July 10, 2019 / 2:48 AM / 6 days ago

Japan rebuffs Seoul's calls to scrap export curbs

TOKYO/SEOUL (Reuters) - Japan pushed back on Tuesday against calls from South Korea to scrap curbs on some high-tech exports, ratcheting up tension in a decades-old diplomatic dispute that threatens to disrupt the global supply of memory chips and smartphones.

FILE PHOTO: The logo of Samsung Electronics is seen at its office building in Seoul, South Korea, July 4, 2017. REUTERS/Kim Hong-Ji/File Photo

Tokyo said last week it would tighten restrictions on exports of three materials used in smartphone displays and chips, citing a dispute with Seoul over South Koreans forced to work for Japanese firms during World War Two.

The moves, which could hit tech giants Samsung Electronics and SK Hynix, among others, spotlight Japan’s sway over a vital part of the global supply chain that the government is now using as a bargaining chip.

“Whether Japan implements additional measures depends on South Korea’s response,” Industry Minister Hiroshige Seko told a news conference after a cabinet meeting.

Tokyo was “not thinking at all” of withdrawing the curbs and they did not violate World Trade Organization rules, he added.

In Seoul, a government official said a South Korean foreign ministry official was expected to discuss the curbs with his counterpart in Washington. Its trade minister was also considering travelling to the United States, a spokeswoman said.

Seko’s comments were an apparent response to South Korean President Moon Jae-in, who urged on Monday that the restrictions be withdrawn. Seoul could not rule out countermeasures for damage inflicted on its firms, Moon added.

South Korea plans to complain to the WTO.

The row shows no signs of abating, with Tokyo threatening last week to drop Seoul from a “white list” of countries with minimum trade restrictions, hitting supply of a wider range of items used in weapons production.

POTENTIAL TALKS

Tokyo’s halt to preferential treatment of the three materials would force exporters to seek permission for each individual shipment to South Korea, taking around 90 days.

The dispute stems from Tokyo’s frustration at what it calls a lack of action by Seoul over a South Korean court ruling last October that ordered Nippon Steel to compensate former forced labourers.

Japan says the issue of forced labour was fully settled in 1965 when the neighbours restored diplomatic ties.

The curbs came just weeks before a July 21 upper house election, where Prime Minister Shinzo Abe’s Liberal Democratic Party (LDP) and its junior partner are expected to win a solid majority.

“Japan is making a 100 percent legal argument but they didn’t show any sincerity over the past 7-8 months,” said one person familiar with the government’s thinking, referring to the years of disagreement over the dispute.

“Unfortunately, the election is coming... The LDP will do anything to solidify their support base.”

Officials of both countries plan to hold talks in Japan on the curbs as early as this week, the Yomiuri newspaper said on Tuesday.

Japanese working-level officials would respond to South Korea’s request for an explanation of the curbs, chief cabinet secretary Yoshihide Suga said, adding that the schedule was being arranged.

The neighbours share a bitter history dating to Japan’s colonisation of the Korean peninsula from 1910 to 1945, which saw forced use of labour by Japanese companies and the use of comfort women, a euphemism for girls and women, many of them Korean, forced to work in its wartime brothels.

Reporting by Takaya Yamaguchi, Kaori Kaneko, Chris Gallagher in TOKYO and Hyunjoo Jin and Hyonhee Shin in SEOUL; Writing by Chris Gallagher and David Dolan; Editing by Clarence Fernandez

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