Japan Unlocks Three Key Semiconductor Materials... South Korea "Withdraws WTO Complaint"

Japan Lifts Export Restrictions on Three Key Strategic Items

Japan has decided to lift export restrictions on the so-called three strategic items: high-purity hydrogen fluoride, fluorinated polyimide, and photoresist. Accordingly, the South Korean government plans to withdraw its World Trade Organization (WTO) complaint against Japan's export restrictions on these three items.

The Ministry of Trade, Industry and Energy announced that during the 9th Korea-Japan Export Control Policy Dialogue held with Japan's Ministry of Economy, Trade and Industry from the 14th to the 16th, both countries agreed to change their export control operations accordingly. As a result, Japan will normalize exports of the three key materials and components essential for semiconductor production to South Korea. This marks about four years since the export restrictions imposed by Japan on South Korea in 2019 caused a blockade between the two countries.

The ministry stated, "During the policy dialogue, the export control authorities of both countries exchanged close opinions on the system, institutional operations, and post-management of export controls, including their effectiveness," and added, "The special general comprehensive license will be applied as before July 2019." The special general comprehensive license is a system that comprehensively permits exports of certain combinations of destinations and items according to the sensitivity of cargo and technology.

[Image source=Yonhap News]

With Japan lifting export restrictions on the three key items, the South Korean government plans to withdraw its WTO complaint against Japan. Previously, in June 2020, the Ministry of Trade, Industry and Energy had resumed WTO dispute settlement procedures against Japan’s export restrictions, which had been suspended once before. Both South Korea and Japan agreed to work toward the prompt restoration of the 'country category (white list)' measures in the future.

This lifting of export restrictions on the three key items by Japan was achieved in the context of a thawing mood in Korea-Japan relations and was facilitated by a summit between the two countries’ leaders. If trade between the two countries normalizes, it is expected to provide greater momentum to strengthen the competitiveness of the domestic materials, parts, and equipment (MPE) industry. It is also analyzed that South Korea, the United States, Japan, Taiwan, and others leading the semiconductor industry can contribute to stabilizing the global supply chain through practical cooperation.

However, some point out that visible achievements in Korea-Japan economic cooperation may be limited. Since the 2019 export restrictions, the South Korean government’s active support for the MPE industry has rapidly strengthened its competitiveness and increased its self-reliance. Therefore, even if MPE cooperation between the two countries normalizes, the benefits from Japan may not be as significant as before.