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Korea to Work to Minimize Losses Incurred to Enterprises

  • DivisionEconomic Policy Bureau - Economic Analysis Division
  • DateAugust 2, 2019
  • Tel0442152730

Government Briefing on Korea’s Removal from Japan’s White List


Korea to Work to Minimize Losses Incurred to Enterprises


Deputy Prime Minister Hong Nam-ki delivered an address at the government briefing on Korea’s removal from Japan’s ‘white list’.  The following is a summary of Deputy Prime Minister Hong’s address.


1. Developments of Japan’s export curbs


On July 1, Japan’s Ministry of Economy, Trade and Industry announced its restrictions on export to Korea of three key materials[1] used in semiconductors and display panels, and implemented the curbs on July 4. Today Japan said that it decided to remove Korea from its list of preferential trade partners.  These will damage the bilateral relationship built on trust and cooperation.


With regard to the supreme court decision, the Korean government could not but respect it as one of democratic countries’ governments and has suggested solutions to the Japanese government.  We have called for bilateral meetings and suggested joint investigation with experts from the UN securities council and other international organizations.  However, the Japanese government did not respond to the efforts to find solutions through talks, and decided again to impose discriminatory trade sanctions.


2. Such sanctions being inappropriate


1) Work to discuss the inappropriateness of economic sanctions


- Have asked for Japanese ambassador to South Korea to strongly express concerns over the trade restrictions

- Have held high-level as well as working-level meetings with the Japanese government

- Have clarified the Korean government’s position through multiple briefings


2) Inappropriate as the sanctions will harm global free trade system


- Have raised the restriction issue at the WTO

- Have explained the developments of trade curbs to global credit rating agencies including S&P, Moody’s and Fitch.


3) Inappropriate for a G20 summit host


- Japan worked hard to help the summit reach an agreement on “free, fair and non-discriminatory” trade


4) Harm reciprocity between the two countries 


- Damage cooperative economic partnership built on specialization, cooperation and healthy competition, leading to harming the security alliance in the Northeast Asia


5) Risk the global value chain


- Affect the global value chain on which global economic growth has been based, leading to the weakening of the global economy


3. Effects of the removal from the white list and how we respond


The economy is likely to be affected by 159 items due to the removal.


- Strategic items involved in the removal to be 1,194, out of which 159 likely to affect the economy

- The government to provide support specified for each and every of the 159 items


The government will continue to call on Japanese government’s retreating from the export control


- Continue to work on a bilateral meeting through diplomatic channels

- Tighten trade regulations against Japan

- Be thoroughly prepared to bring the case before the WTO


The government will work to minimize losses incurred to Korean companies, and provide support.


1) Timely provide information on Japan’s export controls


- Hold meetings national-wide to explain the details of the export control:  Meeting to be held in eight cities for 20 industries until August 9

- Open a website to provide information on the export controls, such as changes in regulations, items and other developments

- Provide consulting services through the center which opened on July 22


2) Work to secure supplies


- Help businesses secure supplies:  Allow them to store the imports of the 159 items in the bonded warehouse for as long as they need, an increase from two months, and streamline customs procedures for those items, running a 24 hour customs clearance support program

- Provide financial support to help businesses find alternative suppliers:  Korea Trade Insurance Corporation to provide guarantees for import financing, Korea Trade-investment Promotion Agency (KOTRA) to support businesses working to find alternative suppliers overseas

- Give exemptions from the chemical substance regulations and flexible work hour regulations to promote R&D

- Work on Japan’s corporate compliance programs


3) Provide businesses affected with fiscal support


- Include a total of 273.2 billion won of support in the 2019 supplementary budget

- Expand the R&D tax reduction to investment in technologies for core materials, parts and equipment, and apply low in-quota tariffs to imports from alternative suppliers

- Provide various tax and tariff support, from late tax payment given to SMEs suffering to late filing of certificates of origin

- Allow one-year renewal of loans taken out by SMEs and leading medium-sized enterprises, which are affected

- Provide a total of up to six trillion won of support to businesses suffering, and work to spend budgets as quickly as possible, which have been allocated to support suppliers over the second half of 2019

- Provide suppliers and manufacturing equipment makers with 29 trillion won of support over 2019 to promote R&Ds and M&As

- Work with the Financial Supervisory Service and state-owned financial institutions to provide emergency support to businesses affected


4) Work to increase production facilities


- Allow longer work hours if they work on developing core technologies

- Ease regulations on managing chemical substances to introduce accelerated procedures for approval and licensing


The government will work on long-term plans


1) Strengthen materials, parts and equipment


- Invest more than 1trillion won annually to promote the R&Ds of ‘strategic items’

- Allow budget spending on R&D investment in core technologies without feasibility studies, and give tax reduction to investment in core technologies

- Launch M&A funds to support the development of core technologies, as well as give M&A tax incentives

- Work on a cooperative model between suppliers and manufacturers, as well as between suppliers, in order to form a solid supply chain within the country

- Announce measures to strengthen materials, parts and equipment next week, and finalize R&D investment plans by the end of this month


The government will work to more effectively respond


- Work through existing ministerial meetings, such as those on Japan’s export curbs and on boosting the economy, as well as through a new meeting to help strengthen materials, parts and equipment

- Make the special act on materials and parts, due to end in 2021, into a general law

- Work with businesses and political parties through the trilateral meeting launched on July 31


[1] resist, etching gas and fluorinated polyimide

Please refer to the attached pdf



Ministry of Economy and Finance
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