March 6, 2021

Japan's trade barriers to South Korea threaten the global market

The de facto president of the South Korean technology group Samsung, Lee Jae-yong, is in Japan looking for solutions to the tensions that recently arose between Tokyo and Seoul as a result of Japanese trade restrictions that may have global effects.

On Thursday, Japan's restrictions on the shipment to South Korea of ​​materials and chemicals essential for the manufacture of smart phone chips, televisions and personal computers, among other electronic devices, came into force.

It is an industry in which Samsung Electronics is the first global manufacturer, so any problem that affects its production chain has global dimensions.

Lee, vice president of the company and considered the most important businessman of South Korea, arrived on Sunday night to Tokyo to meet with Japanese suppliers and entrepreneurs in order to address the problems that may result from these impositions.

The leader of Samsung Electronics, which had not made public the details of the trip, has declined to comment on the reason for his arrival and his contacts are kept in reserve.

Local media claim that Samsung's meeting with its customers in Japan responds to concerns that these changes in export policy will cause delays in the supply chain and subsequent production.

According to the new controls, Japanese suppliers will have to request a license to export three materials used in the production of semiconductors, which in turn are used in the production of screens for smartphones and televisions, and memory chips in South Korea .

In his first reaction to these measures, the South Korean president, Moon Jae-in, urged Japan today to withdraw the restrictions and called for dialogue to resolve the current diplomatic crisis, while threatening reprisals if the Government of Shinzo Abe keep the impositions.

Like Samsung, a significant number of South Korean companies depend on Japan for the supply of chemicals, electronic parts and machine tools.

South Korea's Economy and Finance Minister Hong Nam-ki met on Sunday with the leaders of the Hyundai Motor, SK and LG conglomerates, which are also affected by the new policy, in order to address this situation.

The new trade controls on South Korea come in apparent response to the recent rulings by several South Korean courts – including the Supreme Court – that compel Japanese companies to compensate South Korean citizens who were forced to work for them during World War II, a matter that Japan considers solved for decades.

Tokyo, which colonized the peninsula between 1910 and 1945, argues that all compensations for the victims enslaved by Japanese companies were settled in the treaty of normalization of relations of 1965.

"Korea (South) and the rest of the world are concerned about the decision to restrict transactions that bring private mutual benefit for political reasons," Moon said today.

For its part, the Japanese Government has limited itself to citing as an argument for the new regulations the "significant weakening in the relationship of trust" with its neighboring country.

According to the Nikkei newspaper, Samsung Electronics has only one month of provisions for some of the materials affected by the hardening of exports, which would force the company to reduce or stop production if it does not find substitutes.

The technology giant is the world's leading manufacturer and supplier of memory chips and semiconductors, and also dominates the market for OLED technology applied to all types of displays.

These are components that depend on other leading companies in the production of electronics such as Apple or Lenovo.

The South Korean authorities have already announced that they will take the case to the World Trade Organization (WTO), arguing that it is a decision "against common sense" and showing the dissatisfaction of the South Korean Executive with the actions undertaken by Japan.

. (tagsToTranslate) commercial (t) Japan (t) Korea (t) South (t) threaten

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