Japan rejects South Korean attempt to air trade row at WTO

Published On: July 24, 2019 07:30 PM NPT By: Reuters

GENEVA, July 24: Japan told the World Trade Organization on Wednesday its controls on exports to South Korea were based on security concerns unsuitable for discussion at the WTO, in the latest twist in a row between Washington’s two biggest Asian allies.

South Korea earlier protested against a Japanese plan to remove it from a list of countries that face minimum trade restrictions, saying it would undermine their decades-old economic and security cooperation and threaten free trade.

Japan’s planned revision of a trade control law, one of a number of recent irritants in relations between the two countries, would require Japanese exporters to seek a license for certain items they want to sell to South Korea that could be used in manufacturing weapons.

“The measure referred to by Korea is based on the export control system for national security, and is not an appropriate agenda for the WTO,” Japan’s ambassador Junichi Ihara told a WTO meeting, according to a copy of his statement provided to Reuters.

South Korea brought the row to the WTO’s General Council, the highest trade negotiating body short of a ministerial meeting, hoping to rally international opposition to Japan’s move.

It was not immediately clear if it had gained any support, because the WTO debate broke for lunch before other countries had the opportunity to take the floor. But several diplomats from other countries told Reuters they preferred not to get involved.

Ihara said Japan was one of many countries that regularly reviewed their export controls, and Japan had voluntarily simplified its trade procedures with South Korea in 2004, trusting that Seoul would improve its own trade procedures.

But there had been no discussions on the issue for the last three years, despite requests from Japan.

“In addition, there were cases of inadequate export to Korea. These are the factors that caused us to decide to revert the existing simplified procedures to the original ones for exports to Korea,” Ihara said.

WTO rules are based on the “most favoured nation” principle, which says that WTO members cannot normally discriminate between trading partners, unless they have a wide-ranging trade deal.

But Ihara said simplified export measures could be granted at each country’s discretion, and not all countries were treated equally.

“Korea stated that the measure taken by Japan went against the free-trade system. Free trade, however, does not mean allowing trade in sensitive goods and technologies that can be diverted to military use, without any controls or conditions,” he said.

South Korea has warned that Japan’s move could disrupt global supply chains, but Ihara said that argument simply created confusion because the review was about national security, which is grounds for an exemption from the usual WTO rules.

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