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Japan Will Reinstate South Korea as Preferred Trade Nation as Two Sides Improve Ties

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Japan Will Reinstate South Korea as Preferred Trade Nation as Two Sides Improve Ties

Japan’s tightening of trade controls against Seoul in 2019 was widely seen as retaliation for a South Korean court ruling on World War II-era forced labor.

Japan Will Reinstate South Korea as Preferred Trade Nation as Two Sides Improve Ties
Credit: Depositphotos

Japan announced a decision Tuesday to reinstate South Korea as a preferred nation with fast-track trade status starting July 21, virtually ending a four-year economic row that was further strained during their bitter historic disputes.

Trade Minister Nishimura Yasutoshi told reporters that Japan and South Korea have also agreed to set up a framework to review and follow up on the systems as needed.

Japan and South Korea have been rapidly mending their ties as they deepen three-way security cooperation with Washington in response to growing regional threats from North Korea and China.

Lee Do-woon, spokesperson of South Korean President Yoon Suk-yeol, called Japan’s step a symbolic measure that underscores the countries’ “fully restored bilateral trust” and the removal of uncertainty in trade.

“For the first time in four years, all export restrictions between the countries have been lifted,” Lee said in a briefing Tuesday afternoon. “With import and export procedures getting simplified, we expect exchanges and cooperation between the countries’ companies to accelerate.”

Reinstating South Korea’s preferential status will end a four-year trade dispute that began in July 2019 when Japan removed South Korea from its “white list” of countries given fast-track approvals in trade as ties deteriorated over compensation for Japanese wartime actions.

Japan’s tightening of trade controls against Seoul was an apparent retaliation for South Korean court rulings in 2018 that ordered Japanese companies to compensate Korean workers for abusive treatment and forced labor during World War II, when the Korean Peninsula was under Japanese occupation.

Japan also tightened export controls on key chemicals used by South Korean companies to make semiconductors and displays, prompting South Korea to file a complaint with the World Trade Organization and remove Japan from its own list of countries with preferred trade status. Outraged by Japan’s apparent retaliation, many South Koreans also supported an unofficial movement to boycott Japanese products.

Their ties have improved rapidly since March on an initiative by Yoon’s government to resolve disputes stemming from compensation for wartime Korean forced laborers. Yoon traveled to Tokyo that month for talks with Prime Minister Kishida Fumio and agreed to rebuild the countries’ security and economic ties.

After their talks, South Korea withdrew its complaint at the WTO. Japan simultaneously confirmed its removal of the key chemicals export controls. South Korea has also since reinstated Japan’s preferential trade status.

Kishida paid his own visit to South Korea in May and Yoon returned to Japan to attend the G-7 summit in Hiroshima later that month. It was a dizzying pace of diplomatic engagements for two countries that previously hadn’t exchanged top-level bilateral visits since 2018.

Meanwhile, the Japanese government has been trying to gain South Korea’s understanding in a plan to release the treated radioactive water from the tsunami-wrecked Fukushima Daiichi nuclear power plant into the ocean. It’s a highly contentious plan that faces strong opposition from South Korea and other neighboring countries, as well as local fishing communities concerned about safety and reputational damages.

During Kishida’s visit to South Korea, the two sides agreed to arrange a visit by South Korean experts to the Fukushima plant to examine the treatment process, but the arrangement failed to sway critics in South Korea.