South Korea dropping Japan from list of favoured trade partners

South Korea said on Monday it plans to drop Japan from its "white list" of countries with fast-track trade status from September, a tit-for-tat move that deepens a diplomatic and trade rift between the two countries.
Banners, with Japanese Premier Shinzo Abe's image, denouncing Japan's trade curbs on South Korea on a street in Seoul. PHOTO: ASSOCIATED PRESS
Banners, with Japanese Premier Shinzo Abe's image, denouncing Japan's trade curbs on South Korea on a street in Seoul. PHOTO: ASSOCIATED PRESS

SEOUL • South Korea said it has decided to remove Japan from a list of nations receiving preferential treatment in trade, in what was seen as a tit-for-tat move following Tokyo's decision last month to downgrade Seoul's trade status amid a diplomatic row.

It was not immediately clear how South Korea's tightened export controls would impact bilateral trade.

Seoul said yesterday that some South Korean companies exporting to Japan would be able to receive exceptions from case-by-case inspections - normally applied on sensitive shipments to nations with lower trade status and which typically take 15 days - and go through the same fast-track approval process that they currently enjoy.

Japanese Vice-Minister for Foreign Affairs Masahisa Sato said he believes the impact of Seoul's move would likely be limited as Japan does not import a lot of sensitive materials from South Korea.

Japan provided similar exceptions while removing South Korea as a favoured trade partner, which eased some of the fears in Seoul about a possible blow to its export-dependent economy, where many manufacturers rely heavily on parts and materials imported from Japan.

After spending weeks berating Tokyo for allegedly weaponising trade and vowing retaliation, South Korean President Moon Jae-in struck a more conciliatory tone yesterday, saying that his government will refrain from "emotional" reactions to Japan over the trade dispute.

"While maintaining unwavering resolve and calmness, we need a long-term approach to look for fundamental countermeasures," Mr Moon said in a meeting with senior aides.

South Korean Trade Minister Sung Yun-mo said Seoul decided to remove Japan from a 29-member "white list" of countries that enjoy minimum restrictions in trade because it has failed to uphold international principles while managing its export controls on sensitive materials.


Mr Sato said South Korea would be violating World Trade Organisation rules if it was retaliating against Japan's earlier measures.

South Korean trade official Park Tae-sung said Seoul is making a legitimate effort under domestic and international laws to improve its export controls.

South Korea currently divides its trade partners into two groups while managing the exports of sensitive materials that can be used both for civilian and military purposes.

Seoul will create a new in-between bracket where it plans to place only Japan, which "in principle" will receive the same treatment as the non-favoured nations in what is now the second group, Mr Sung said.

He also said the changes are expected to take effect some time next month, following a 20-day period for gathering public opinion on the issue and further regulatory and legal reviews.

He added that Seoul is willing to accept any request by Tokyo for consultation over the issue during the opinion-gathering period. But officials did not say whether Seoul's decision will be negotiable.


A version of this article appeared in the print edition of The Straits Times on August 13, 2019, with the headline 'South Korea dropping Japan from list of favoured trade partners'. Print Edition | Subscribe