Japan decides to revoke S. Korea's preferential trade status
Japan on Friday decided to remove South Korea from a list of nations entitled to simplified export control procedures.
The Cabinet of Prime Minister Shinzo Abe approved the plans to remove South Korea from its "white list" of countries, raising the stakes in a bitter diplomatic row between the two neighbors.
The removal of South Korea from the list will take effect on August 28 following the necessary completion of domestic procedures, Japanese Minister of Economy, Trade and Industry Hiroshige Seko said at a press conference.
Seko maintained that the move by Tokyo was not aimed at restraining trade or supposed to damage bilateral ties between both countries, although observers have noted that bilateral relations have already sunk to new lows in recent times amid an ongoing labor dispute and Japan's previous tightening of export control regulations.
Japan has already tightened regulations early last month on its exports to South Korea of three materials vital to make memory chips and display panels, which are mainstays of the South Korean economy, in a further escalation of souring ties between both parties.
Chief Cabinet Secretary Yoshihide Suga, however, told a separate press briefing on the matter that Japan will deal with South Korea the same way it treats other countries in the region.
"We don't believe there would be any impact on global supply chains," Japan's top government spokesman said.
Suga previously reiterated that Japan believes that it is an appropriate step from enforcing effective export controls to remove South Korea from the white list.
Japan has a total of 27 countries on its whitelist, including the United States, Britain, Germany, Australia, New Zealand and Argentina, and whitelisted countries can, through simplified procedures, receive products exported from Japan that could be potentially be diverted for military use.
South Korea has been on the list of nations entitled to simplified export control procedures since 2004, which cover a wide range of items, except for food, timber and other goods.
In order to then export the products to countries not on the white list, the countries only need to obtain approval from Japan's trade ministry.
The South Korean government had urged Japan not to proceed with its removal from the white list, which it estimates could have a negative bearing on more than 1,000 items in key industries spanning the auto and petrochemical sectors.
Experts close to the matter said that the measures could adversely affect both South Korean manufacturers and Japanese exporters as their supply chains are closely connected.
Japanese and South Korean foreign ministers failed to resolve differences between the two countries in a recent meeting in Bangkok, Thailand.