March 4, 2021

Tokyo expands its trade barriers to Seoul and deepens the bilateral crisis

The Government of Japan decided today to strip South Korea of ​​its status as a preferred trading partner, a measure that deepens the bilateral diplomatic crisis and could have a negative impact on the economies of these neighboring countries.

The decision was approved this Friday by the Cabinet that leads Shinzo Abe and expands the obstacles that Tokyo has applied since the beginning of last July to the basic chemical materials acquired by South Korean companies to manufacture screens and memory chips.

Tokyo justified the application of the new restrictions for security reasons, while Seoul described it as "unfair" and "retaliation" for the contentious drag both countries in the wake of the Japanese colonization of Korea, and warned of "serious damage "that can cause national economies and globally.

The decision of Japan, which will come into force on August 28, comes after a series of angry disagreements and an escalation of accusations between those responsible for both countries and represents another step in the deterioration of bilateral relations that are going through their worst moment of the last decades.

In practice, it will mean that South Korea no longer has access to simplified procedures for the purchase of materials and technology of Japanese origin susceptible to military use, a status enjoyed by Seoul since 2004 with a group of 26 other countries, including United States, United Kingdom, Argentina or Germany.

More than a thousand Japanese products will be affected by these obstacles, which will affect key South Korean industries such as the automobile or petrochemical industries and adds to the similar limitations that Japan decided to impose before other materials used, especially by the technological sector of the neighboring country.

In Seoul it is feared that the Japanese restrictions that entered into force in July block the supply of materials and components for the production of DRAM memories, whose global market share corresponds to 70% to South Korean companies, and to the national economy itself, whose muscle exporter depends on 25% of semiconductors.

South Korean President Moon Jae-in today accused Japan of "deliberately attacking" the national economy, something that could also have a "strong impact" on a global scale, and warned that Seoul has "methods" to respond that could cause "enormous damage" to Japan during his speech at an emergency meeting of his Cabinet broadcast live by local media.

For his part, the spokesman for the Japanese Executive, Yoshihide Suga, said at a press conference that today's decision was necessary "to properly implement Japan's export control system from a security point of view," and because the measures applied by South Korea "were insufficient."

The Minister of Economy, Trade and Industry of Japan, Hiroshige Seko, also noted that South Korean companies "may continue to import (products from Japan) provided they complete the procedures properly," and denied that the measure may have an impact on the Japanese companies.

The decision of the Japanese Government contributed to a "black Friday" in the stock exchanges in Seoul and Tokyo, where the main indicators and the technological sectors closed this Friday with strong falls, also caused by the new tariffs announced by the United States on China.

The Nikkei benchmark of the Tokyo parquet closed with a fall of 2.11 percent, while in Seoul the Kospi lost 0.95%.

The origin of the bilateral confrontation was the ruling of the South Korean Supreme Court of the end of 2018, which contemplated that Japanese companies with a presence in South Korea were forced to pay compensation to Korean citizens (or their heirs) enslaved by these companies during World War II World.

Based on the 1965 treaty, Japan, which colonized the Korean peninsula between 1910 and 1945, donated $ 300 million to the victims, money that the Park Chung-hee military dictatorship did not reach all, which is why thousands of them recently denounced the Government of South Korea.

Antonio Hermosín Gandul

. (tagsToTranslate) Tokyo (t) wide (t) commercial (t) Seoul (t) bilateral

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