Japan and South Korea Embroiled in High-Tech Industry Trade Tensions

Japanese trade restrictions aimed at South Korea have caused a ruckus in the region and prompted calls for retaliatory measures from Seoul this week, as both nations are trying to protect their high-tech industries.

Japan announced last week that it was curbing the export of substances used to make light-emitting diodes and semiconductors to South Korea. Observers have tied Japan’s confrontational attitude to recent court decisions in South Korea demanding Japan pay compensation to South Koreans forced into sex slavery during the Japanese occupation of the country in the first half of the 20th century. Tokyo denied any such connections.

Seoul warned its neighbor not to disrupt global supply chains. On Tuesday, Tokyo backpedaled, saying it might grant export licenses for the supply of certain South Korean chipmakers like Samsung and SK Hynix.

Japan exports several high-tech related products to South Korea, including photo lab equipment, machinery and integrated circuits. Chemical products also make up US$8.7 billion of Japan’s total US$54.2 billion worth of exports to South Korea. South Korea exports to Japan include more raw materials like metals, precious metals and refined petroleum and only total US$26.9 billion.