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| Korea Institute for International Economic Policy (KIEP) President Lee Jae-young |
By Park Jae-hyuk
Korea should continue to be on alert against Japan, even if it appears to be refraining from expanding the trade war with its neighbor, according to the head of the government-funded economic think tank, Thursday.
Lee Jae-young, President of the Korea Institute for International Economic Policy (KIEP), told The Korea Times that Tokyo is "trying to deceive the international community with its latest decisions on its trade policy" ― approving shipments of semiconductor material to Korea while not adding new items to the list of exports to Korea it controls.
"It is still possible for Japan to take additional retaliatory measures against Korea at any time," Lee said. "Japan's recent measures are meaningless, unless it eases its export curbs on Korea as before."
After Japan made the decisions, some analysts said it is slowing its trade "tantrums."
But Lee regarded the moves as temporary measures to avoid criticism from inside and outside the country.
"A growing number of Japanese have begun complaining about damage from the export controls," he said. "Some of them say the Japanese government's trade policy may lead the country to lose its close ally.
"Japan is facing criticism from the international community as well, because it caused a rift within the global free trade order and damaged the principle of mutual prosperity in the region.
"Japan's actions are hardly what we would expect from the country which has enjoyed the benefits of free trade more than any other nation and grown into the third-largest economy in the world."
According to Lee, Korean manufacturers account for over 70 percent of the global market for DRAM semiconductor products as of the first quarter of 2019. In 2018, Korea exported semiconductors worth $126.7 billion to the U.S., China, Taiwan, Hong Kong, Vietnam, the Philippines and India.
Lee said the data shows that a setback in Korea's semiconductor production would cause significant disruption in the global supply.
He also said Japan's export restrictions may go against World Trade Organization (WTO) regulations.
"While Japan claims the measures do not violate WTO regulations in any way, once it has been established that exports of the items in question to Korea were restricted to a substantial extent, Japan's recent actions will constitute a violation of Article 11(1) of the GATT (the General Agreement on Tariffs and Trade), which prohibits export restrictions against other WTO members, and 'Most Favored-Nation (MFN)' treatment mandated under Article 1 of the GATT," he said.
Lee suggested the Korean government collects evidence before it files a complaint with the WTO on Japan's export curbs.
He also said Korea's removal of Japan from its whitelist of countries receiving preferential trade treatment would be inevitable, unless Japan restores Korea to its own whitelist.
