Korea seeks truce in trade war with Japan by halting WTO dispute process

The Korea Times

The Korea Times

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Tue, September 26, 2023 | 07:30

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Korea seeks truce in trade war with Japan by halting WTO dispute process

Posted : 2023-03-06 19:32

Updated : 2023-03-06 19:37

Kang Gam-chan, an industry ministry official, speaks during a press conference at the Sejong Government Complex, Monday. Yonhap

By Lee Kyung-min

Korea will seek a rapid restoration of frayed bilateral relations with Japan by deciding to temporarily halt an ongoing dispute settlement process with the World Trade Organization (WTO), the industry ministry said Monday.

Ties between the two countries have deteriorated after years of intensified conflict over Japan's export curbs on key materials needed to manufacture computer chips ― Korea's growth driver industry accounting for about a fifth of its total exports.

Accelerating the move to end four years of bilateral feuding is a recent breakthrough in long-stalled talks over compensating Koreans who were forced to labor at Japanese factories during World War II. The dispute was triggered by Korea's 2018 Supreme Court ruling that ordered Japanese firms to pay Korean forced labor victims.

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Late Sunday, Korea and Japan agreed to establish a fund for the education and cultural exchanges of young people in both countries, including scholarships. The fund, operated by the two countries' business lobbies, essentially will replace compensation responsibilities as outlined by the 2018 court ruling.

"Korea-Japan could hold bilateral talks to resolve the export curb feud as early as this month," an industry ministry official told reporters at the Sejong Government Complex, Monday.

The talks will, the official said, seek to turn the clock back to before July 2019, when Japan initiated the curbs on three key materials in retaliation against the 2018 court ruling.

The 2019 move caused little disruption to local manufacturing, due in large part to effective and timely countermeasures to fortify the competitiveness of the local supply chain, the official said. Among the key components of the value chain were materials, parts and equipment that are critical to bolstering supply and production at major exporters.

"Korea sought to accelerate technological development, a move equally pursued with continued efforts to diversity trading partners as well as greater investments from Korea's other peers. These all led to a strengthened value chain thereafter," he said.

The uncertainties in business conditions caused by Japan's move have not been completely dispelled, the official said, but the previous heavy dependence on the neighboring country for high-quality materials has since been on a steady decline.

"Some remaining issues on business uncertainties will be addressed and subsequently reduced. We will be able to tell more upon the conclusion of the talks," the official said.

lkm@koreatimes.co.kr