SEOUL – South Korea will halt a World Trade Organisation (WTO) dispute process sparked by a complaint against Japan as the two countries discuss Japan’s export curbs on high-tech materials to South Korea, the two countries’ trade ministries said on Monday.

In July 2019, Japan imposed export curbs on materials used in smartphone displays and chips amid a decades-old row with Seoul about South Koreans who said they were forced to work under Japan’s 1910 to 1945 occupation of Korea.

As South Korea has proposed that its companies would compensate those people, both countries will quickly begin discussions to return export curbs to their pre-July 2019 state, the ministries said on Monday.

“The suspension of the WTO dispute resolution process is not really a withdrawal... But a pause,” said South Korea’s Trade Ministry director-general Kang Kam-chan. “If the issue does not progress well, the process may resume again.”

South Korean technology companies such as Samsung Electronics, SK Hynix and LG Display were among companies widely expected to be affected by Tokyo’s curbs on fluorinated polyimides, photoresists and hydrogen fluoride, in which Japanese production dominates.

But Seoul-based analysts said the impact was limited as the companies found import routes through other countries, worked to diversify sourcing – including investing in local materials companies – and some Japanese companies set up production in South Korea.

“In hydrogen fluoride’s case, domestication has progressed considerably,” said Korea Institute for Industrial Economics and Trade senior researcher Kim Yang-paeng. REUTERS