Uncertainties Still Remain for Korean Firms
The Japanese government officially excluded South Korea from its trade white list on Aug. 7. However, contrary to expectations, it refrained from expanding the list of items subject to export restrictions.
Some experts pointed out that the Japanese government is pacing itself. The others pointed out that uncertainties still remain. Still, what matters is the fact that an individual export license must be obtained from now on for every "strategic" item exported from Japan to South Korea. In addition, Japan’s export control can be expanded to cover non-strategic items that it thinks can be used for military purposes.
The Japanese government is going to divide its trade whitelist into four groups. Existing whitelist countries are classified into Group A and their preferential treatment in the form of simplified export procedures will be maintained as it is. Group B, which includes South Korea, consists of those satisfying certain conditions as members of the four export control regimes of Nuclear Suppliers Group, Australia Group, Missile Technology Control Regime and Wassenaar Arrangement.
Starting from Aug. 28, Group A countries can benefit from simple export documentation and quick screening for three years with regard to strategic items. On the other hand, individual export licenses effective for six months and requiring nine different documents are applied to Group B countries along with a screening period of up to 90 days. The Ministry of Economy, Trade and Industry of Japan can intentionally delay the screening or block export by demanding additional documents.
The Japanese government has left the list of items subject to export restrictions unchanged. Previously, South Korean companies tried to estimate their additional damage based on which would be additionally restricted out of the 1,100 or so strategic items. However, their concerns are mounting due to the lack of new export restrictions. “The lack means an immediate and compulsory individual export licensing can be applied to any item, and we need to procure as many materials and components as possible as fast as we can,” one of them said, adding, “It seems that the Japanese government is putting pressure on South Korea by adding to uncertainties and what matters now is how the South Korean government reacts in that additional restrictions hinge on its diplomatic efforts.”
In the meantime, the Japanese government reiterated on Aug. 7 that the exclusion of South Korea from the white list does not constitute any economic retaliation. “What we did is an export management system review related to national security and we have no intention at all to affect the diplomatic relations between Japan and South Korea,” said Japanese Chief Cabinet Secretary Yoshihide Suga. The South Korean government is planning to hold a ministerial meeting on Aug. 8 in order to discuss excluding Japan from its own white list and adopting similar individual export licensing.