Japan removing South Korea from favored trade list

Trade war widens between two key US allies, no dual use items for S. Korea without prior permission



Japan is mulling to remove South Korea, from its preferential trade arrangement list, signaling widening of rift between the two countries, Japanese media reported.

The move is part of a trade war going on between the two neighbors in the Pacific region, after Tokyo slowed down supply of three vital electronic items, to Seoul early in July.

“Japan will decide on Aug. 2 to remove South Korea from its list of countries allowed to trade under preferential arrangement, to buy dual use products that could be diverted for military use,” Japanese Kyodo news reported.

“We believe it is an appropriate step from enforcing effective export controls to remove [South Korea] from the white list,” Japanese Chief Cabinet Secretary Yoshihide Suga told reporters.

But, he added that nothing has been decided yet.

The plan, if approved, will be operationalized by late August. Japan had accorded preferential trade status to South Korea in 2004.

South Korean Foreign Minister Kang Kyung Wha has asked her Japanese counterpart to reconsider the proposed plan. “The action will worsen the current situation,” she said. The minister also asked Tokyo to repeal the July 4 order that restricts exports to South Korea.

Both countries, close allies of the U.S. in the region, are witnessing freezing relations, after a Korean court last October directed Japanese companies to pay compensation to wartime victims. But Tokyo refused to oblige. Japan, which had occupied Korean peninsula from 1910 to 1945, is accused of large scale rights violations.

Tokyo has said that Korean court order has severely damaged the mutual trust.

South Korea is among 27 countries in the preferential trade list of Japan. The decision will impact supply of dual use items. They are such items that have commercial and military usages as well. For trading such item to a non-preferential country, a prior approval from trade ministry is required, thus slowing down the export process.

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