One Year of Japan's Export Restrictions Seen by Japanese Media: "Only Increasing Burden on Korean and Japanese Companies"

[Image source=Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] "How long will we continue the situation where political dialogue is lacking and both economies suffer?" (Editorial, Asahi Shimbun, June 2)

Marking one year since the Japanese government's export restrictions on South Korea, Japanese media have summarized the outcome as "a result where no one benefits." On July 1 last year, the Japanese government announced export controls on key semiconductor materials such as photoresist, hydrogen fluoride, and fluorinated polyimide as a retaliatory measure against the South Korean Supreme Court's forced labor compensation ruling. Ultimately, this only increased the burden on companies in both Japan and South Korea.

On June 2, Asahi Shimbun pointed out, "One year has passed since Japan announced strengthened export controls against South Korea," but "there is no sign that the governments of the two countries will find a way to improve relations."

In particular, local media focused on the damage suffered by Japan's business sector. Asahi reported that after the export restrictions were tightened, Japan's hydrogen fluoride exports dropped significantly. Although two major Japanese companies obtained permission to resume exports at the end of last year, the impact was severe. Citing a representative from a company in Osaka, it reported, "Export volumes have fallen to about half of what they were before the restrictions. The impact on management is also significant," and added that another company saw its total shipments last year decrease by nearly 30% compared to the previous year.

Mainichi Shimbun also reported that since July last year, Japanese companies attempting to export regulated items have faced long delays in obtaining permits, causing considerable dissatisfaction. Katsumi Sawada, editorial writer for Mainichi Shimbun, said, "This is known as the worst situation since the normalization of diplomatic relations in 1965, and there are no signs of improvement," emphasizing that "political leaders of both countries need to face reality and seek solutions."

Japanese media also reported that South Korean companies were affected. While South Korea used this as an opportunity to localize some core materials and diversify imports to reduce dependence on Japan, it ultimately increased corporate costs.

Asahi quoted a senior South Korean government official who said, "Thank you, Abe," referring to the reduction in dependence using Japan's external pressure, but also noted, "Research and development for localization takes a long time and enormous costs, and since the developed products are not sold worldwide, there are profitability issues." It also introduced a comment from a South Korean business official lamenting, "Companies are bearing unexpected costs. For companies in both Japan and South Korea, the strengthened regulations are a no-win fight to save political face."

Despite the difficulties faced by the business sectors of both countries, Japanese media forecast that improvements in Japan-South Korea relations will not be easy in the near future. Asahi evaluated that although diplomatic authorities of both countries continue video conferences, they have not found a clue to resolve the situation. Nihon Keizai Shimbun also stated, "The 'Japan boycott movement' has taken root in South Korea, and Japanese companies have begun withdrawing. There are no signs of easing the Japan-South Korea confrontation," while NHK broadcast pointed out, "A prolonged confrontation is expected." However, regarding the sale of Japanese companies' assets in South Korea, both sides want to avoid cashing out, quoting a South Korean government official saying, "The real intention is to avoid increasing U.S. concerns over Japan-South Korea relations."

In its editorial on the same day, Asahi emphasized, "The Japanese and South Korean governments must actively engage to make progress on the core issue of forced labor victims (the Japanese term for forced labor victims)," urging the Japanese government to immediately lift export restrictions and the South Korean government to reconsider its World Trade Organization (WTO) complaint and actively engage in the forced labor issue.