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[Editorial] Unilateralism hurts

Japan’s politically motivated trade restrictions set bad precedent

The Japanese government’s politically motivated decision to restrict exports of three key industrial materials to South Korea has set a bad precedent. It may cater to some anti-Korean Japanese voters ahead of parliamentary elections, but will cut into Japan’s own national interests in the long run.

The announcement, made by the Ministry of Economy, Trade and Industry on Monday, targeted three high-tech materials on which Korean firms like Samsung, LG and Sk Hynix rely heavily. They are fluorinated polyimide, which is used in smartphone displays; resist, a thin layer used to transfer a circuit pattern to the semiconductor substrate; and high-purity hydrogen fluoride, which is used in the etching process while making semiconductors.

Under the decision, which will take effect Thursday, Japanese suppliers of the three materials would be required to get approval for all shipments to Korean buyers.

Previously, Korea, being one of the 27 countries that was given preferential treatment, had a simplified export process for those materials. The new rule may force Korean companies to wait for about 90 days to get government approval, which could disrupt their production process. In the worst-case scenario, the Japanese government may disapprove some of the shipments.

That could severely damage major Korean tech firms as Japan is the world’s dominant supply of the materials. For instance, Japanese suppliers control about 70 percent of the world market for etching chemicals and 90 percent for resist and fluorinated polyimide.

Besides the restrictions on the three materials, Japanese media reported that Tokyo is considering removing Korea from its “white list” of countries with minimum restrictions on transfer of technology related to national security. Some went on to mention possible visa regulations.

It is apparent that all these moves are related to the strained political ties between the two countries, especially after last October’s Korean court ruling that ordered Japanese companies to compensate Korean victims of forced labor.

The Japanese ministry’s statement did not elaborate, only saying that it was taking the action because “mutual trust has been seriously damaged.” But the retaliation is in line with warnings and threats local politicians and senior government officials had made in reference to the bilateral political ties that have deteriorated to the lowest level in many years due to historical issues.

There are enough reasons the Japanese government’s action should be condemned. Most of all, the move is seen, as reported by many Japanese media outlets, as an attempt by the Shinzo Abe administration to shore up anti-Korea sentiment before the July 21 elections for the upper house.

Granted, such Korea bashing could help the rightist prime minister and his party, but the unfair trade restrictions should encounter international criticism. It is self-contradictory that the trade restriction came only two days after Abe presided over the G-20 summit, where free trade was one of the key issues among leaders of the advanced economies.

The G-20 leaders’ joint statement issued after their two-day meeting in Osaka said they “strive to realize a free, fair, nondiscriminatory, transparent, predictable and stable trade and investment environment.”

The Japanese government’s action against Korea is definitely unfair and discriminatory.

While Japan’s unilateralism in dealing with relations with Seoul is lamentable, the Korean government cannot avoid blame for the worsening situation either. It needed to exert diplomatic efforts to resolve pending issues and prevent further deterioration of relations.

What’s obvious is the way the Seoul government deals with Japan’s apparent economic retaliation should be different from its reaction under similar pressure from China.

Now what it needs to do is to take the case to the World Trade Organization, as Trade Minister Sung Yun-mo promised to do, and draw international attention to Japan’s infringement upon the principle of fair trade. Prime Minister Abe said Tuesday that the Japanese action does not violate the WTO rules, but few would buy what he said.

Some other tit-for-tat actions may be necessary for now, but eventually, both sides should explore ways to overcome the current conflicts through diplomatic negotiations, refraining from taking more hostile actions.

On their part, Korean companies will also have to gear up for growing trade conflicts with major trading countries like the US, China and Japan, and find more diverse ways to secure materials -- as Japan did when China curbed exports of rare-earth metals in 2010 over a territorial dispute -- and diversify their export markets.
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