US Raises 'Export Controls'... Korean Economy Engulfed in Ukraine Fire

[Image source=Reuters Yonhap News]

[Asia Economy New York=Correspondents Seolgina Jo and Hyeyoung Lee] The United States has taken a stronger sanction measure, including 'export controls,' in response to Russia's invasion of Ukraine. The so-called 'Huawei-style sanctions' export controls include items produced by domestic companies such as semiconductors and computers, making it inevitable that South Korea will also be affected. The Moon Jae-in administration is also expected to join the international community's sanctions against Russia.

On the 24th (local time), U.S. President Joe Biden announced additional sanctions against Russia in a national address at the White House, stating, "Russian President Vladimir Putin has chosen war." The sanctions focus on major Russian financial institutions holding a total of $1 trillion (approximately 1,204 trillion KRW) in assets, export controls that could directly damage the advanced technology industry, and sanctions on close associates of President Putin.

With these sanctions, over 90 financial institutions, including Russia's largest banks Sberbank and VTB, will be unable to conduct transactions through the U.S. financial system. Additionally, export restrictions targeting Russia's defense and aerospace industries are designed to block Russia's access to advanced technology. Key items include semiconductors, computers, communications equipment, lasers, and sensors. The European Union (EU) member states and the Group of Seven (G7) countries are also participating in these sanctions. On the same day, the EU announced it would exclude Russia's access to core technologies such as semiconductors and advanced software.

These export controls are expected to impact South Korean companies as well. If the U.S. and major countries increase the level of economic sanctions against Russia in the future, domestic companies operating and exporting locally will inevitably suffer greater damage.

South Korea's exports to Russia amounted to $9.983 billion (approximately 12.0255 trillion KRW) last year, accounting for about 1.6% of total exports. Among these, automobiles and parts account for 40.6% of the total, around 5 trillion KRW, raising concerns about significant damage to the finished car industry due to export restrictions. During the 2014 sanctions against Russia, South Korea's exports of passenger cars and auto parts dropped sharply by 62.1% and 39.6%, respectively, and it took considerable time to recover sales. Although semiconductors account for only 0.06% of Russia's share, damage is expected since semiconductor chips are included in virtually all finished products such as vehicles, smartphones, and home appliances.

The Russian military, which invaded Ukraine, is currently advancing near the capital, Kyiv. According to the U.S. Department of Defense, Russia launched more than 160 missiles, including medium-range and cruise missiles, on this day. Due to Russia's simultaneous attacks the previous day, numerous military facilities in Ukraine were destroyed, and approximately 220 Ukrainians were reported dead or injured.

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