{"id":3941,"date":"2019-09-05T09:29:36","date_gmt":"2019-09-05T08:29:36","guid":{"rendered":"http:\/\/blogs.sussex.ac.uk\/uktpo\/?p=3941"},"modified":"2019-09-05T09:36:10","modified_gmt":"2019-09-05T08:36:10","slug":"mimicking-president-trump-trade-and-politics-in-japans-recent-export-measure","status":"publish","type":"post","link":"https:\/\/blogs.sussex.ac.uk\/uktpo\/2019\/09\/05\/mimicking-president-trump-trade-and-politics-in-japans-recent-export-measure\/","title":{"rendered":"Mimicking President Trump? \u2013 Trade and Politics in Japan\u2019s Recent Export Measure"},"content":{"rendered":"Share this article: <\/em> \"Facebook\"<\/a>\"twitter\"<\/a>\"reddit\"<\/a>\"pinterest\"<\/a>\"linkedin\"<\/a>\"mail\"<\/a>

\"\"5 September 2019<\/em><\/p>\n

Guest blog by Professor Yong-Shik Lee is Director and Professorial Fellow of the Law and Development Institute and Hiram H. Lesar Distinguished Visiting Professor in Law, Southern Illinois University School of Law.<\/em><\/p>\n

In the last eighteen months, President Trump has re-introduced the use of national security arguments to restrict the USA\u2019s international trade for commercial reasons. I recently warned<\/a>[1]<\/a> that the US use of security arguments to justify its additional tariffs on steel and aluminum imports would create a dangerous precedent, and shortly after that, another major trading nation has indeed followed this precedent.<\/p>\n

On July 1, 2019, the Japanese Government announced the exclusion of Korea from a group of countries (\u201cthe white list\u201d) that benefited from a simpler approval process for the exportation of materials and items that Japan considers \u201cstrategic,\u201d because they can be converted into military use. Initially this exclusion<\/a> covered three items that are essential to produce Korea\u2019s key export item, semiconductors, namely, photo resists, hydrogen fluoride (HF) and fluorinated polyimides. Japan\u2019s measure does not prohibit the exportation of the said items per se<\/em>, but it requires a tighter approval process for each export request, which may take up to 90 days, at the end of which there is no guarantee of approval. This measure creates substantial uncertainty from the perspective of both exporters and importers. In the worst scenario, IT industries worldwide could be devastated if the supply of semiconductors from Korea, which supplies up 70 percent of the global market, is disrupted.<\/p>\n

Despite these concerns, the Japanese government escalated the situation. On August 2, it decided to expand on its earlier measure and exclude Korea from the white list<\/a> with respect to all the other strategic export items beyond the initial three. The Japanese government has justified its measure in terms of its security concern over the exportation of such items, but it is widely considered to be an act of retribution to the court decision in Korea that ordered the Japanese companies to provide compensation<\/a> for the Koreans who were forced to work by the Japanese government during the Second World War. The Japanese government has protested against this decision claiming that it had already offered compensation in the treaty made between Korea and Japan in 1965. The Korean court found, however, that the treaty did not exclude the claim of a private person for the compensation.<\/p>\n

It is also possible, however, that Japan\u2019s measure has a commercial objective \u2013 as many suspect of President Trump\u2019s use of tariffs on steel and aluminum and his threat to use them on autos. Japan\u2019s measure may have been motivated by its desire to keep Korea in check; Korea has become a major competitor to Japan in important product categories that Japan once dominated<\/a>, such as home electronics and semiconductors. Korean manufacturers, such as Samsung, plan to expand their production into new areas, such as the next generation of systems semiconductors which use new production technologies that require materials from Japan. The Korean semiconductor manufacturers rely on the supply of these items from Japan<\/a>, and finding alternative suppliers might prove to be difficult, if not impossible.<\/p>\n

Irrespective of its motives, Japan\u2019s export measure marks a couple of \u2018firsts\u2019:<\/p>\n