What Japan’s removal of South Korea from trade whitelist means

South Korea can still attain comprehensive permits through the Compliance Program.

The Japanese government, on the 2nd of August, publicized its decision to remove South Korea from its whitelist of chosen trading partners, following its decision on July 4th to request individual licenses in case hydrogen fluoride, EUV photoresist, or fluorinated polyimides are to be exported.

According to a report by Reuters, this implies that Japanese exporters of “strategic” products will need to acquire additional individual permits and go through extra screening to make sure that their goods are not being utilized by South Korea’s weapons market or it’s military. These latest restrictions are set to take effect from the 28th of August. Individual permits may take as long as 90 days and will need to be renewed after every 6 months, needing a couple of application documents for renewal. This is a contrast to the comprehensive permits which take 1 week for issuance, need to renew after every 3 years and require only 2 application documents.

It is important to note that South Korea was the only Asian country on Japan’s trade whitelist. No giant developers of electronic devices such as China, Singapore, etc. were given the whitelist status. None of these nations underwent production interruption due to delayed Japanese imports. This is due to the fact that the Japanese firms which have developed a Compliance Program are given special comprehensive permits, which implies how they can export their goods through a fast approval procedure, almost the same as it is for white listed countries.

As stated by Japan’s Ministry of Economy, Trade, and Industry, there are presently 632 Japanese firms which have developed the Compliance Program. In addition to the other Comprehensive Program companies whose names haven’t been disclosed, there are a total of nearly 1,300 Compliance Program companies.