By Kang Yoon-seung
SEOUL, June 30 (Yonhap) -- Japan may come up with new export curbs against South Korea, which could further complicate already frayed ties between the two Asian neighbors, a trade association said Tuesday.
Seoul and Tokyo have been at loggerheads since July last year, after Japan abruptly rolled out restrictions on exports of key industrial materials to South Korea, namely photoresist, etching gas and fluorinated polyimide.
"South Korea was able to avoid any disruptions in its production of affected goods on the back of the efforts to develop its own technologies and diversify suppliers," Hong Ji-sang, a researcher at the Korea International Trade Association (KITA), said.
"But as Japan hints that it will come up with additional regulations in response to the lawsuit filed at the World Trade Organization (WTO) and the move to seize assets of a Japanese firm, South Korea needs to brace for more regulations," Hong added.
South Korea reopened a lawsuit at the WTO this month, which was suspended last year in a goodwill gesture, as Japan has remained unresponsive to Seoul's repeated requests to lift the regulations.
The WTO plans to decide in July whether to set up a panel to look into South Korea's complaint against Japan.
Tokyo says South Korea did not effectively control sensitive items that could be used for military purposes, while Seoul considers it more retaliation against a court's decision that ordered a Japanese firm to compensate victims of forced labor during the 1910-45 colonial rule.
The two could face yet another deadlock as the South Korean court can order the selling off of seized assets of a Japanese firm that has ignored the ruling to compensate victims.
Reflecting the tensions, Japan reportedly remains uneasy over the United States' move to invite South Korea to a Group of Seven summit, along with Seoul's bid to take the top job of the WTO.
Due to the escalating tensions, the KITA report expected that Japan could come up with more export restrictions especially centering on "non-sensitive strategic items" that South Korea still depends heavily on Japan for.
"Japan has beefed up inspections on exports of non-sensitive strategic items after removing South Korea from its list of trusted trade partners. Thus, South Korea should prepare for new regulations," Hong said.
Japan removed South Korea from its list of trusted partners last year, prompting Seoul to take a tit-for-tat measure.
The trade row, however, has been causing more damage to Tokyo's exports than the other way around. South Korea's exports to Japan slipped 6.9 percent to $28 billion in 2019 from a year earlier. Its imports from Japan fell by a wider margin of 12.9 percent to $47 billion.
South Korea was able to significantly reduce its imports of Japanese photoresist and etching gas by finding new suppliers from Belgium and Taiwan.
While Japanese fluorinated polyimide is still important for local industries, the country has been making efforts to develop it domestically as well.
South Korea's imports of Japanese beer plunged 87.8 percent in April from a year earlier as well amid the prolonged "boycott Japan" movement among South Korean consumers. South Korea used to be the top importer of Japanese beer.
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