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Minister of Economy and Finance and Deputy Prime Minister Hong Nam-ki
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Relevant ministries convene to analyze trends in domestic semiconductor industry
The South Korean government has announced that it will look into ways to retaliate against Japan for the import restrictions it’s imposing on key materials used by South Korean companies to produce high-tech products like semiconductors. Following a countermeasure planning meeting held by the relevant ministries on July 4, the government is planning to hold a meeting of ministers involved with the foreign economy early next week, during which the countermeasures will be announced. “Japan’s export controls are clearly economic retribution. The government is also exploring a range of countermeasures and will explore corresponding measures that can be taken against Japan,” said Minister of Economy and Finance and Deputy Prime Minister Hong Nam-ki during an appearance on the Kim Hyeon-jeong News Show, on CBS radio, on Thursday morning. The “corresponding measures” mentioned by Hong refer to additional strategic responses that South Korea may take in addition to lodging a complaint with the World Trade Organization (WTO). “We’re looking into a number of specific strategies and considering whether to use each strategy, and if so, when each one ought to be used,” said an official from the Ministry of Trade, Industry, and Energy. On Thursday, the Japanese government began to regulate exports to South Korea of three types of Japanese parts and materials that are used in the manufacture of semiconductors, smartphones, and displays. The Japanese government also reiterated that it plans to reach a final decision soon about whether to exclude South Korea from the “white list” of countries that receive preferential treatment according to Japan’s Foreign Exchange and Foreign Trade Management Act. On Thursday afternoon, the South Korean government assessed current trends in a countermeasures meeting among related ministries and associations representing the semiconductor and display industries. “Japan’s measures violate the basic guidelines of the Wassenaar Arrangement, which states that all member states must operate their export control systems for strategic materials such that they don’t impede private-sector transactions that are conducted with good intentions,” said South Korean Trade Minister Yoo Myung-hee, who chaired the meeting. Exploring ways to promote domestic production of intermediate materials Seoul is also planning to explore ways to promote domestic production of intermediate materials, including parts and materials, for which South Korean is currently highly dependent on foreign producers. “We’ll increase our autonomy and reduce our dependence on Japan by aggressively promoting the development and commercialization of key technologies. We’re planning to make preparations to ensure that projects that can be implemented before the end of the year are included in the supplementary budget bill that will be reviewed by the National Assembly and to aggressively allocate funding for such projects when drafting the 2020 budget as well,” said 2nd Vice Minister of Economy and Finance Koo Yun-cheol. “We’re going to look into idea of including the more urgent [of the semiconductor measures] in the supplementary budget,” said Cho Jeong-sik, chief of the policy committee for the Democratic Party. Calls have been made in some quarters to “fight fire with fire” by restricting exports of South Korean products to Japan, but that’s not likely to actually be put into practice. Since both countries’ industrial structure is dependent upon the international supply chain, a direct trade conflict would inevitably cause serious damage to both countries. “These sanctions could be a political gesture by the Abe administration motivated by the House of Councillors election, which is scheduled for July 21. For the moment, our top priority is finding ways to protect domestic industries while considering the possibility of taking additional sanctions against Japan,” said a high-ranking official in the South Korean government. By Noh Hyun-woong, Kim Won-chul, and Choi Ha-yan, staff reporters Please direct comments or questions to [english@hani.co.kr]
