South Korea has warned Japan against escalating a dispute that could upend a trade relationship worth around $80 billion and threaten the global supply chain for smartphones and electronic devices.
During a telephone call on Friday, Foreign Minister Kang Kyung-wha pressed her Japanese counterpart to lift trade restrictions on materials South Korean companies need to produce computer chips.
She also urged Tokyo not to further aggravate the situation by removing South Korea from a list of countries that can trade with Japan with minimum restrictions.
Japan is “on course” to drop South Korea from its so-called white list of countries and a decision could come as early as August 2, sources familiar with the matter told CNN. If that happens, companies would need a government license to sell any products that could potentially be used for weapons and military applications to South Korean firms.
South Korea is Japan’s third largest trading partner, buying about $54 billion worth of Japanese goods, including industrial machines, chemicals and cars, according to a trade data tracking tool affiliated with the Massachusetts Institute of Technology.
The standoff between the two countries started earlier this month when Tokyo placed controls on exports of three chemical materials to South Korea. The materials — fluorinated polyamides, photoresists and hydrogen fluoride — are used to make computer chips, among other things.
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