South Korea Will File WTO Complaint Against Japan Export Curbs

(Bloomberg) --

South Korea will file a complaint Wednesday with the World Trade Organization against Japan’s export curbs on key materials used by its neighbor’s chip and display makers, South Korea’s trade minister said in a statement.

Japan was politically motivated in taking the export control measures July 4 and is a “discriminatory” step directly targeting the nation, Trade Minister Yoo Myung-hee said. Japan’s move came following South Korean Supreme Court’s ruling on compensation to former Korean war-time forced laborers.

Tokyo has denied the claims and has said the move was based on concerns about what it saw as lax South Korean export controls for sensitive materials.

Relations between the two countries have sunk to their lowest point in decades, following a series of disputes, mostly rooted in unresolved rancor over Japan’s 1910-45 colonization of the Korean Peninsula. Hostility spilled over to affect security ties when South Korea last month announced it would end a military information-sharing agreement with Japan.

South Korea will request Japan hold bilateral meeting as part of the dispute settlement process with the WTO, Yoo said, adding the country will seek “constructive” measures to resolve the issue with Japan.

The move comes just hours after WTO ruled for a second time that South Korea’s anti-dumping duties on Japanese valves violate international trade rules, according to a decision published on the WTO website. The WTO statement also upheld various findings of a 2018 report that disfavored Japan and found in South Korea’s favor with respect to various other aspects of the case.

While the escalating feud between the two nations have had limited impact on growth so far, it has heightened concerns about the fallout for global supply chains, financial markets and economic health. U.S. technology companies have urged both countries to negotiate a resolution, while sales of Japanese cars in South Korea have plunged in recent months.

--With assistance from Kana Nishizawa and Seyoon Kim.

To contact the reporter on this story: Shinhye Kang in Seoul at skang24@bloomberg.net

To contact the editor responsible for this story: Peter Pae at ppae1@bloomberg.net

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