situation report

Japan, South Korea: Tokyo Grants 1st Export License to South Korea Since Adding Trade Restrictions

2 MINS READAug 8, 2019 | 19:26 GMT

What Happened: The Japanese Ministry of Industry has issued an export license for one of three sensitive chemicals to a South Korean company for the first time since Japan put export restrictions on these products in early July, The Japan Times reported Aug. 8. South Korean Prime Minister Lee Nak Yon said the license was for photoresist chemicals used in chipmaking, and an anonymous South Korean official said that it went to Samsung. In response, South Korea said that it would delay the decision to remove Japan from its own list of trusted trade partners.

Why It Matters: While this highly public move is meant by Japan to signal the flexibility of its trade restrictions, this isn't necessarily a sign that Japan is willing to compromise with South Korea or that their trade spat is easing. But with the full restrictions related to its removal last week from the Japanese national security "white list" set to take force in the coming weeks, this small move to provide selective relief to a single South Korean company is relatively small compared to what may come next.

Background: In early July, the Japanese government imposed onerous trade restrictions on three chemicals crucial to South Korea's chip and smartphone manufacturers. Last week, Tokyo then removed South Korea from the 27-country national security white list, meaning a wide array of Japanese exports to South Korea would be subject to additional scrutiny and delays. The Japanese moves came largely in response to South Korea's hard-line stance on Japan's wartime legacy, including a raft of court rulings awarding compensation to Korean forced laborers from Japanese companies.

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