July 21, 2019
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Japan trade barriers on South Korea threaten global market

By Nora Olivé

Tokyo, Jul 8 (EFE).- Samsung representatives are in Japan seeking to defuse tensions that have emerged after Tokyo imposed trade on Seoul that could have a global impact.

On July 4, Japan rolled out restrictions on exports to South Korea on products that ranged from smartphone chips, television sets and personal computers, among other electronic devices.

Samsung Electronics, a Soth Korean electronics conglomerate company, is a worldwide leading manufacturer of consumer electronics, meaning any problem in its chain of production could have global ramifications.

Lee Jae-yong, one of South Korea's most high-profile businessmen and vice president of Samsung, arrived in Tokyo on Sunday night to meet with Japanese suppliers and entrepreneurs in order to address the problems that could arise as result of this trade blockade.

Lee, who has not made the details of the visit public, refused to comment on the matter upon his arrival and all meetings were held privately.

Local media have reported that the Samsung meetings with Japanese clients were linked to concerns arising from changes in export policies that could lead to delays in the supply chain and subsequent production.

In line with the new restrictions, Japanese suppliers would have to request a license for exporting three materials used in the production of semiconductors, which are used for the creation of smartphone displays, television sets and memory chips in South Korea.

In his first reaction to the measures, South Korean President Moon Jae-in on Monday urged Japan to revoke the measure and called for a dialogue to resolve the crisis diplomatically.

He also warned of retaliation if the Shinzo Abe government did not revoke the trade barriers.

Like Samsung, a significant number of South Korean firms depend on Japan for the supply of chemicals, electronic equipment, machinery and tools.

Hong Nam-ki, South Korean Minister of Economy and Finance, on Sunday met with heads of conglomerates such as Hyundai Motor, SK and LG, all of which are also affected by the new policy.

The new trade restrictions on South Korea are allegedly in response to the rulings by several South Korean courts - including the Supreme Court - ruling Japanese companies to pay compensation to Korean citizens that were forced to work for them during World War II.

Japan, which colonized the Korean peninsula between 1910 and 1945, maintains that all compensation for victims enslaved by Japanese companies was settled during the 1965 Treaty on Basic Relations.

Moon on Monday said that South Korea and the rest of the world were worried about the decision, which was politically motivated, and affected an area that was mutually beneficial.

The Japanese government has only cited significant weakening in the relationship of trust with its neighboring country for the new policies.

According to financial daily Nikkei, Samsung Electronics only has one month worth of supply of the materials affected by the export restrictions, which would compel the company to reduce or even stop its production if it is unable to find an alternative.

The technology giant is the leading manufacturer and global provider of memory chips and semiconductors and also dominates the market of OLED technology that is used across all types of screens.

Other leading electronics manufacturing companies such as Apple and Lenovo are also dependent on these components.

South Korean authorities have already announced that they will take the case to the World Trade Organization, arguing that it is a decision is lacks common sense.


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