US-China New Cold War Cooperation Justification... Opportunity to Mend Korea-Japan Export Dispute

US-led Anti-China Economic Bloc EPN Formation
South Korea and Japan Under Pressure to Join
Even Without Full Withdrawal
Resolving White List Could Open Dialogue
Ministry of Industry Demands Restoration by Month-End
"Communicating Through Multiple Channels"

Lee Ho-hyun, Director General of Trade Policy at the Ministry of Trade, Industry and Energy, briefing. (Photo by Yonhap News)

[Asia Economy Reporter Moon Chaeseok] As conflicts between the United States and China escalate into a 'new Cold War,' attention is turning to the possibility of cooperation between South Korea and Japan. With the world fervently reorganizing the global value chain (GVC) under the banner of 'de-Chinaization,' the interests of the two countries may overlap. South Korea has demanded that Japan restore export regulations to their original state by the end of this month, and the focus is on whether Japan will switch the three major regulated items from an individual permit system back to a general permit system.

According to related government departments on the 26th, the Ministry of Trade, Industry and Energy (MOTIE) has strongly urged Japan to restore the export regulations to the state before last July by the end of this month and is currently awaiting a response from the Japanese side.

On the 12th, Lee Ho-hyun, Director General of Trade Policy at MOTIE, stated, "All three reasons Japan cited when imposing export regulations?suspension of Korea-Japan policy dialogue, catch-all control on conventional weapons, and insufficient export control organization and personnel?have been resolved, and there is no problem with exports to Korea," adding, "Since all necessary and sufficient conditions for Japan to resolve the issue are met, there is no reason for Japan to hesitate in restoring the strengthened export control measures to their original state."

At that time, there were criticisms about whether setting the deadline as 'the end of this month' was realistic, given that Japan was severely hit by the novel coronavirus disease (COVID-19). However, the situation changed as Prime Minister Shinzo Abe lifted the nationwide COVID-19 emergency declaration the day before. Furthermore, with the US and China entering a new Cold War, there is also a possibility of a positive improvement in Korea-Japan relations.

Experts agree that while there is no need to be fixated on the 'end of this month,' the new US-China Cold War and Japan's economic reopening present a golden opportunity for economic cooperation between the two countries. This is because the US is building the Economic Prosperity Network (EPN), often called the 'anti-China economic bloc,' and is drawing South Korea and Japan into an 'anti-China economic alliance,' a situation that cannot be ignored.

Despite sharp diplomatic conflicts over issues such as the Korea-Japan General Security of Military Information Agreement (GSOMIA), forced labor, and Dokdo, South Korea and Japan have a history of joining hands as 'economic partners.' Experts say this is not only due to the alignment of their industrial structures but also because of the diplomatic rationale of being a 'community of shared destiny' tied to the Indo-Pacific Strategy belt, a new security strategy of the Trump administration in the Asia-Pacific region.

Professor Jung In-kyo of Inha University's Department of International Trade said, "Currently, the two countries have many issues to discuss, including COVID-19, the international order, and US-China conflicts, but neither side is stepping forward, and the question is who will extend a hand first," adding, "In this situation, it is necessary for us to make a proactive proposal to Japan from the perspective of national interest rather than pride."

Even if Japan does not fully withdraw all export regulations, if it presents solutions regarding the three regulated items?EUV photoresists, fluorinated polyimide, and hydrogen fluoride?and the issue of South Korea's removal from the whitelist (preferred export screening countries for security reasons), economic cooperation between the two countries could open a new chapter, according to the prevailing view.

The core justification for South Korea's demand for Japan to withdraw export regulations is that since Japan changed the three items from a general permit system to an individual permit system on July 4 last year, more than ten months of sound export transaction records have accumulated, indicating that switching back to the general permit system would not harm the economy. South Korea has urged Japan to make a decision to minimize uncertainty for companies in both countries.

The Ministry of Trade, Industry and Energy has only stated that it is closely consulting with Japan. It has also refrained from commenting on a 'Plan B' in case Japan does not respond or rejects the demand by the end of this month. A ministry official said, "We are currently waiting for a response from the Japanese side, so it is difficult to comment on specific matters," and added, "We are communicating with Japan through various channels."

This content was produced with the assistance of AI translation services.