Japan lets out first S. Korean export since July curbs

Japan has granted material exports to the South Korea for the first time since imposing restrictions on them in July but threatened further action.

Hiroshige Seko, head of Japan's Ministry of Economy, Trade and Industry, said Japan had given the greenlight to exporting chemicals used in chipmaking and smartphone manufacturing to South Korea on Thursday.

"We don't usually announce individual cases of export permits but I'm making an exception in making this public because South Korea's government has made unfair criticism that our move is something like an export embargo," he told reporters.

Stressing that Japan will not misuse its export curbs, Seko said his ministry made the decision because it is determined that "there is no risk the material will be used for military equipment".

However, he warned of broadening restrictions on shipments to South Korea should "improper use of exports is found".

The export approval was the first cooling down after a yearlong flare up over historical and territorial disputes between the neighbors.

The disputes escalated after Japan imposed a series of export controls on products critical to South Korea's tech companies. In response, South Koreans vented anger over the growing boycott of Japanese goods.

Seoul regarded the export controls as dishonorable retaliation despite Tokyo's insistence that they are not related.

"By granting permission, Japan showed that it has not imposed a de facto export ban and that we allow legitimate trade," said Japanese Chief Cabinet Secretary Yoshihide Suga. He insisted that Japan manages exports properly.

Meanwhile, South Korean President Moon Jae-in accused Japan of using its industrial advantage as a weapon against other countries and said it will only hurt Japan's international credibility.

"The measures so far undermine the trust of the free trade order and the international division of labor," Moon said. "Even if there are any gains, it will be short-lived. In the end it is a game without winners where everyone, including Japan itself, becomes a victim."

Noriyoshi Ehara, chief economist of Japan's Institute for International Trade and Investment, said the disputes between Tokyo and Seoul are like Rashomon. The famous Japanese novel and film is known for every character having a reasonable, subjective, self-serving but contradictory version of the same incident.

"Each side has its logic but no one sees the whole picture that trade disputes hurt all. Japan may get advantages at present, but also may lose more in the long run," Ehara said.

On Wednesday, Japan published its decision to stop South Korea's preferred trade status starting from Aug 28 on its official gazette "Kampo". It confirmed that from that day on, its trade ministry can order screenings of shipments for nearly all products, other than food and lumber, to South Korea with a review period up to 90 days.