Japan To Allow First Export Of Materials To South Korea Since Curbs

  • Category:Other
Move comes a month after Tokyo tightened controls on chip components
TOKYO -- The Japanese government is set to greenlight some exports of semiconductor manufacturing materials to South Korea, the first such approvals since Tokyo tightened export controls on the products in July, Nikkei has learned.

The Ministry of Economy, Trade and Industry determined after a review that there is no risk the shipments will be used for military equipment. It is expected to announce the approvals soon, though officials are not expected to give details about the shipments or orders.

The approvals back up Tokyo's contention that the curbs will not be treated as a de facto ban. But given the additional bureaucratic hoops exporters must still jump through, the impact on South Korea's semiconductor production remains unclear.

On July 4, Japanese Prime Minister Shinzo Abe's government decided to require government approval for each shipment of key materials -- namely fluorinated polyimide, which is used in smartphone displays, and resists and hydrogen fluoride, used to make semiconductors -- to South Korea. Previously, companies could obtain comprehensive approval that allowed them to export without screenings of individual shipments, for a set period.

The amount of paperwork involved is significant. For resists and fluorinated polyimides, the process involves submitting seven different documents, including technical details about the materials and their specifications.

Hydrogen fluoride is subject to more stringent controls, with nine documents required. The exporter must provide details about the production process at the facility using the gas, going all the way up to finished goods, along with a record of the buyer's past purchases of the material and output of the products for which it will be used. The importer must also sign a pledge that the gas will not be used for military purposes.

Kunio Mizuki, a director at resist maker Tokyo Ohka Kogyo, declined to comment Wednesday on the status of his company's application, as it involves customer production information.

"We have begun considering increasing output at our Incheon plant in South Korea to fulfill our responsibility as a supplier," Mizuki said.
The red tape has created more work for exporters, which have had to field inquiries from the government about South Korean manufacturers' production processes or needed to get the signatures of those companies' executives, according to a source familiar with the situation.

This has bogged down the screening process at the trade ministry. Reviews can take up to 90 days. Showa Denko, which reportedly sent in an application for hydrogen fluoride exports in mid-July, is still waiting for approval, according to President Kohei Morikawa.

Even after exports resume, companies will face the same amount of paperwork for every shipment thereafter.

"The amount of work needed to handle the procedures will grow, putting a greater burden on people on the ground," said a representative of Morita Chemical Industries, a major producer of hydrogen fluoride.

Japan also requires approval for individual shipments of these products to China and Taiwan, which typically receive less favorable treatment than South Korea.

But with those two markets, exporters of resists and fluorinated polyimides can get comprehensive approvals letting them use simplified customs procedures for three years.

Japan's cabinet decided Friday to remove South Korea from its list of preferential trade partners, a move that will take effect on Aug. 28. The new rules allow the trade ministry to order screenings of shipments for nearly all products, other than food and lumber, to South Korea.

Observers worry that this could expand the red tape issue to industrial machinery and other goods.

Comment(s) Write comment

Trackback (You need to login.)