S.Korea to return to Japan’s preferential trade partner list in July

Japan has decided to put South Korea back on the list of its preferential trade partners, nearly four years after its removal. The Korea-Japan trade dispute is expected to be near the end as Korea took a similar measure in April.

The Japanese government will revise its export rule to redesignate Korea as a Group A member state, which can benefit from fast-track approvals in trade, Korea’s trade ministry said on Tuesday. Among the group members are the US, the UK and France.

Through the revision, Japan will ease restrictions on its exports to Korea, including materials and technologies for weapons production. The revision will be published on June 30 and will take effect on July 21.

Similarly, Korea announced on April 24 that it will restore Japan to its white list, or its list of preferential trading partners. Seoul’s move reduced application procedures and paperwork for Korean exports of “strategic materials” to Japan, including those used for military purposes.

The Korea-Japan economic conflicts began to resolve in earnest in March of this year as Korean President Yoon Suk Yeol and Japanese Prime Minister Fumio Kishida met in Tokyo in the same month. During the meeting, the two leaders pledged to strengthen ties between the neighboring countries for security and the economy.

After the summit talks in March, Japan’s economy ministry announced it will cancel restrictions on exports of three key materials for chips and electronics to Korea – fluorinated polyimides, photoresist and hydrogen fluoride. Simultaneously, Korea said it will withdraw its complaint filed with the World Trade Organization (WTO) against Japan.

The two nations’ trade dispute started in 2018 as Korea's Supreme Court ordered Japan’s Nippon Steel to compensate Korean workers for forced labor during World War II. The Korean peninsula was colonized by Japan between 1910 and 1945.

Following the rulings, Japan enacted export curbs on Korea, downgrading the neighbor from Group A to B in July 2019. Korea filed a complaint to the WTO against Japan for weaponizing trade to retaliate for the ruling over historical conflicts.

Write to Yeong-Hyo Jeong at hugh@hankyung.com