Moon meets with S. Korea business community for ways to respond to export controls

Posted on : 2019-07-11 18:05 KST Modified on : 2019-07-11 18:05 KST
Mentions possibility of two countries’ dispute becoming protracted
South Korean President Moon Jae-in meets with the heads of South Korea’s top companies at the Blue House on July 10. (Blue House photo pool)
South Korean President Moon Jae-in meets with the heads of South Korea’s top companies at the Blue House on July 10. (Blue House photo pool)

During a meeting with the leaders of South Korea’s top 30 companies, South Korean President Moon Jae-in discussed ways to respond to new restrictions that Japan has placed on exports to South Korea. While mentioning the possibility of the two countries’ dispute becoming protracted, Moon called for close cooperation between the government and the business community. During the meeting, business leaders called for the sweeping relaxation of regulations and support from the government to bolster the domestic parts and materials industry.

During this roundtable meeting, which was held at the Blue House for more than two hours on July 10, Moon promised proactive support from the government and suggested that this crisis should be taken as an opportunity to rectify structural issues in the South Korean economy. “We must prepare for every possibility,” the president said, while reiterating that the Japanese government’s export restrictions on key components for semiconductors and displays may remain in place for some time.

Moon’s remarks suggest that the government has concluded that the reason Tokyo has provided varying explanations for its export controls and rejected the South Korean government’s proposal for negotiations is due not only to Japanese domestic politics but also, and more fundamentally, to serious concerns that the South Korean economy is narrowing the gap with Japan.

“Japan has changed its story several times, mentioning forced labor, North Korean sanctions, and sarin gas, all of which are basically issues that can’t be resolved through negotiations. This kind of issue could be dealt with through the proposals and explanations our government has offered. But seeing how Japan keeps changing its story and shutting the door on negotiations, the only interpretation is that it doesn’t want to resolve this issue,” said a senior official at the Blue House.

“Japan has enjoyed a huge trade surplus with us. But now that we’re catching up and overtaking it in semiconductor technology, for example, Japan appears to be worried that, if it’s not careful, the two countries’ economic positions could be reversed,” another senior official said.

Indeed, Moon mentioned Japan’s “economic intentions” several times during the roundtable on Wednesday. One person who attended the meeting quoted Moon as saying, “South Korea-Japan need to have a win-win relationship, but competition is heating up. If Japan has economic intentions, [the conflict] could become protracted.” This means that the Blue House has concluded that the dispute could last beyond Japan’s House of Councillors election on July 21. This was also consistent with Moon’s remarks that South Korea “must improve its industrial structure so that it’s not dependent on any one country” and his emphasis throughout on diversifying import sources, fostering domestic production of major parts and materials, strengthening government support, and simplifying administration procedures, including licenses and permits.

Asks chaebol to work with smaller companies to develop parts and materials industries

Moon made a particular appeal to South Korea’s chaebol, asking them to help develop the domestic parts and materials industry through cooperating with smaller companies and purchasing the results of those projects. The Japanese government has reportedly created a list of key parts and materials that it could place export controls on, in addition to fluorine polyimides, photoresist, and high-purity hydrogen fluoride (etching gas), which are already under restrictions.

While businesspeople at the meeting are taking the situation seriously, the Blue House said, they also expressed their agreement with the president’s proposal to make “good out of evil.”

“Business leaders voiced their support for the government’s determination to strengthen the competitiveness of the parts industry and to expand domestic production of parts and called on the government to have a long-term view and to provide tailored support. They pledged to treat this as an opportunity to help the related industry take root by strengthening cooperation with suppliers,” Blue House Spokesperson Ko Min-jung said.

What businesspeople called for during the meeting was the easing of regulations to promote the domestic parts and material industry. “If companies had complained that they were facing awful difficulties because of this conflict, we would’ve been in real trouble. But most of them seemed confident that, if the government continues to provide support, they’ll be able to make it through this, even if it takes a while. They also said that persistent support from the government for R&D and technological investment is necessary to help this technology become established,” an official at the Blue House said.

In related news, the Blue House said it hasn’t given any consideration to dispatching a special envoy to Japan about the economic friction. “A special envoy is someone you send when diplomatic relations are cut off,” a high-ranking official said, dismissing such speculation.

By Seong Yeon-cheol, staff reporter

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