South Korea WTO Detailed The Japanese Trade Restrictions "Crime", Japan's Domestic Demand Response This Week

 

In August 8, 2019, South Korean people held a protest against the Japanese government with the slogan and banner of "no Abe" in Seoul, South Korea. Before the Japanese government issued a decree, the government of the Republic of Korea removed the "Bai Ming single state" with preferential treatment in the export management of safety and security.

Last week, the Korean government applied for a consultation with WTO on the grounds of Japan's restrictions on exports and the WTO rules. On Monday, the consultation application was formally distributed within the WTO. The application shows that the south side has accused Japan of implementing some restrictive measures in the export of fluorinated polyimides, anti polymers, hydrogen fluoride and related technologies to Korea, which are inconsistent with the responsibilities of Japan as a member of WTO.

According to the document, South Korea believes that the following actions violate the WTO rules. First, in July 1, 2019, the Ministry of economy and industry of Japan announced that different licensing policies and procedures will be applied to the export and transfer of certain controlled commodities and related technologies to Korea according to the twenty-fifth and first sections of the foreign exchange and foreign trade act of Japan and the forty-eighth first paragraphs.

Secondly, according to this decision, since July 4, 2019, when the following three specific products and related technologies are about to be exported to Korea, Japan has begun to impose stringent export licensing policies and procedures on these commodities and related technologies (that is, "export licensing policies and procedures revision"). The three specific products are fluorinated polyimides, polymers and hydrogen fluoride, which are mainly used for the production of smart phones, TV displays and semiconductors.

Japan also claims that "some sensitive items have been exported to South Korea" because of poor management, so it is necessary to adopt more stringent export licensing procedures for these products and related technologies.

Korea believes that Japan's export control measures against Korea have nothing to do with the legal export control considerations of the three products, but based on political considerations.

In addition, according to the revised export licensing policy and procedure, Japan has removed South Korea from the category "regional I" and has been separately included in the newly established "regional Ri" category.

South Korea concluded that when Japan's export destination was South Korea, Japan did not have any form of "bulk license" for the above three products and related technologies. Applications for individual export licenses have been subject to more stringent scrutiny, resulting in unnecessary delays and other serious restrictions on exports of these products and related technologies to Korea. In addition, the revised export licensing policies and procedures effectively restrict various other forms of international trade, including investment, licensing or other transfers of intellectual property rights, as well as the provision of certain services related to technology transfer.

Yonhap reported that South Korea believed that Japan only converted the export of 3 key semiconductor materials to individual licenses, which violated the WTO's obligation to prohibit discrimination and the most favored nation treatment. The Japanese side made the order period from one or two weeks to the longest 90 days and there was uncertainty. This violated WTO's obligation to prohibit the establishment and maintenance of export control measures, and Japan's trade restrictions for political purposes violated the principle of fair trade. Since South Korea is an important supplier of semiconductors and monitors, Japan's measures will also add uncertainty to the world economy.

Under the WTO dispute settlement mechanism, the bilateral negotiation between the parties is the first step to settle the dispute. Japan should give a reply within 10 days after receiving the consultation application, and the two sides should hold consultations within 30 days. If the applicant fails to reply on time, or the two sides fail to settle the dispute within 60 days, the applicant can apply to the WTO dispute settlement body for the establishment of an expert group.

South Korea plans to move Japan out of its trade facilitation "white list" this week. In the middle of August, the Ministry of industry and Commerce resources of Korea decided to reform the classification of trade partners, and changed the previous two categories of class A and B to 1 categories A, 2, and three. The export procedures of class A and 1 were unchanged, and the treatment of class A and 2 was unchanged. The treatment of class A and 2 was significantly reduced, and Japan was added to the new category a 2. This means that the examination and approval procedures for goods exported to Japan are simple and complicated.

The export control of the 2 countries is roughly the same as that of class B countries. The difference is to exempt from the intermediary trade examination of some materials and strategic materials required for individual declarations. Therefore, when Korean enterprises export strategic materials to Japan, the simplified declaration and approval process takes about 15 days, far exceeding the existing 5 days. At the same time, enterprises must apply for approval one by one, and each required documents submitted to the government should be increased from 3 to 5.

In August 2nd, the cabinet of Japan approved the adoption of the revised export trade management order, and decided to remove the Republic of Korea from the "white list" for trade facilitation. In August 28th, the decree came into effect. Japan's trade "white list" includes 27 countries, and South Korea is the first country to be excluded.

In response to Japan's trade strike, South Korean consumers launched a boycott of Japanese goods. According to the data obtained from the South Korean customs department, the import volume of beer and sake in Japan decreased by 99.9% and 63.7% respectively on 1-10 September. In August, total imports of Korean consumer goods increased by 5.5% over the same period last year, but imports from Japan decreased by 2.8%. In July, total imports of consumer goods grew by 9% over the same period last year, and 13.8% from Japan.