Seoul denies sharing technology with North Korea as trade war with Japan heats up

South Korean president Moon Jae-in has made several decisions that have angered Tokyo.  - YONHAP
South Korean president Moon Jae-in has made several decisions that have angered Tokyo. - YONHAP

The South Korean government has angrily denied claims by Japan that its is turning a blind eye to transfers of sensitive technology to North Korea, in defiance of United Nations sanctions on Pyongyang.

Sung Yun-mo, the South Korean industry minister, told a press conference on Tuesday that the government has “found no evidence” that banned technology or materials are being shared with North Korea and accused Japan of “making groundless allegations”.

The real reason for Japan imposing new export controls on exports of chemicals to South Korea, Seoul claims, is in retaliation for rulings by a number of domestic courts that Japanese companies should pay compensation to people who served as forced labourers during Japan’s colonial rule of the Korean Peninsula.

Shinzo Abe, the Japanese prime minister, has indicated that he ordered restrictions on exports of chemicals critical to South Korea’s high-tech manufacturing industry out of concern that banned technology is being shared with North Korea.

The restrictions went into force on Thursday and have effectively halted shipments of fluorinated polyimides, used in flat screens for televisions and mobile phones, as well as photoresist and hydrogen fluoride, used in making semiconductors.

Some estimates suggest that Korean companies such as Samsung, LG Electronics and SK Hynix have as little as one month of the chemicals left in stock, while securing alternative suppliers is virtually impossible because Japanese companies hold a virtual monopoly on production of the chemicals.

South Korea’s delegation to the World Trade Organisation filed a complaint in Geneva on Tuesday over Japan’s decision, describing the move as politically driven economic retaliation.

Japan rejected that claim and insists that the issue is not a matter for the WTO as it has not halted exports entirely and is merely requiring additional checks on shipments. Japan has also refused requests from Seoul for discussions and reiterated that it has no intention of lifting the restrictions.

Tokyo has been angered by a number of decisions by the administration of Moon Jae-in, the South Korean president, and accuses Seoul of going back on agreements signed by the two governments.

Japan says all matters concerning redress for the decades of colonial rule were settled in a 1965 treaty that normalised relations and saw Japan pay $500 million in compensation. South Korea has also unilaterally scrapped an agreement signed in 2017 that provided compensation to women forced to work in military brothels during the war, a pact that both sides said at the time they hoped would draw a line under one of the darkest chapters in the two nations’ shared histories.

“The entire situation is highly frustrating from a business perspective”, said Martin Schulz, senior economist with the Fujitsu Research Institute in Tokyo. “Japan is saying that South Korea has broken its trust on the political side but that is now spilling over and trust has gone in the business relationship”.