooperate and to strengthen communication between the three sides, the Foreign Ministry said in a statement.

Mr Kim Hyun-chong, deputy chief of South Korea's National Security Office, arrived in Washington, DC, on Wednesday in an unannounced visit and told reporters he was there to meet officials from the White House and Congress to discuss issues that included Japan's export curbs.

However, some experts said the US is unlikely to step in as a mediator in the dispute.

Former Japanese ambassador to the US, Mr Ichiro Fujisaki, said in an interview with Reuters on Wednesday that "I don’t think we need the United States to mediate, just like Japan would not mediate US-Mexico ties or US-Canada relations.

"This is an issue to be solved between Japan and South Korea," Mr Fujisaki said.

New US Assistant Secretary of State for East Asian and Pacific Affairs David Stilwell is visiting Asia until July 21, including stops in Japan and South Korea, to work on a shared vision for the Indo-Pacific region, the State Department said in a statement.

It did not say whether the Japan-South Korea dispute would be discussed.;

Ms Sheila Smith, senior fellow for Japan studies at the Council on Foreign Relations, said it may be too early for Mr Stilwell to assess what the US could do to help.

"He is likely to begin with what I would call deep listening," she said.

South Korea’s Democratic Party said in a statement on Thursday it would include up to 300 billion won in an extra budget to cope with Japan’s export limits on high-tech materials.

The size of the South Korean government’s 6.7 trillion won supplementary budget plan, proposed in April, can change during its parliamentary review this month, a finance ministry official said.