Japan enforced the revised Export Trade Control Order as planned on Wednesday to remove South Korea from its “white list,” the list of countries subject to simplified export procedures. With the significantly tougher procedures on export from South Korea to Japan, South Korean companies will face the uncertainty of when and which products will become subject to separate approval. There is no answer in the near future as to when the current conflicts between the two countries will be resolved as Japan has completed institutional settings for export control over South Korea.
In response to Japan’s actions, the South Korean government announced a plan to invest over five trillion won in the research and development sector of more than 100 key items in materials, parts, and equipment sectors for the next three years, as well as a strong determination to file a complaint with the World Trade Organization. “We urge Japan to stop worsening the situation and engage in communication with sincerity to restore the bilateral relations,” said South Korean Prime Minister Lee Nak-yeon. “We will also focus on developing the materials, parts, and equipment industries with a long-term consistent perspective.”
On the other hand, this may be a time to leapfrog South Korea’s industrial competitiveness as both the government and economic circles are emphasizing the development of the parts and materials industries. Kim Sung-su, the head of the Science, Technology & Innovation Office at the Ministry of Science and ICT, said on Tuesday that the materials, parts, and equipment sectors that cannot easily produce journals or patents have not received sufficient governmental investment and suggested that more R&D investment in focus industries of the nation is needed. “This is a matter of pride for those working in science and technology,” said Kim with tears in his eyes. “We need to strengthen the fundamentals of the national focus industries and close the gaps in the R&D sector.” Kim’s remarks also imply that the current conflicts with Japan could be an opportunity to reflect on the areas that the South Korean economy is currently lacking.
As the saying goes, a crisis could be an opportunity. The recent development should be used as an opportunity to fundamentally transform the ecosystem of the materials, parts, and equipment industries. The government and the private sector must come together to implement long-term fundamental measures with high accuracy and speed. It is critical not only to encourage R&D activities but also to create a favorable environment for businesses in terms of taxes, approvals, and finance. It’s been told that Japan may raise tariffs, put regulations on remittance, and strengthen the visa issuance criteria as additional measures to put pressure on South Korea. Efforts to improve the bilateral relations with a long-term perspective are required while conducting risk management to prevent the conflicts from worsening.