TWN Info Service on WTO and Trade Issues (Jul19/33)
31 July 2019
Third World Network

Korea brings complaint over Japan’s export controls to General Council
Published in SUNS #8955 dated 26 July 2019

Geneva, 25 Jul (Kanaga Raja) – South Korea on Wednesday (24 July) brought to the General Council of the World Trade Organisation (WTO) its complaint over Japan’s measures restricting exports to Korea of Japanese materials that are essential for the manufacture of semi-conductors and display screens.

Reportedly, Korea believes that these export restrictions by Japan were in retaliation over a Korean Supreme Court ruling late last year that had ordered a Japanese firm to compensate Korean workers who were engaged in forced labour by Japan during its occupation of the Korean peninsula during World War II.

A Reuters news report quoted Korean deputy trade minister Kim Seung-ho, who addressed the General Council meeting on Wednesday, as telling reporters later: “It’s not at all a trade measure, it’s not at all a security measure, it’s purely strategically planned to gain the upper hand in the diplomatic rows, I mean the forced labour issues.”

At the General Council meeting, under the agenda item that it raised on export restrictive measures by Japan, Korea was of the view that these measures by Japan pose a threat to the semi-conductor industry.

It said that this is going to cause problems beyond simply the Korean economy, and it is going to cause problems for other countries as well.

It could affect consumers across the world, and this is a deviation from the rules of the WTO.

Korea noted that Japan has been a big beneficiary of the multilateral trading system.

The impact of this measure on others is evident because Korea supplies roughly 70% of semi-conductors around the world, it said.

Korea urged Japan to meet with it in a bilateral, diplomatic dialogue on this matter.

Japan said that the measure referred to by Korea is based on the export control system for national security, and is not an appropriate agenda for the WTO.

It said that the purpose of export controls is to prevent proliferation of relevant goods and technology from a security perspective.

Japan is only one of many countries, including Korea, that consistently conduct necessary reviews for effective implementation of export controls under the international framework.

The measure taken by Japan is part of such operational review of export controls.

Although the WTO is not an appropriate venue to discuss such measures based on the export control system, given that Korea raised this agenda item, Japan said that it feels compelled to explain the background to this review of its export controls.

It said that Japan simplified its export procedures for Korea from 2004 as a voluntary measure in spite of challenges with Korea’s export control system and its operation.

Based on exchanges between the agencies concerned, Japan had believed that Korea intended to improve its system and properly implement controls, and accordingly simplified the procedures applying to Korea.

For the past three years, however, despite requests by Japan’s authorities for consultations, no further such exchanges have taken place, said Japan, adding that there were cases of “inappropriate” export to Korea.

These are the factors that caused Japan to decide to revert the existing simplified procedures to the original ones for export to Korea.

Each country can grant simplified measures for an export to a certain country at its own discretion, and not all countries are treated equally, it pointed out.

Japan reiterated that the measure referred to by Korea is not a trade embargo, but an operational review necessary for the proper implementation of Japan’s export control system, based on its security concerns.

The measure taken by Japan simply reverts the existing simplified procedures applied to Korea to the original procedures.

The three items in question (reportedly, fluorinated polyimide, photo-resists and hydrogen fluoride) are already subject to the international regulatory framework under the non-proliferation regime, said Japan, adding that its measure is therefore fully consistent with the WTO agreement.

According to Japan, Korea stated that the measure taken by Japan went against the free-trade system.

Free trade, however, does not mean allowing trade in sensitive goods and technologies that can be diverted to military use, without any controls or conditions, said Japan.

It is, therefore, pointless to just pick up export control measures conducted by responsible WTO members, including Japan, and claim they “go against free trade”.

Furthermore, said Japan, Korea has focused on the economic aspects of the measure such as possible negative impacts on the global supply chain.

It said such an argument by Korea not only creates misconceptions about the measure taken by Japan, but also confounds the real agenda, which is the review conducted for national security purposes.

“That is why I must say that this discussion focusing on issues related to economic benefits is not acceptable,” said Japan.

Japan said that its export control agency will permit exports as long as it does not identify any problems as a result of its examinations.

No other delegation took the floor under this agenda item.