S Korea urges Japan to correct ‘reckless, risky’ export curb

Bloomberg

South Korean Prime Minister Lee Nak-yon on Sunday urged Japan to correct its “reckless and risky” decision to curb exports to the country, saying that the international community is concerned about security in Northeast Asia after the latest developments. Japan is carrying out an “economic attack” against South Korea after deliberately dismissing diplomatic discussions with the country as well as arbitration by the US, Lee said. He was speaking at a high-level meeting with South Korea’s presidential office, government officials and ruling party lawmakers to discuss countermeasures to Japan’s export restrictions.
Tensions between the two nations worsened this week as Japan removed South Korea from a list of trusted export destinations, in a move that will hit the chip and display industries that are the backbones of the South Korean economy. South Korea has responded by saying it will take Japan off its preferred-trade list.
South Korea plans to earmark at least one trillion won ($835 million) in next year’s budget to support local parts makers and material suppliers that will be affected by Japan’s decision, ruling party lawmaker Cho Jeong-sik said after the meeting.
Prime Minister Lee reiterated that the government will support local businesses so that they can break away from their dependency on Japan.
In Japan, the Ministry of Foreign Affairs warned Japanese citizens in South Korea to stay away from demonstrations. It also warned them to be careful in visiting places in the country that are associated with Japan.
South Korea’s parliament approved an extra budget last week to support a sluggish economy. It included about 273.2 billion won ($228 million) as a response to Japan’s expanded export restrictions.
The finance ministry is also looking at possible budget and tax measures to minimize the damage from the Japanese curbs, according to a statement. Finance Minister Hong Nam-ki ordered the ministry to monitor the impact of the restrictions on the economy and markets. The ministry should approve extended working hours for companies affected by the issue, Hong said. The removal of Japanese firms from the preferred-trade list is expected to be effective this month. It will threaten South Korea’s semiconductor and display sectors as uncertainty over imports of key materials from Japan makes it harder for companies to plan operations, further disrupting key supply chains.