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(2nd LD) S. Korea to halt WTO dispute settlement process on Japan's export curbs: industry ministry

All News 16:19 March 06, 2023

(ATTN: ADDS more details, comments, background info in last 9 paras, additional photo)

SEOUL, March 6 (Yonhap) -- South Korea has decided to halt a process of its complaint with the World Trade Organization (WTO) on Japan's export controls of key industry materials to Seoul as they prepare to launch official talks on the lifting of the restrictive measures, Seoul's industry ministry said Monday.

In 2019, Tokyo imposed export controls on three major industrial materials to Seoul, which are essential for chips and displays, and officially removed South Korea from its list of nations given preferential treatment in trade in apparent retaliation for the South Korean Supreme Court's ruling the previous year that ordered Japanese companies to pay compensation to Korean forced labor victims.

In response to the export controls, South Korea filed a complaint with the WTO over the trade dispute, claiming it is a discriminatory act that violates its rules.

"The two nations agreed to swiftly conduct bilateral consultations on export control issues to bring the situation back to July 2019. The South Korean government decided to halt the WTO trade dispute settlement procedures while related consultations proceeds," The Ministry of Trade, Industry and Energy said in a release.

The two sides will hold a policy consultation meeting on bilateral exports "soon," it added.

The announcement came just after the South Korean government vowed to create a foundation in charge of collecting public donations and compensating victims of Japan's forced labor during its 1910-45 colonial rule of Korea in an effort to resolve the long-running feud between the two neighbors and to improve frayed ties.

This file photo, provided by the Korea Research Institute of Standards and Science on Sept. 22, 2020, shows researchers carrying out a quality evaluation of hydrogen fluoride. (PHOTO NOT FOR SALE) (Yonhap)

This file photo, provided by the Korea Research Institute of Standards and Science on Sept. 22, 2020, shows researchers carrying out a quality evaluation of hydrogen fluoride. (PHOTO NOT FOR SALE) (Yonhap)

But the ministry made it clear Monday's announcement does not mean that South Korea will withdraw the complaint and any decision on the possible withdrawal would be made in line with the developments of bilateral consultations.

It is not the first time that the two sides suspended the WTO dispute settlement procedures regarding the export curbs, as they did so in November 2019 while seeking bilateral solutions.

But the efforts had gone nowhere due to differences in their opinions, and South Korea resumed the process on the complaint in June 2020. The WTO's dispute settlement body has been working to set up a panel to look into the case.

"We are now able to fully secure supplies of the three items subject to the restrictions. But things will get much better, and we can expect more opportunities of bilateral industry cooperation in case Japan's export controls are lifted," Industry Minister Lee Chang-yang told reporters.

The three materials are fluorine polyimide, photoresist and hydrogen fluoride.

In the wake of Japan's export curbs, South Korea has made all-out efforts to ensure stable supply chains of key industry materials, parts and equipment, and nurture advanced industry sectors through technology development, the diversification of import channels and luring foreign investment.

"Despite such efforts, uncertainties have been there for corporate businesses. The upcoming dialogue on exports will be a chance for the two nations to devise measures to ensure supply chain stability," a ministry official said.

South Korea's dependence on Japanese materials and parts has hit an all-time low of around 15 percent last year, according to government data.

Victims of the forced labor have demanded an apology and direct compensation from the Japanese companies concerned, while Japan has long claimed all reparation issues stemming from its colonial occupation were settled under the 1965 treaty under which Seoul normalized relations with Tokyo in exchange for US$300 million in grants and $200 million in low-interest loans.

(2nd LD) S. Korea to halt WTO dispute settlement process on Japan's export curbs: industry ministry - 2

graceoh@yna.co.kr
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