South Korea is removing Japan from a list of trusted trading partners, escalating a dispute with its neighbor that is already creating a mess in the global supply chain for big tech companies, like Samsung.
South Korean Trade Minister, Sung Yun-mo said Japan will be downgraded from most trusted status to a new category, referring to Tokyo’s violations of “the basic principles of the international export control regime.”
The downgrade means South Korean companies exporting to Japan will have to go through more documentation, facing more time for approvals and get used to a shorter duration of trade permits. South Korean officials did not mention specific materials or items that are going to effect after this step.
Japan and South Korea, two of Washington’s closest allies in South Asia, are clutched in a trade war, causing damage to World’s number one smartphones company Samsung Electronics and global smartphone supply chains as Japan’s doing the same to Samsung what the US did to Huawei.
The tension escalated between the two countries last month when Japan imposed control on exports to South Korea of three chemical substances mandatory for the manufacturing of semiconductor diodes and LED screens used in smartphones and television sets, causing an immense trouble for tech giants like Samsung and LG Display, which depends mainly on Japan, known for being a global source of chemicals.
The export of specific materials, need Japanese companies to apply for licenses for each of the products, which can involve processing time of up to 90 days.
According to President Trump, the South Korean President Moon Jae-in had asked for U.S. intervention in the trade dispute that appears unlikely to resolve. Moon’s spokeswoman confirmed that he had asked Trump for help in Seoul at their recent summit on June 30.