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Minister for Trade Yoo Myung-hee announces that South Korea will file a complaint with the World Trade Organization (WTO) regarding Japan’s export controls on three key materials used in semiconductors and displays at the Central Government Complex in Seoul on July 4. (provided by the Ministry of Trade

The South Korean government lodged a case against Japan with the World Trade Organization (WTO), claiming that its intensification of controls on exports of three key semiconductor and display materials to South Korea was a discriminatory and politically motivated measure. Not included in the complaint was Japan’s decision to take South Korea off its “white list” of countries benefiting streamlined export review procedures on strategic items. The decision to initiate a legal battle over the three materials is being seen as intended to emphasize the Japanese measure’s unjustness before the international community and to prevent Tokyo from imposing additional export controls.

Minister for Trade Yoo Myung-hee announced the WTO complaint against Japan in a press conference on Sept. 11 at the Central Government Complex in Seoul. The move comes 69 days after Japan decided on July 4 to grant only individual permits rather than three-year comprehensive permits to companies exporting three key materials – high-purity hydrogen fluoride (etching gas), photoresist, and fluorine polyimides – to South Korea. The South Korean government had also been considering filing a complaint against Japan around Aug. 28, when a Japanese Export Trade Control Order amended went into effect removing South Korea from the white list. But the announced measures ended up being put off amid calls for caution from in and around the administration and the growing controversy surrounding Cho Kuk, who was then nominated to become the justice minister.

The South Korean government concluded that Japan’s intensified controls on exports of the three items were in violation of Article I of the General Agreement on Tariffs and Trade (GATT) concerning “general most-favoured-nation treatment,” Article XI on the “general elimination of quantitative restrictions,” and Article X on “publication and administration of trade regulations.”

“Only three [exportations] have been permitted as of the present, two months after the adoption of Japan’s measures singling out only South Korea,” Yoo said.

“This is an arbitrary restriction of trade for political reasons, which conflicts with the obligation to implement trade regulations in a consistent, fair, and reasonable manner,” she added.

Japan’s institutional change in dropping South Korea from its white list was not included in the complaint. Yoo explained, “Japan’s intensified controls on the three items went into effect in early July, and the effects of export restrictions have already been consistently manifested.” In contrast, the white list removal remains only an institutional change at the moment and has not yet led to actual intensification of export controls.

“We’re considering every possibility for our response plan,” Yoo said.

“We decided that we needed to objectively demonstrate the unjustness of [Japan’s measures] with this case to prevent abuses of the [strategic item] export permit system by Japan and forestall similar future measures,” she explained.

The same day as its announcement of the complaint, Seoul also formally requested that Tokyo join it for bilateral discussions. According to WTO dispute procedures, the deadline for responding to bilateral discussions comes 30 days after receipt of the request. As the complainant side, South Korea may move to immediately request the establishment of a panel (similar to a court) if Japan does not agree to the discussions – which suggests the discussions are indeed likely to happen. Seoul is entitled to request the panel if no agreement is reached between the parties within 60 days. If the dispute is not resolved by the panel’s decision (the equivalent of a first trial ruling) but continued on to an appeal by either side, the entire process up to a final conclusion could take upwards of three years. The two sides’ dispute over seafood from the Fukushima region continued for around four years until South Korea’s ultimate victory.

Upon receiving the request for bilateral discussions, Japan reiterated its claim that the intensification of export controls was intended as a change to the trade management system for security reasons and was not in violation of GATT.

“In terms of our specific response plan going forward, we plan to examine the content of the request closely and respond appropriately according to the procedures set out by WTO agreement,” said Minister of Economy, Trade and Industry Hiroshige Seko that day.

“These measures [Japan’s export controls against South Korea] are unquestionably consistent with the WTO [agreement],” he insisted. In a Cabinet reshuffle that same afternoon, Seko transferred to the position of House of Councillors secretary-general.

By Choi Ha-yan, staff reporter, and Cho Ki-weon, Tokyo correspondent

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