Tue, Jul 09, 2019 page10

• Moon calls for diplomatic solution to trade spat

  POLITICAL RETALIATION? There is concern that Japan might expand the restrictions to include other key semiconductor materials or components used in other products

  • AP, SEOUL
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  South Korean President Moon Jae-in yesterday said that the country is committed to finding a diplomatic solution to a bitter dispute over tightened Japanese control on exports of high-tech materials used by South Korean companies to produce semiconductors and displays.

  In a meeting with senior aides, Moon called for Japan to withdraw what he described as a politically motivated measure and “sincere” bilateral discussions for the issue.

  He said that South Korea would be left no choice but to take unspecified countermeasures should the Japanese trade curbs result in actual damages to South Korean firms.

  Japan last week removed South Korea from a list of nations with which it minimally restricts trade and ordered a more stringent approval process for shipments of photoresist and other key chemicals to South Korea.

  The move came amid deteriorating relations between the nations over issues related to forced labor during World War II.

  The South Korean Ministry of Trade has said that Seoul plans to file a complaint with the WTO over Japan’s “unjust” action.

  Seoul sees Japan’s move as retaliation against recent South Korean court rulings ordering Japanese firms to compensate South Korean plaintiffs over forced labor during World War II.

  “The recent trade curbs imposed by Japan have raised concern over disruption in production for our companies and the threat it poses to global supply chains... There are global concerns over the move to limit mutually beneficial trade between civilian companies for political purposes,” Moon said.

  “A vicious cycle created by measures and countermeasures wouldn’t be ideal for either country, but if South Korean companies begin experiencing actual damages, our government would have no choice but to implement a necessary response,” he said before adding that he hopes things do not come to that.

  Japan’s export restrictions, which went into effect on Thursday last week, cover fluorinated polyimides, which are used in organic LED screens for TVs and smartphones, and photoresist and hydrogen fluoride, which are used for making semiconductors.

  Analysts say that the measure would not immediately have a meaningful effect on South Korean firms such as Samsung Electronics Co and SK Hynix Inc, which both have sufficient supplies of the materials, given the slowdown in demand for semiconductors.

  However, there is concern that Japan might expand the restrictions to include other key semiconductor materials, such as wafers, or materials and components used in other products, including rechargeable batteries for electric vehicles.

  In the January-to-May perios, 94 percent of South Korea’s imports of fluorinated polyimide and 92 percent of its imports of photoresist were from Japan, according to a report by Moody’s Investors Service.

  Meanwhile, most Japanese approve of the government’s decision to tighten controls on exports to South Korea of specialist materials vital to its tech industry, a poll showed yesterday, as an ongoing dispute over colonial history threatens to damage business ties between the neighbors.

  About 58 percent of respondents to the poll carried out by the Japan News Network said that they approved of the government’s policy, compared with 24 percent who did not.

  Japanese Prime Minister Shinzo Abe on Sunday reiterated denials that the checks were a form of retaliation against South Korea for recent court rulings holding Japanese companies liable for cases of forced labor before and during World War II.

  Additional reporting by Bloomberg
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