Japan puts Korea back on trade 'white list' after 4 years

President Yoon Suk Yeol, right, and his Japanese counterpart Fumio Kishida shake hands before a summit at the presidential office in Yongsan, Seoul, May 7. Yonhap

By Lee Kyung-min

Japan put Korea back on its list of favored trade partners, Tuesday, seeking to improve bilateral economic ties nearly four years after downgrading the neighboring country's status, Seoul's industry ministry said.

The Ministry of Trade, Industry and Energy said Japan's trade ministry decided to amend simplified export control guidelines to reinstate Seoul on its “white list” under which a greater number of Korean businesses will be able to export goods to Japan faster. The amendment will take effect starting July 21.

The latest development came as a follow-up measure after Tokyo lifted export curbs on Seoul in March following a summit between President Yoon Suk Yeol and Japanese Prime Minister Fumio Kishida where the two leaders agreed to bolster efforts to improve economic ties. In the following month, Korea put Japan back on its white list.

Japan removed Korea from its white list in July 2019 after initiating export curbs on three key materials needed to manufacture semiconductors, in retaliation against Korea's 2018 Supreme Court ruling that ordered Japanese firms to compensate Korean forced labor victims.

The three key materials are fluorine polyimide, photoresist and hydrogen fluoride. Japan produces about 90 percent of fluorine polyimide and photoresist and around 70 percent of hydrogen fluoride used by Korean chipmakers. This is why the Korean semiconductor industry and policymakers were left helpless following the curbs. Semiconductor manufacturing accounts for about a fifth of Korea's total exports.

Two months later, Korea lodged a complaint with the World Trade Organization (WTO) seeking remedies over the export curbs and also removed Japan from its white list.

The industry ministry said Korean exporters will no longer have to wait up to 90 days for clearance, which almost always entailed a submission of a large number of related documents.

This is a much simpler process compared to the past three years and 10 months, when only “CP firms” certified by the ministry were able to apply for speedier, easier clearance services. CP is short for compliance program, whereby only certain pre-screened firms are granted the services for closely managing export goods and activities, followed by the submission of regular reports.

Also resolving supply chain disruptions for Korean exporters is the lifting of “catch-all” measures that led to a long delay in outbound shipments of materials whose end-use can be “intended for a weapon of mass destruction or missile.”

The measures have long provided a legal and regulatory basis to require government permission to export unlisted items. But businesses have said the process, whose scope is too broad, posed a major to obstacle to meeting client needs.