The Ministry of Trade, Industry and Energy of South Korea revised its export and import licensing system on Aug. 12, excluding Japan from its trade white list 10 days after Japan took the same measure against South Korea.
According to the revised rules, simplified export procedures are no longer applied to South Korean companies exporting strategic items to Japan, and they must obtain individual export licenses. In addition, they must prepare five instead of three export documents and an export screening process taking up to 15 days is applied instead of up to five days. The number of such strategic items totals 1,735 and the new system is scheduled to become effective next month.
The South Korean government’s measure is similar to that of Japan. Each excluded the other from its trade white list, and yet neither South Korea nor Japan specified items subject to compulsory individual licensing. In other words, the South Korean government is allowing the export of strategic items while responding to Japan’s measure in the same way.
Experts point out that the South Korean government is pacing itself in doing so. “With Japan’s economic retaliation going on, the government had to do something with few options that can lead to substantial damage to Japan,” said Inha University professor Chung In-kyo, adding, “The government took a cautious step in that any escalation of the tension can result in more damage on the part of South Korean companies and industries.”
South Korean products account for a small portion of Japan’s total imports. Specifically, Japan’s imports added up to 39,132.1 billion yen in the first half of this year and its imports from South Korea represented only 4.2 percent of the total. In addition, Japanese steel and chemical companies can easily find alternative business partners in China and so on although they currently rely on South Korean products. Likewise, Japanese semiconductor companies can easily replace South Korean semiconductor products with those of Toshiba, Micron Technology, etc.
Japan is currently avoiding direct export restrictions against South Korea and this point is reflected in South Korea’s measure, too. The Japanese government specified no individual licensing item while excluding South Korea from its trade white list. Also, it recently permitted the export of one of the previously restricted semiconductor materials.