South Korea restores Japan on trade 'white list'

South Korea formally restored Japan to its list of countries it gives preferential treatment in trade on April 24, three years after the neighbours downgraded each other’s trade status amid a diplomatic row fuelled by historical grievances.

South Korea formally restored Japan to its list of countries it gives preferential treatment in trade on April 24, three years after the neighbours downgraded each other’s trade status amid a diplomatic row fuelled by historical grievances.

In announcing the move through a government gazette, South Korea’s Ministry of Trade, Industry and Energy also said Seoul will further restrict technology and industrial exports to Russia and its ally Belarus to support the U.S.-led pressure campaign against Moscow over the war in Ukraine.

After years of friction, Seoul and Tokyo are working to repair relations as they tighten their three-way security cooperation with Washington to counter the threat posed by North Korea. Pyongyang has used the distractions caused by the war to accelerate testing of nuclear-capable missiles.

South Korean officials expect Tokyo to restore Seoul as a favoured trade partner too, but expect that step to take more time based on the procedures to revise Japan's export regulations.

In September 2019, South Korea dropped Japan from its “white list” of countries receiving fast-track approvals in trade, reacting to a similar move by Tokyo. Japan had also tightened export controls on key chemicals South Korean companies use to make semi-conductors and displays, prompting South Korea to file a complaint with the World Trade Organization.

Seoul accused Tokyo of weaponising trade to retaliate against South Korean court rulings that ordered Japanese companies to offer reparations to South Koreans forced into slave labour before the end of World War II, when Japan had colonised the Korean Peninsula. The 2018 rulings irked Japan, which insists all compensation issues were settled by a 1965 treaty that normalised relations. Relations between the U.S. allies began to thaw in March when the government of South Korean President Yoon Suk Yeol, who took office in May 2022, announced plans to use South Korean funds to compensate the forced labourers without requiring Japanese contributions. Yoon travelled to Tokyo to meet with Japanese Prime Minster Fumio Kishida and they vowed to rebuild the countries’ security and economic ties.

Yoon’s push to mend ties with Tokyo has triggered criticism from some forced labour victims and from his political rivals. They have called for direct compensation from Japanese companies that employed the forced labourers. But Yoon has defended his decision, saying closer ties with Japan are essential for dealing with a slew of regional challenges, especially North Korea’s growing nuclear threat.