S. Korea wins exemption from U.S.’ Foreign Direct Product Rule

The U.S. has decided to exempt South Korea from the Foreign Direct Product Rule (FDPR), which has been introduced as part of export restrictions on Russia. As a result, when South Korean companies export items subject to the FDPR, such as semiconductors and computers to Russia, they can obtain permission from the South Korean government, instead of the U.S. government.

South Korean Trade Minister Yeo Han-koo met with officials from the White House and the U.S. Department of Commerce in Washington, D.C. on Thursday (local time), and said the two countries agreed to exempt South Korea from the U.S.’ FDPR. The agreement will be published in the U.S. Commerce Department’s official gazette as early as Friday.

The FDPR is a restriction imposed on all items, including foreign-produced items that are a direct product of U.S.-origin technology or software, which require permission from the U.S. government when exporting to Russia.

It is necessary to obtain permission from the U.S. government when exporting 57 items that are subject to the FDPR to Russia. Because South Korea has won an exemption, the subject of control has shifted from the U.S. to the South Korean government. Minister Yeo explained that if South Korea had not included in the exemption list, it would have been uncertain in many ways and take a lot of administrative costs and time for South Korean companies to obtain permission from the U.S. government.

However, confusion is continuing for South Korean companies as export routes have already been blocked as shipments to Russia through air and sea have been suspended. The World’s largest shipping companies including MSC, Maersk, One, and CMA CGM have suspended shipments to and from Russia. South Korea’s largest shipping company HMM is also considering suspending shipments to Russia.


Hee-Chang Park ramblas@donga.com