South Korea will remove Japan from its “white list” of trusted trading partners, Seoul’s finance minister said Friday, reciprocating just hours after a similar move by Tokyo.
The Japanese government’s decision “fundamentally destroys the relations of trust and cooperation that the two countries established” in the past, said Hong Nam-ki.
“For this, we express our strong protest and deep regret, and urge Tokyo to immediately withdraw its vengeful trade measures.”
Tokyo’s move came with the countries mired in a long-running dispute over the use of forced labour during World War II, but Japan insisted it was related to national security and was not retaliatory.
“The government at a cabinet meeting today approved a revision to the export control law… South Korea, the only Asian nation on the list, will be removed,” Japan’s Trade Minister Hiroshige Seko told reporters.
Seoul has reacted furiously, with President Moon Jae-in calling it “very reckless” and saying it would cripple global supply chains.
“We will continue making efforts to solve this issue diplomatically,” said finance minister Hong.
“But we will also remove Japan from our white list and go through a process to strengthen our export controls.”
Japan last month tightened the rules on exports of three products key to South Korea’s chip and smartphone industries, raising fears for global supply in the sectors.
Tokyo’s latest decision comes despite calls from Washington for the two US allies to set aside their differences, and after South Korea warned it would review security cooperation with Japan if the de-listing went ahead.
South Korea is now the first country ever to be dropped from Japan’s so-called “white” list of nations granted minimal constraints on exports of products that could be diverted to military use.
It means hundreds of products listed as sensitive will be subject to tighter export controls, though experts said the effect would be more symbolic than economic.
It “will only have a limited impact on the South Korean economy,” said Hajime Yoshimoto, senior economist at Nomura Securities, in part because Japanese exporters can obtain special permission to ship to non-white-list countries with simplified procedures.
Many major Japanese exporters already have that special permission, according to the trade ministry.
“I’d like to make it clear that this is not an export embargo,” Seko said Friday.
“We believe stripping South Korea of preferential treatment does not affect the global supply chain or have a negative impact on Japanese companies.”
