The South Korean government has decided to remove Japan from the “white list” – a list of countries eligible for simplified export procedures – by revising the Public Notice on Trade of Strategic Items. South Korea had been categorizing the countries that have subscribed to the four major international export controls regimes, including the Wassenaar Arrangement, into Group A – “white-list” countries – while grouping the rest of all countries into Group B. According to the newly-introduced change, Group A is divided into Group A1 and Group A2, with Japan belonging to the latter. As a result, strategic items exported from South Korea to Japan will experience longer evaluation periods and be required to submit more complex application documents. The South Korean government explained that it is a measure taken based on principles for Japan’s inappropriate export controls system of strategic items.
The implications of the new measure are more symbolic than anything else. Seoul hasn’t designated specific items to be under export regulations, unlike Tokyo. Members of the relevant industries believe that the actual impact of the measure on Japanese companies won’t be large, which is in stark contrast with the South Korean companies directly affected by adverse impact from Japan’s export regulations on three items, including etching gas.
Nonetheless, Japan’s Deputy Minister of Foreign Affairs Masahisa Sato said, “If this is a countermeasure against Japan’s export management measure, it may be deemed as a violation of WTO principles.” It is Japan’s argument that the removal of South Korea from Japan’s “white list” was simply intended for appropriate export management, not economic retaliation, while South Korea introduced a countermeasure against the justifiable measure. However, Japan is contradicting itself by claiming that South Korea has violated WTO rules, and unfairly criticizing South Korea for adopting the very same measure that it has introduced first – removing South Korea from the “white list” and, worse yet, specifying items for export controls.
It is deemed unavoidable for South Korea to have Japan removed from its “white list,” regardless of its actual effectiveness, as it was a reaction corresponding to the unjustified action of a foreign country. However, the South Korea government’s stance to avoid emotional response must not be swayed. South Korean President Moon Jae-in also said Monday, “Our response to Japan’s economic retaliation should not be emotional.” Concerned business people on the front line welcome the president’s statement calling for a calm response, but at the same time feel confused in light of the strong words said by some ruling party members. The result of the survey conducted by K-Biz Korea Federation of SMEs showed that most business people prefer diplomatic resolution and international cooperation. Both South Korea and Japan must seek solutions aligned with the principles of free trade and international division of labor, rather than engaging in political demagoguery.