A Response to Japan’s Economic Retaliation?
The conflict between South Korea and Japan triggered by Japan’s restrictions on exports of key semiconductor materials shows signs of escalating into “a tariff war.”
The South Korean government decided on July 10 to extend an anti-dumping duty on imports of ethyl acetate, including those from Japan, by three years. It is also reconsidering imposing an anti-dumping tariff on imports of stainless steel bars from Japan that are used in the precision industry.
The government’s moves are seen as a response to Japan’s semiconductor material export curbs.
The Ministry of Economy and Finance (MOEF) announced its regulations on anti-dumping tariffs a day earlier to extend the anti-dumping duty on imports of ethyl acetate from Japan, China, Singapore and India by three more years, according to the government.
Ethyl acetate is primarily used as a solvent for paints, synthetic resins and inks as well as adhesives for liquid crystal display (LCD) panels. The size of the domestic ethyl acetate market is estimated at 100 billion won (US$84.64 million), or 100,000 tons. For Japanese ethyl acetate, the government will impose an anti-dumping tariff of 30.18 percent on Showa Denko and other companies exporting its products. It will also levy 4.73 percent to 25.28 percent duties on ethyl acetate products from China, 17.84 percent duties on products from Singapore, and 8.56 percent to 19.84 percent tariffs on imports from India.
An anti-dumping duty is a protectionist tariff that a domestic government imposes on imports that it believes are priced below fair market value.
The government has been imposing an anti-dumping duty of 4.64 percent to 17.76 percent on Chinese, Singaporean, Japanese ethyl acetate products and 8.56 percent to 19.84 percent on Indian ones since 2008. Accordingly, the imports from Japan and Singapore have been stopped since 2009 and 2012, respectively. Japanese and Singaporean companies have discontinued exporting the products due to a burden from the anti-dumping tariff. As the government has decided to renew the anti-dumping duty, restrictions on the imports will continue. On the other hand, Chinese firms have continuously been exporting ethyl acetate products and currently have some 30 percent of market share in South Korea. However, the MOEF said, “The latest extension of the anti-dumping tariff is irrelevant to Japan’s restrictions on semiconductor material exports and it is an issue that we have been considering before.”
In addition, the government is now reconsidering the extension of the anti-dumping duty on Japanese stainless steel bar products. The item to be regulated is a round steel bar used for stationery, including ball pen tips. Stainless steel bars are used to produce auto parts, precision industry materials and construction materials. The size of the domestic stainless steel bar was worth 340 billion won (US$287.77 million) as of 2016. The government is imposing 3.56 percent to 15.39 percent of the anti-dumping duty on stainless steel bars from Japan, India and Spain.
A MOEF official said, “We expect that the decision on whether to extend the anti-dumping tariff on stainless steel bars which have been reconsidered from last month will be made by the end of next year. It falls within the jurisdiction of the Korean Trade Commission but the decision can be made considering the recent economic situations between South Korea and Japan.”