South Korea removes Japan from trade whitelist as feud deepens

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SEOUL (Sept 17): South Korea removed Japan from its list of most trusted trading partners, the latest sign of unraveling ties between two U.S. allies mired in a series of disputes.

The change means that exports of some strategic goods to Japan will receive greater scrutiny than shipments to 28 other fast-track destinations, South Korea’s trade ministry said early Wednesday in a statement.

The move comes after Japan last month cut South Korea from a list of so-called “white nations” it deems safe for export of strategic materials. South Korea also plans to terminate a U.S.-endorsed intelligence-sharing pact with Japan and has filed a complaint with the World Trade Organization against its neighbour for imposing tighter export controls on materials key to tech manufacturing.

The trade tensions have hurt South Korea’s economic outlook as some of the country’s major companies rely on materials from Japan to produce products such as memory chips and displays. While no notable impact has yet been reported by either country, the escalated tension bodes ill for the economies already struggling from weak global demand and the U.S.-China trade war.

It's Not Just Chips

The dispute stems largely from differences in perception as to whether Japan has shown sufficient contrition for its 1910-45 colonization of the Korean Peninsula. Last year, the South Korean Supreme Court ruled in favor of individuals seeking compensations from Japanese firms for forced labor during the colonial era. Japan says the ruling violates a 1965 agreement between the two governments.

In the statement, South Korea’s trade ministry said the revision is to improve the country’s control of strategic material exports, and is not a retaliation against Japan. It said the country has notified Japan of the changes, and explained the background of the revisions through various routes.