South Korea Retaliates Against Japan in Trade and Diplomatic Rift

SEOUL, South Korea — South Korea retaliated against Japan on Monday in a diplomatic and trade dispute between the two key American allies, deciding to remove its neighbor from its list of countries entitled to preferential treatment in trade.

South Korea’s tit-for-tat action had been expected since Japan took a similar action against South Korea on Aug. 2. Still, the move provided Washington with fresh evidence that neither South Korea nor Japan would back down anytime soon, even though President Trump has urged them both to “sit down and get along with each other.”

The removal of Japan from South Korea’s “white list” of 29 most-trusted trading partners will take effect in September, said Sung Yun-mo, South Korea’s minister of trade, industry and energy.

It was not immediately clear how the tightened export controls South Korea and Japan have introduced against each other would affect bilateral trade, because the measures do not ban certain kinds of trade outright. Rather, they simply give the countries a tool to slow down or stop shipments of sensitive goods.

In its new trade policy announced on Monday, South Korea divided its trading partners into three groups, instead of the current two, and assigned Japan to the newly established second bracket, which it said was for countries whose export control practices were “not up to international standards.”

The new criteria were created because South Korea finds it “hard to work closely with a country that frequently violates basic rules of international export control or that frequently operates it in an inappropriate manner,” Mr. Sung said, without citing Japan by name.

Japan was the only country placed in the new second-tier bracket.

Under the new guidelines, South Korean companies sending Japan sensitive strategic goods, like those that could be used for making weapons, will have to fill out additional paperwork. The approval process could also take as much as three times longer.

South Korea did not specify which of Japan’s trade practices failed to meet international norms, but its officials accused Tokyo of flouting international free trade principles this month when it removed South Korea from its own white list of countries under minimal trade restrictions. Japan has also imposed stricter controls on exports of three chemical products widely used in the manufacture of two of South Korea’s most important exports: semiconductors and displays for televisions and smartphones.

In addition to the South Korean government’s vow of retaliation, members of the South Korean public are also boycotting Japanese consumer goods and leisure travel to the island nation.

South Korea and Japan have often had diplomatic and territorial disputes rooted in Japan’s colonial rule of Korea from 1910 until its surrender to Allied forces in 1945 at the end of World War II. But bilateral relations have soured further under Prime Minister Shinzo Abe of Japan and President Moon Jae-in of South Korea.

Mr. Abe’s stance on South Korea has hardened since last year, when its top court upheld a ruling that a Japanese company, Nippon Steel & Sumitomo Metal, must compensate four Korean men who said they had been subjected to forced labor during the Japanese occupation.

Mr. Moon has in recent weeks accused Tokyo of weaponizing trade as retaliation over historical disputes, with his domestic supporters urging him not to give in under what they called Japan’s new “invasion,” meaning an attempt to subjugate South Korea economically

But on Monday, Mr. Moon also urged South Koreans to guard against “antagonistic nationalism.”

“Our response to Japan’s economic retaliation should not be emotional,” he said during a meeting with senior staff members. “We must remain resolute but cool.”

Last week, a district office in Seoul withdrew a plan to put up hundreds of “No Japan” placards on its streets after criticism that they would unnecessarily antagonize Japanese tourists.

In the past, Washington has often intervened behind the scenes to help keep diplomatic disputes between South Korea and Japan from escalating. But analysts have accused Mr. Trump of being reluctant to help repair the current rift.

On Friday, Mr. Trump warned that the dispute between South Korea and Japan was undermining Washington’s joint efforts with the two countries to address the common challenges posed by China and North Korea.

“South Korea and Japan are fighting all the time. They’ve got to get along because it puts us in a very bad position,” he said. “I’m concerned that they’re not getting along with each other.”