Japan's 'Export Restrictions' May Ease... 8 out of 10 Companies Expect Improved Relations After Yoon Government Inauguration

President-elect Yoon Suk-yeol is having lunch and chatting with disaster and safety accident victims and their bereaved families on the open grounds within Yongsan Park on the afternoon of the 19th. Photo by Hyunmin Kim kimhyun81@

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[Asia Economy Reporter Moon Chaeseok] With the delegation for Korea-Japan policy consultations led by President-elect Yoon Suk-yeol set to visit Japan in four days, expectations are high among companies trading with Japan for increased trade. About one in four expect that relations with Japan will improve after the new government takes office, and that urgent issues such as easing export restrictions on materials, parts, and equipment will be resolved.

The Korea Chamber of Commerce and Industry (KCCI) announced on the 20th the results of a survey conducted over five days starting from the 11th, targeting 327 domestic companies, titled "Prospects for Korea-Japan Relations after the New Government Takes Office." 45.3% of the respondent companies answered that "Korea-Japan relations will improve." The response rate for "no change" was also not low at 44%. However, considering that only 12.9% of companies predicted "improved relations" in the "Korea-Japan Relations Corporate Perception Survey" conducted in October last year, KCCI explained that expectations for recovery in relations after the new government takes office have indeed increased. In particular, more than half of the respondents, 50.4%, said they would "increase trade and investment with Japan if relations improve." Narrowing down to 115 companies currently trading with Japan, 69.5% expressed willingness to expand investment.

The most urgent issue to be resolved was identified as "resolving trade frictions such as export restrictions between the two countries" (39.4%). "Resumption of top-level diplomacy such as summit meetings" (30.3%) followed. The biggest obstacle was cited as "historical issues" (57.2%). "Deterioration of public perception" (14.1%) was also pointed out as a significant concern. Company A, which produces automotive batteries, said, "As a mid-sized company, diversifying customers is extremely urgent, but worsening Korea-Japan relations have made it difficult to secure Japanese clients," adding, "Recovery of Korea-Japan relations is a matter of survival for some companies." Company B, which manufactures LED production equipment, said, "We have struggled to enter the Japanese market, but sales in Japan are significantly lower than in other countries," and expressed hope that "sales in Japan will increase through improved Korea-Japan relations."

As necessary cooperation areas, "cooperation in supply chain restructuring such as semiconductors" (48.3%) was selected. "Activation of human exchanges such as youth employment" (19.0%) followed. For policy tasks to improve relations, "resolution of historical and territorial disputes" (52.9%) was overwhelmingly chosen, and "seeking ways to ease anti-Japanese sentiment and public emotions" (22.9%) was also selected by a considerable number. Regarding the new government's diplomatic policy direction, the largest number of companies chose "balanced diplomacy among the US, China, and Japan" (45.3%) as their top priority. "Strengthening the Korea-US alliance" (27.5%) and "diversifying diplomatic lines such as strengthening cooperation with middle powers" (19.3%) followed. Lee Sung-woo, head of the International Trade Division at KCCI, said, "It seems that companies have high expectations for the new paradigm of Korea-Japan relations to be written after the new government takes office," and added, "We will support continuing economic cooperation discussions between the two countries through various channels such as private sector Korea-Japan business meetings."

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