JapanJapan

Japan to tighten export
restrictions to Korea
A dispute arising from events that took place more than 70 years
ago is behind the the Japanese government’s removal of Korea
from the so-called list of ‘White Countries’, write Go Hashimoto andKirika Morita.

It’s official. On 2 August 2019, theMinistry of Economy, Trade andIndustry of Japan (‘METI’)
announced the approval by the cabinetof the order to remove Republic ofKorea from the so-called Group A list,
freshly renamed from the previous‘White Countries List’. 1Countries on the said list are
accorded preferred status in terms ofexport control enforcement. This is arare, if not unprecedented, move by theJapanese government in post-war
historytoshowits
strongdetermination to advance its position
against its neighboring countries. A
brief review of what has transpired todate may help us place thedevelopments in perspective.

subheadOn 1 July 2019, METI announced
amendments to four sets of guidelines
relating to the implementation ofexport control regulations, which went
into effect on 4 July 2019. The maincontents of the amendments are as
follows:

Countries’ are currently renamed as‘Group A Countries’.
Under Japanese law, the Foreign
Exchange and Foreign Trade Act (the‘Act’) and the related orders, including

Individual export
licences are required forthree items (fluorinatedpolyimide, resist andhydrogen fluoride) andrelated technologies.
the Order, control exporting goods andtransferring technologies for the statedgoal to maintain peace and security ofJapanandtheinternationalcommunity. The Act requires anyone(i) who wishes to export designatedgoods to certain countries or (ii) whowishes
totransfer
designatedtechnologies ultimately to, and for usein, designated countries, regardless ofwhether or not the transaction takes
place in Japan, to obtain a licence fromMETI if the transactions are specified
by the Order as having possibilities ofobstructing peace and security (article
25 and 48 of the Act).
As an exception, exports to ‘WhiteCountries’ are subject to morestreamlined
exportlicensingrequirements and rarely require an
export licence unless they involve theexport or transfer of so-called ‘listed
products and technologies’ (article 4 ofthe Order).
Even if the destination is a nonWhite country, under certain limited
conditions, a bulk export licencesystem may also apply where thelicensing procedures are simplified byallowing licensees to make multiple
exports of controlled items (article 2-2of the Export Trade Control Ordinanceand Guideline on Bulk Export Licence).
Requiring individual export licence,
instead of bulk export licence, inconnection with the three itemsl Individual export licences arerequired for three items (fluorinatedpolyimide, resist and hydrogenfluoride) and related technologies,
which means that the bulk licences
for them will no longer beapplicable.
l The process of removing Korea from
‘White Countries’ in appended
Table 3 of the Export Trade Control
Order (the ‘Order’) has been put inmotion and public comments on
this amendment to be submitted by24 July. As noted above, the ‘White

Links and notes
1

https://www.meti.go.jp/english/press/2019/0802_001.html

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Japan(fluorinated polyimide, resist andhydrogen fluoride), will have a big
impact on large Korean hightechnology manufacturers such as
Samsung Electronics Co. and SK Hynix
Inc., because most of the fluorinatedpolyimide, resist and hydrogen fluoride
used for manufacturing semiconductors have been produced inJapan. Frequent or high-volume
exports and transfers of these products
and technologies to Korea may bedelayed by the need to obtain
individual export licences for eachtransaction.
In addition to the added
administrative costs above, exporters
are no longer permitted to file theirapplication for export licences with a
METI local bureau or branch office but
are now required to do so with theSecurity Export Licensing Division ofMETI’s main office in Tokyo.
Generally, it takes approximately threemonths to review each individual
export licence application. This
amendment will now be enforced andwill be applicable to exports of thethree items independent of theJapanese government’s decision toJapan
remove Korea from the list of WhiteCountries.
Catch-all catch
Removal of Korea from the list ofWhite Countries will also delay exportsof the relevant products/technologies

Removal of Korea fromthe list of WhiteCountries will also delayexports of the relevant
products/technologies
from Japan to Korea.
from Japan to Korea. As a result of theremoval, under certain conditions,
exporters to Korea may be subject tothe so-called catch-all control, whenexporting all items except the listed
products and technologies if suchexported items appear to be diverted
for use in developing, designing,manufacturing or storing weapons ofmass destruction (‘WMD’) or theirdelivery systems such as missiles(appended Table 16 of the Order).

After a period of public comment
solicitation, the removal of Korea fromthe White Country list came into effectas of 2 August as noted above. This is
the first such removal of any country
from the list of White Countries by theJapanese government.
Tokyo says it is about national
security. Seoul says it is a retaliatory
action by the Japanese government inviolation of the spirit and the rules ofthe WTO. All this has been happening
against a backdrop of animosity
between the two countries on issues
ultimately dating back to theoccupation of Korea by the Japanese
which ended in 1945.
The Korean government isreportedly preparing to appeal thematter to the WTO. On the other hand,
the Japanese government denies any
intention of resolving the matter before
a WTO panel because it is strictly amatter that concerns national security.
How the matter will develop and willbe resolved remains to be seen while
government officials, practitioners andcommentators will extensively analyse
the merit of the arguments advancedby the respective governments.
Suffice it to say, however, that weneed to understand this as a salientpart of the resurgence of nationalistic
policy priorities and the resulting
politicisation of economic diplomacy.
Recently, we, as practitioners, haveseen ‘weaponisation’, as it were, of
fiscal and economic policies, so muchso that even countries like Japan,
which has traditionally kept a low-key
diplomatic approach for more thanseveral decades, have joined the ranks
despitethehistoricalissuesperiodically raised by neighbouring
countries. We are expecting, and wehave in fact been receiving, anincreasing number of inquiries
requiring interdisciplinary approachwith legal, economic, political and evengeopolitical considerations, to solve
this newly presented export control
conundrum.

Go Hashimoto is a partner andKirika Morita is an associate at
Atsumi & Sakai Law Firm inTokyo, Japan.
go.hashimoto@aplaw.jp
kirika.morita@aplaw.jp

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