TOKYO (Reuters) – Japan’s plan to drop South Korea from its “white list” of nations with minimum trade curbs will probably hit 630 billion yen ($5.8 billion) in annual exports of microchip-making gear to its neighbor, a Japanese lawmaker said on Wednesday.
Semiconductor-making equipment is Japan’s top export item to South Korea, amounting to about 11 percent of its total exports by value to the country last year.
But Japan is already factoring in the short-term drawback, and aims to focus more on the long-term upside in the form of improved security in Asia, ruling party lawmaker Norihiro Nakayama told Reuters.
“We are aware that the sanctions against South Korea will deliver a short-term blow to both South Korea and Japan,” Nakayama said by telephone. “Nonetheless, it is a necessary step to ensure long-term security in Asia.”
Recent tension between the two countries, largely over the issue of compensation for South Koreans forced to work in Japan’s factories during its occupation of the Korean peninsula from 1910 to 1945, worsened this month, when Japan reined in exports of high-tech materials to South Korea.
Japan also plans to strip South Korea of white-list status under a trade control law, which would require Japanese exporters to seek a license for items that could be used in some weapon-related applications.
Japan has denied that the laborers’ compensation dispute is behind the export curbs, and cited “inadequate management” of sensitive items sent to South Korea, with its media saying some items ended up in North Korea, which South Korea has denied.
Reporting by Izumi Nakagawa; Writing by Kiyoshi Takenaka; Editing by Clarence Fernandez