Korea-Japan Engage in Full-Scale Legal Battle Over Export Controls at WTO... Panel Installation Confirmed

[Image source=Yonhap News]

[Asia Economy Reporter Kim Hyung-min] Japan and South Korea are set to engage in a full-scale legal battle at the World Trade Organization (WTO) over Japan's export restrictions imposed on South Korea.

The WTO Dispute Settlement Body (DSB) confirmed the establishment of a panel, which acts as the first instance in dispute resolution procedures, regarding Japan's export restriction dispute (DS590) at its regular meeting held on the 29th (local time) at the WTO headquarters in Geneva, Switzerland, following a request from the South Korean government.

At the meeting, the South Korean government pointed out that Japan's export restrictions on three items?photoresists, fluorinated polyimides, and high-purity hydrogen fluoride?have caused unnecessary delays in exports to South Korea, increasing uncertainty and costs.

It emphasized that these products are primarily used in the production of displays and semiconductors, which are crucial in the global electronics industry, and that Japan's measures are causing disruption to the global value chain.

The government also explained that the measures are politically motivated, which was part of the reason for requesting the panel's establishment.

Previously, at the DSB meeting held on the 29th of last month, the establishment of the panel was a major agenda item but was not approved due to Japan's opposition as the respondent country.

However, according to WTO rules, unless all member countries unanimously reject at the second meeting, the panel is automatically established, and thus the panel was confirmed on this day.

This allows the dispute procedures, including the selection of panel members and hearings, to proceed.

The panel will consist of three members, and their appointment will be decided through consultations between the complainant and respondent countries.

From the panel's establishment to the ruling, it generally takes about 10 to 13 months, but this period can be shortened or extended depending on the dispute.

If a party disagrees with the panel's decision, they can appeal; however, the WTO Appellate Body, which serves as the final instance, has been non-functional since December of last year.

Japan changed the licensing system for three key materials necessary for semiconductor and display manufacturing from general comprehensive licenses to individual licenses in July last year, as a de facto retaliatory measure against South Korea's Supreme Court ruling on forced labor compensation during the Japanese colonial period.

In August of the same year, Japan removed South Korea from its "white list," which grants simplified approval procedures for exports by Japanese companies.

In response, the South Korean government filed a complaint with the WTO on September 11 of last year. However, on November 22 of the same year, aiming to resolve the Korea-Japan conflict through dialogue, South Korea suspended the effectiveness of its notification to terminate the General Security of Military Information Agreement (GSOMIA) with Japan and also halted the WTO complaint process.

Since then, South Korea has addressed all institutional deficiencies cited by Japan as justification for the export restrictions and demanded that Japan present solutions to the export restrictions by the end of last month.

However, as Japan ultimately did not provide an active response, the South Korean government decided on June 2 to resume the WTO dispute settlement procedures. On the 18th of last month, it sent a request for panel establishment to the WTO Secretariat and the Japanese Mission in Geneva.

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