Korea Has Few Options Over Japan's Export Restrictions
07 July, 2019
Finance Minister Hong Nam-ki on Thursday vowed the government will come up with "corresponding steps" if Japan does not relent over export curbs on core materials needed by Korean IT giants.
But in reality Korea has few options except filing a complaint with the World Trade Organization. "It takes a long period of time before the WTO rules on a complaint, so that can't be the only response," Hong said.
He said the government is not ruling out export restrictions of its own targeting Japan, and explained that Seoul "will not sit still" in the face of Tokyo's "unilateral steps."
Finance Minister Hong Nam-ki (2nd from right) speaks in a meeting with business leaders at the Korean Chamber of Commerce and Industry in Seoul on Thursday.
The government has also mooted diversifying import channels for the affected materials, on which Japan currently has a virtual monopoly, and investing W1 trillion in developing Korea's ability to manufacture them too (US$1=W1,170). But all that takes time and cannot deliver a quick blow.
Filing a complaint at the WTO takes at least two years and losing it could mean massive loss of face. Lee Won-deog at Kookmin University said, "Japan built up a trade barrier motivated by a diplomatic dispute, so we have an advantage there, but it also looks like Japan made detailed legal preparations."
Even if the WTO eventually rules in Korea's favor, Japan could drag its heels for quite some time before complying.
Korea's and Japan's industries are so closely interlinked that Seoul has few economic options that would not also hurt Korean businesses.
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