The Japan-South Korea trade dispute may impact the U.S. and potentially require the intervention of U.S. export control officials, experts said during an Aug. 7 Heritage Foundation panel discussion. They also said it will be difficult for South Korea to get back on Japan’s so-called “whitelist” of preferential trading partners, a move that could hurt Japanese companies more than any other party.
South Korean companies can still import Japanese goods despite Japan’s export restrictions by making use of a Japanese approval process called the Compliance Program, according to an Aug. 3 report from the Korea JoongAng Daily. The program allows certain registered companies a shortened timeline for exporting dual-use items and allows them to trade freely for three years with “no additional paperwork,” the report said. The report said 632 Japanese companies are registered with the program, including “major material manufacturers and chemical companies” such as Toray Industries, JSR, Sumitomo Chemical and Showa Denko.
Japan is expected to pass a bill to remove South Korea from its so-called "whitelist" of trusted trading partners as the two countries grow more entrenched in their ongoing trade dispute, according to a July 30 report from The Korea Herald.
Japan’s Ministry of Economy, Trade and Industry released a July 24 statement about Japan’s ongoing dispute with South Korea, saying South Korea’s position on “catch-all controls” are “unclear” and criticizing South Korea for continuously postponing “policy dialogue” talks.
An American Enterprise Institute trade scholar says "Japan has chosen a dangerous and destructive mode of retaliation, one that is likely to greatly disrupt global electronic supply chains and bolster China’s push for dominance of 5G wireless," and it's not justified, even if South Korea has been provoking its former occupier.
Treasury Secretary Steven Mnuchin and Larry Kudlow, the president's chief economic adviser, were set to meet July 22 with executives from Intel, Qualcomm, Broadcom, Micron, Google and other tech firms, Reuters reported. The news agency said the meeting was to discuss the restrictions on exports to Huawei, which have hurt many chip makers, and have led Google to tell Huawei its phones cannot use Android operating software. A White House spokesman told Reuters that while the Huawei ban will likely come up, that's not the purpose of the meeting.
Commerce plans to eliminate license exceptions for civil end-users from the Export Administration Regulations, according to an alert from Akin Gump. Commerce did not say when the changes would take effect, the alert said, but U.S. companies should “prepare for the possibility that currently exempted activities may soon require specific licenses” from the Bureau of Industry and Security. The Office of Information and Regulatory Affairs recently completed a review of the changes, according to a notice on the OIRA website.
After more than 25 industry associations urged the Commerce Department to grant more time for comments on its next advance notice of proposed rulemaking for foundational technologies, top Commerce officials said it will consider the request but suggested that U.S. industries have had ample time to prepare comments.
Huawei will remain on the Commerce Department Bureau of Industry and Security's Entity List but "we've opened the door, relaxed a bit the licensing requirements from the Commerce Department where there are not national security influences or consequences," White House Chief Economic Adviser Larry Kudlow said at a CNBC Capital Exchange event July 9. For example, "some of the chip companies would be permitted to sell on a limited basis to Huawei," he said. Those may be parts for "general merchandise" that ends up in countries "where we don't hold any great cachet," such as South Korea or Vietnam, he said. "That's the sort of thing that will be opened up that was closed." Kudlow also noted that China and the U.S. aren't far apart in their trade talks, but said that sometimes the last pieces can be the most difficult to resolve. China has resisted U.S. requests for change in Chinese laws and for enforcement provisions, he said.
Export Compliance Daily is providing readers with some of the top stories for July 1-5 in case they were missed.