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Seoul to file WTO complaint over Japan's 'discriminatory' export curbs

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By Hyunjoo Jin

SEOUL (Reuters) – South Korea plans to file a complaint over Japan’s tighter export controls at the World Trade Organization on Wednesday, accusing Tokyo of being “politically motivated” and “discriminatory” in an escalating row rooted in wartime history.

In July, Japan imposed tighter controls on exports of three materials to South Korea used in smartphone chips and displays following a diplomatic dispute over compensation for forced labourers during Japan’s occupation of Korea during World War Two.

“We have decided to complain about Japan’s measures at the WTO… to prevent the act of abusing trade for political purposes from recurring,” South Korea’s Trade Minister Yoo Myung-Hee said at a briefing.

Bilateral relations deteriorated after South Korea’s Supreme Court last year ordered two Japanese companies to compensate wartime workers in a ruling that Tokyo said violated international law. Japan says the issue of compensation was settled under a 1965 treaty.

Yoo said South Korean firms are “faced with serious damage” as a result of the export curbs, which also cast uncertainty into the global supply chain and the economy.

The materials affected by Japan’s export controls are fluorinated polyimides, photoresists and hydrogen fluoride, which are used by South Korean tech firms such as Samsung Electronics <005930.KS>.

Japan now requires exporters to seek permission each time they want to ship those materials, which takes up to 90 days. Previously, it only took a couple of weeks to ship, Yoo said.

Only three shipments have been approved since Tokyo took action on July 4.

“Seoul’s complaint will not lead Japan to drop its tighter export curbs on the three items, but this will certainly put pressure on Japan to cautiously implement the measures,” said Ahn Duk-geun, a professor at Seoul National University.

60-DAYCONSULTATION

As the first step of WTO dispute settlement, South Korea will request consultations with Japan and seek the end of the export curbs. If that does not resolve the issues, South Korea will request a WTO panel ruling on the cases, the trade minister told a briefing.

The talks could take 60 days or more, a trade ministry official said.

Yoo also said South Korea was considering “all options” in response to Tokyo’s decision to drop Korea from the so-called white list of preferred trading partners. South Korea is taking steps to drop Japan from its own white list.

Experts expect Japan to launch complaints at the WTO over Korea’s planned export curbs. But WTO cases can take years.

“They should resolve the matter politically and diplomatically, but chances are low for such a resolution because both governments are using the dispute to their own political advantage,” said Cheong In-kyo, an economics professor at Inha University.

(Reporting by Hyunjoo Jin; Editing by Kim Coghill, Edwina Gibbs and Gerry Doyle)

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