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SKorea: Trade Curbs Hurt Japan More    07/15 06:22

   SEOUL, South Korea (AP) -- In his strongest comments yet on a growing trade 
dispute, South Korea's president urged Japan on Monday to lift recently 
tightened controls on high-tech exports to South Korea, which he said threaten 
to shatter the countries' economic cooperation and could damage Japan more than 
South Korea.

   The dispute between the two U.S. allies has further soured relations already 
troubled over Japan's colonial rule of Korea before the end of World War II.

   President Moon Jae-in accused Japan of abusing its leverage in trade to 
punish South Korea over their historical dispute. South Korea sees the trade 
curbs as retaliation for South Korean court rulings earlier this year that 
ordered Japanese corporations to compensate South Korean victims for forced 
labor during World War II.

   South Korea says the strengthened export controls of photoresists and other 
sensitive materials mainly to manufacture semiconductors and display screens 
could hurt its export-dependent economy and disrupt global supply chains.

   Its government plans to file a complaint with the World Trade Organization 
and raise the issue at next week's WTO General Council in Geneva. Trade 
officials from the countries failed to resolve the dispute in a working-level 
meeting in Tokyo on Friday.

   Moon also said South Korea will use the dispute as an opportunity to reduce 
its dependence on Japan by strengthening its technology industry and 
diversifying import sources.

   "Japan's export restrictions have broken the framework of economic 
cooperation between South Korea and Japan that had continued over a 
half-century based on mutual dependence," Moon said in a meeting of senior 
aides at Seoul's presidential palace.

   "The shattered credibility of cooperation with Japan in the manufacturing 
industry will inspire our companies to break out of their dependence on 
Japanese materials, components and equipment and work toward diversifying 
import sources or localizing the technologies. I warn that, eventually, it will 
be the Japanese economy that will be damaged more."

   Analysts say the Japanese measure won't have any immediate meaningful impact 
on South Korean chipmakers, which have sufficient supplies of the materials for 
now, given a slowdown in demand for semiconductors. But there is concern that 
Japan will expand its export controls to other industries.

   Park Ki-young, a spokesman of the Ministry of Trade, Industry and Energy, 
said Monday that the government is bracing for the possibility that Japan will 
remove South Korea from a 27-country "whitelist" receiving preferential 
treatment in trade.

   Its removal from the list would require Japanese companies to apply for 
case-by-case approvals for exports to South Korea of more than 850 items deemed 
sensitive, not just the three materials affected by the trade curbs that took 
effect July 4. It would also allow Japanese authorities to restrict any export 
to South Korea when they believe there are security concerns, Park said.

   Moon spoke hours after dozens of South Korean small-business owners rallied 
in Seoul, calling for boycotts of Japanese consumer goods.

   The Japanese measures have stoked public anger in South Korea, where many 
believe Japan still hasn't fully acknowledged responsibility for atrocities 
committed during its colonial occupation of Korea from 1910 to 1945.

   Kim Sung-min, president of the Korea Mart Association, urged shop owners to 
boycott the distribution of Japanese products until Tokyo apologizes over the 
trade curbs and withdraws them. Other demonstrators held up signs that read, 
"Our supermarket does not sell Japanese products."

   Thousands of South Koreans have signed petitions posted by citizens on the 
presidential office's websites that called for boycotts of Japanese products 
and of travel to Japan and for South Korea to skip next year's Tokyo Summer 
Olympics. Retailers have also reported modest drops in the sales of Japanese 

   "We will continue boycotting the consumption and distribution of Japanese 
products until Japan's government and the Abe administration apologizes and 
withdraws its economic retaliation," Kim said, referring to Japanese Prime 
Minister Shinzo Abe.

   Tokyo says the materials affected by the export controls can be sent only to 
trustworthy trading partners. Without presenting specific examples, Tokyo has 
questioned Seoul's credibility in controlling the exports of arms and dual-use 
items that can be used both for civilian and military purposes. Abe and his 
conservative aides suggested there may have been illegal transfers of sensitive 
materials from South Korea to North Korea.

   South Korea says its export controls are working just fine. Last week, its 
presidential office proposed an investigation by the United Nations Security 
Council or another international body to look into the export controls of both 
South Korea and Japan as it continues to reject Japanese claims that the South 
cannot be trusted to faithfully implement sanctions against North Korea.


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