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Japan's Trade War Is as Futile as Trump's


Added 07-16-19 01:34:06pm EST - “Tokyo's temper tantrum over history is mostly hurting itself.” - Foreignpolicy.com

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Posted By TheNewsCommenter: From Foreignpolicy.com: “Japan’s Trade War Is as Futile as Trump’s”. Below is an excerpt from the article.

Argument: Japan’s Trade War Is as Futile as Trump’s Japan’s Trade War Is as Futile as Trump’s...

Japan and South Korea’s long-standing diplomatic dispute about the legacy of imperial Japan’s colonization of South Korea is not new. But Tokyo’s recent decision to turn trade issues with South Korea into a weapon in the history wars is a radical escalation. Japanese Prime Minister Shinzo Abe’s trade measures against South Korea are reminiscent of U.S. President Donald Trump’s trade war: unclear and self-contradictory while potentially harming both the international and domestic economy in the process.

Japan’s opening salvo in the trade war, ironically, came just two days after the conclusion of a successful G-20 summit in Osaka in which Abe declared: “A free and open economy is the foundation of global peace and prosperity.” Tokyo announced changes in its rules on export approvals for three critical chemicals used in high-end display and semiconductor manufacturing: fluorinated polyimide, photoresists, and hydrogen fluoride. South Korean high-tech manufacturers rely significantly on Japanese companies to supply these chemicals. With the new measures, Japan’s exporters need to apply for a license for each sale, which may take up to 90 days. Tokyo also indicated that it may remove South Korea from the “white list” that gives exemptions from export licensing.

Tokyo sought to downplay the significance of these measures by deeming them technical changes in the export licensing scheme. However, in an era of just-in-time manufacturing, it is likely that any delay in exporting Japanese chemicals is likely to hinder the supply chain. The Korean manufacturers import from Japan between 40 and 80 percent of the three chemicals at issue and reportedly have less than three months’ supply at hand. This could potentially cause, for example, a global shortage in semiconductors used in everyday gadgets, as Korea’s Samsung Electronics and SK Hynix collectively produce approximately 70 percent of DRAM and 40 percent of NAND flash memory used worldwide—technologies critical to products including smartphones and medical electronics.

It is not clear what Japan seeks to achieve with these measures. Initially, it appeared that the trade restrictions were in retaliation for a South Korean Supreme Court opinion ordering compensation for Korean workers who were forced to work in factories and mines run by Japanese corporations during World War II, often under brutal conditions. Japanese officials have claimed that the actions were not related to the ongoing disputes and that they were in line with trading rules under the World Trade Organization.

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