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International relations

WTO agrees to discuss Japan's export curbs on South Korea

Seoul and Tokyo get chance to win 'sympathizers' during two-day session in Geneva

The World Trade Organization will hear arguments surrounding the trade dispute between South Korea and Japan this month at the headquarters in Geneva.   © Reuters

GENEVA -- The World Trade Organization has stepped into the latest flashpoint between South Korea and Japan, agreeing to formally discuss Seoul's grievances over Tokyo's restrictions against exports of semiconductor materials later this month.

Paik Ji-ah, South Korea's envoy to Geneva, is expected to demand that Tokyo either fully justify the export curbs or withdraw them completely when the WTO's General Council convenes July 23-24. Japan will likely respond by reiterating that the trade strictures are based on legitimate security concerns.

The exchange at the General Council, however, is not expected to make much progress on settling the feud. The deliberations will more likely serve as a "venue for recruiting sympathizers" in the international arena, according to a diplomatic source.

Seoul had been lobbying the WTO to address the issue, saying the export curbs were a violation of the international body's rules. Some observers have called the restrictions a retaliatory move after Seoul failed to intervene with Supreme Court rulings ordering Japanese companies to pay those forced to work for them during World War II.

Japan implemented an order on July 4 requiring government approval for contracts to ship etching gas, photoresist and fluorinated polyimides to South Korea, citing lax controls for the three chipmaking materials, which can be used for military purposes.

This prompted a furious pushback by South Korea. Seoul brought up the issue during Tuesday's session at the WTO's council for trade in goods, where both sides argued their sides. South Korean and Japanese officials met Friday in Tokyo for working-level talks, which failed to bring the sides closer to an agreement.

The two parties did not appear to see eye-to-eye on the purpose of the meeting. A South Korean official in attendance said Saturday that Seoul requested an end to the restrictions and to enter negotiations, but that this was rejected by the Japanese side.

"We agreed that the setting was for working-level explanations," an official for Japan's Ministry of Economy, Trade and Industry said the same day during a news conference.

"There was a demand to resolve the issue, but we responded by saying we will explain the facts of the matter," the official said, adding that they had not received a request to withdraw the trade curbs.

The meeting did shed light on whether the export curbs were put in place because Japan believed South Korea was allowing materials to be smuggled to the North, a claim Seoul had said was not true.

"We received the explanation from the Japanese side that illegal diversion of goods to North Korea or elsewhere does not apply to the improprieties" alleged by Tokyo, the South Korean official said. This suggests that the row is concerned exclusively with the trade between the two countries.

The General Council is the WTO's top decision-making body, aside from ministerial conferences that take place once every two years. All 164 members of the trade group participate in the council. There, third parties such as the U.S. and the European Union will have the chance to air their views.

South Korea seeks to quickly resolve the dispute through this channel. On Wednesday, South Korean Minister of Foreign Affairs Kang Kyung-wha spoke on the phone with U.S. Secretary of State Mike Pompeo. She expressed concerns that the Japanese export controls will impact U.S. corporations as well as the global economy.

Seoul is considering a suit against Tokyo at the WTO. In that event, the two countries would first have to attempt to negotiate a resolution. If that fails, then the complaint goes before the WTO's dispute panel.

Despite the mounting international trade frictions, including those between the U.S. and China, there is a shortage of WTO judges. A final verdict on a suit lodged by South Korea could take more than a year. South Korea's presidential office said that it was prepared for a drawn-out battle, according to a report Saturday by Yonhap News Agency.

Nikkei staff writers Kenichi Yamada in Seoul and Junichi Sugihara in Tokyo contributed to this report.

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