Government Decision Shocks Companies
The South Korean government decided not to extend the General Security of Military Information Agreement (GSOMIA) with Japan. South Korean companies are shocked in that the decision can result in Japan’s additional export curbs and economic retaliation with its enforcement ordinance for excluding South Korea from its trade white list scheduled to become effective on Aug. 28.
“The GSOMIA has been one of the very foundations of the alliance between South Korea and Japan and the termination of the agreement will affect South Korea’s national security as well as economy,” said one of them, adding that the continuation of the confrontation will result in a series of measures adversely affecting both the South Korean and Japanese economies. It continued to say, “Japan’s economic retaliation is likely to be expanded to every industry, including future industries.”
It is said that the termination of the agreement will affect the bilateral relations between the United States and South Korea as well. “It was just one day ago that U.S. Ambassador to the Republic of Korea Harry Harris met with South Korean entrepreneurs and asked them to make efforts for better South Korea-Japan relations,” said a local executive, adding, “South Korean companies will have to face even more difficulties if the South Korea-U.S. relations deteriorate due to the government’s decision.”
In the meantime, the Korea Federation of SMEs conducted a survey with 269 small and medium-sized enterprises early last month and close to 60 percent of the survey respondents answered that they can endure Japan’s export restrictions for less than six months. “In the survey, companies said that the most desirable is a diplomatic solution between the two governments,” the federation explained, adding, “The South Korean government has to make efforts so that the termination of the GSOMIA does not lead to any substantial damage on the part of small firms.”