Japan-South Korea ‘trade war’: Moon warns Tokyo not to ‘force Seoul’s hand’ over export curbs on hi-tech materials
- The South Korean president will meet heads of 30 major conglomerates on Wednesday to discuss a response to Japan’s announcement
- He said Seoul preferred ‘a diplomatic settlement’ as tit-for-tat measures were undesirable for both countries
“Such moves putting restrictions on private companies’ mutually beneficial transactions for political purposes cause concern not only to South Korea but to the whole world.”
Japan-South Korea ‘trade war’: has Tokyo shot itself in foot?
The hi-tech materials affected by the restrictions include fluorine polyamide needed to make flexible organic light-emitting diode displays, photoresist used to transfer a circuit pattern to a semiconductor substrate and etching gas essential for semiconductor fabrication process.
Japan rules out easing curbs on hi-tech materials exported to South Korea
Japan has rejected a South Korean proposal to create a joint compensation fund for victims with contributions from both nations’ companies.
A government source claimed Abe’s administration was seeking to “deal a serious blow” to Moon and his ruling Democratic Party by causing disturbances to the country’s economy before South Korea’s parliamentary elections in April next year and the 2022 presidential polls.
“The Abe government is thus seeking to intervene in South Korean domestic politics,” the source told the South China Morning Post.
South Koreans call for boycott of Japanese cars, beer
The Japan News Network said a survey it carried out found 58 per cent of respondents approved of Tokyo’s policy, compared with 24 per cent who did not.
More than 2,400 public posts with hashtag #BoycottJapan have been shared on Instagram since the measures were imposed, with some including a picture using Japan’s red rising sun icon as “O” in the word “No”. “NO, Boycott Japan: Don’t go, don’t buy,” it says.
South Korea is Japan’s third-largest export market, worth 5.79 trillion yen (US$53.4 billion) in trade last year.
In recent days, South Korean internet users have been sharing cancellation confirmations for flights to Tokyo, Osaka and other popular travel destinations. South Koreans make up 13 per cent of spending by foreign tourists in Japan, according to the Japan Tourism Agency, or 584.2 billion yen in 2018.
Explained: the legacy of war in Asia
The Korean Supermarkets Alliance, an organisation representing more than 23,000 stores, said it would temporarily halt sales of Japanese products, including Asahi and Kirin beer, and Japan Tobacco’s Mild Seven cigarettes.
“We will fight Japan’s attitude toward its wartime history and retaliatory measures,” association president Lim Won-bae said.
Professor Ha Jong-moon at Hanshin University said Seoul had cause for concern about the economic impact of the curbs as semiconductor exports worth US$126.7 billion last year accounted for 21 per cent of the country’s total exports and 7.8 per cent of GDP.
“It’s high time that back door diplomacy was absolutely necessary as this is a life and death matter not only for the government but for the whole South Korean economy,” he said.
Japan produces about 90 per cent of the world’s fluorinated polyamide, about 70 per cent of etching gas and about 90 per cent of photoresists, according to a government report, making it difficult for South Korean chip makers to find an alternative supply.
In the first five months of this year, South Korean firms bought US$103.52 million of photoresists from Japan, US$28.44 million of hydrogen fluoride and US$12.14 million of fluorinated polyamides.
South Korean chip makers may be forced to build stockpiles of materials as they rely heavily on Japan for photoresists and etching gas. South Korean tech giants such as Samsung, SK Hynix and LG Display could all be affected.
Japanese suppliers of photoresists include JSR, Tokyo Ohka Kogyo and Shin-Etsu Chemical. Makers of etching gas include Showa Denko KK. Kanto Denka Kogyo, a fluorochemicals maker, is also likely to be impacted.
Additional reporting by Reuters and Bloomberg
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