Japan’s Cabinet on Aug. 2 approved a measure that will allow the Ministry of Economy, Trade and Industry (METI) to impose new licensing policies and procedures on exports and transfers of controlled items to South Korea.
The Japanese ministry proposed the measures on July 1, stating that the Japanese government “cannot help but state that the Japan-ROK (Republic of Korea) relationship of trust including in the field of export control and regulation has been significantly undermined.”
The Japanese ministry added “it must change the current implementation practices such as licensing policies and procedures for export or transfer of controlled items and their relevant technologies to the ROK in order to ensure appropriate implementation of Japan’s own export control and regulation.”
Under the new order, which begins implementation Aug. 7, South Korea will be removed from Japan’s so-called list of “White Countries,” or countries with recognized export compliance oversight.
In addition, Japanese companies will no longer be able to use general bulk export licenses for exports and technology transfers to South Korea. These exports will also be subject to Japan’s “catch-all control,” the Ministry of Economy, Trade and Industry said.
The Japanese ministry said the enforcement phase for the new export control regulations for South Korea will take effect Aug. 28.
Starting July 4, Japanese exporters to South Korea had to apply for individual export licenses for shipments of fluorinated polyimide, resists and hydrogen fluoride and related technologies to South Korea. These chemicals are mostly used by South Korea’s semiconductor manufacturing industry.
According to a Bloomberg news report, South Korea’s President Moon Jae-in said Japan’s action was in response to South Korea’s Supreme Court upholding a ruling that Japanese companies must pay survivors of World War II-era Japanese labor camps.
Bloomberg quoted Moon stating during an Aug. 1 cabinet that Japan “will be entirely held accountable” for this action, and adding that “It is a selfish, destructive act that will cripple the global supply chain and wreak havoc on the global economy.”
Paul DiVecchio, a 40-year export regulatory compliance consultant based in Boston, warned U.S. companies with subsidiaries or branches in Japan to pay close attention to this change in export controls for South Korea. “This will impact U.S. companies exporting products from Japan that would have been exempt,” he said.