<![CDATA[Japan-South Korea 'trade war': Moon warns Tokyo not to 'force Seoul's hand' over curbs on hi-tech exports]>
South Korean President Moon Jae-in on Monday warned Japan's new export curbs on hi-tech materials threatened global supply networks of semiconductor chips and smartphone displays, and insisted Seoul could yet enact countermeasures.
In his first comments since Tokyo last week announced export restrictions from July 4, Moon said: "The recent trade restrictions by Japan have sparked concerns over feared production disruptions at our companies, which would in turn threaten the global supply networks.
"Such moves putting restrictions on private companies' mutually beneficial transactions for political purposes cause concern not only to South Korea but to the whole world."
He said Seoul preferred "a diplomatic settlement" as tit-for-tat measures were undesirable for both countries.
"But if real damage occurs to South Korean companies, it would force the government's hand and the government would have to take necessary countermeasures. I don't want to see this happen," he said. "I urge Japan to withdraw the curbs and call for sincere talks between the two countries. I hope Japan return to the principle of free trade that it has always been emphasising."
Over the weekend, South Korea's government and top electronics firms scrambled to address the situation. Samsung Electronics vice-chairman Lee Jae-yong travelled to Japan on Sunday to discuss the tighter controls with local business leaders, Yonhap reported.
The hi-tech materials affected by the restrictions include fluorine polyamide needed to make flexible organic light-emitting diode displays, photoresist used to transfer a circuit pattern to a semiconductor substrate and etching gas essential for semiconductor fabrication process.
Moon will meet heads of 30 major conglomerates on Wednesday to discuss a response to Japan's announcement, which was the latest development to further strain relations between the countries.
Japanese Prime Minister Shinzo Abe, however, denied the decision to impose export controls was a reaction to a series of South Korean court rulings demanding compensation be paid to South Korean victims of wartime forced labour during Japanese occupation.
Japan maintains all reparation issues stemming from its colonial rule were settled under a 1965 government-to-government accord that normalised bilateral relations and provided US$300 million grant in economic aid. South Korea claims the agreement was between the two governments and did not absolve Japanese companies of responsibility toward individual workers.
South Korean President Moon Jae-in. Photo: dpa alt=South Korean President Moon Jae-in. Photo: dpa
Japan has rejected a South Korean proposal to create a joint compensation fund for victims with contributions from both nations' companies.
A government source claimed Abe's administration was seeking to "deal a serious blow" to Moon and his ruling Democratic Party by causing disturbances to the country's economy before South Korea's parliamentary elections in April next year and the 2022 presidential polls.
"The Abe government is thus seeking to intervene in South Korean domestic politics," the source told the South China Morning Post.
The Japan News Network said a survey it carried out found 58 per cent of respondents approved of Tokyo's policy, compared with 24 per cent who did not.
Meanwhile, the hashtag #BoycottJapan has been trending in South Korea, and social media has been buzz with anti-Japan sentiment and calls to shun Japanese products.
More than 2,400 public posts with hashtag #BoycottJapan have been shared on Instagram since the measures were imposed, with some including a picture using Japan's red rising sun icon as "O" in the word "No". "NO, Boycott Japan: Don't go, don't buy," it says.
A post shared by @ all_righteousness on
South Korea is Japan's third-largest export market, worth 5.79 trillion yen (US$53.4 billion) in trade last year.
In recent days, South Korean internet users have been sharing cancellation confirmations for flights to Tokyo, Osaka and other popular travel destinations. South Koreans make up 13 per cent of spending by foreign tourists in Japan, according to the Japan Tourism Agency, or 584.2 billion yen in 2018.
The Korean Supermarkets Alliance, an organisation representing more than 23,000 stores, said it would temporarily halt sales of Japanese products, including Asahi and Kirin beer, and Japan Tobacco's Mild Seven cigarettes.
"We will fight Japan's attitude toward its wartime history and retaliatory measures," association president Lim Won-bae said.
A market in Seoul has posted signs indicating it neither buys nor sells Japanese products. Photo: EPA alt=A market in Seoul has posted signs indicating it neither buys nor sells Japanese products. Photo: EPA
Professor Ha Jong-moon at Hanshin University said Seoul had cause for concern about the economic impact of the curbs as semiconductor exports worth US$126.7 billion last year accounted for 21 per cent of the country's total exports and 7.8 per cent of GDP.
"It's high time that back door diplomacy was absolutely necessary as this is a life and death matter not only for the government but for the whole South Korean economy," he said.
Japan produces about 90 per cent of the world's fluorinated polyamide, about 70 per cent of etching gas and about 90 per cent of photoresists, according to a government report, making it difficult for South Korean chip makers to find an alternative supply.
South Korean activists march in front of the Japanese Embassy in Seoul. Photo: EPA alt=South Korean activists march in front of the Japanese Embassy in Seoul. Photo: EPA
In the first five months of this year, South Korean firms bought US$103.52 million of photoresists from Japan, US$28.44 million of hydrogen fluoride and US$12.14 million of fluorinated polyamides.
South Korean chip makers may be forced to build stockpiles of materials as they rely heavily on Japan for photoresists and etching gas. South Korean tech giants such as Samsung, SK Hynix and LG Display could all be affected.
Japanese suppliers of photoresists include JSR, Tokyo Ohka Kogyo and Shin-Etsu Chemical. Makers of etching gas include Showa Denko KK. Kanto Denka Kogyo, a fluorochemicals maker, is also likely to be impacted.
Additional reporting by Reuters and Bloomberg
This article originally appeared on the South China Morning Post (SCMP).
Copyright (c) 2019. South China Morning Post Publishers Ltd. All rights reserved.
