South Korea is set to drop Japan as a preferred trading partner in September in response to Tokyo’s recent decision to exclude Seoul from its whitelist, officials said Monday.

“An export control system on strategic items should be run under ground rules of an international export control system,” said Industry Minister Sung Yun-mo during a press briefing Monday afternoon.

“(However) the system should be run accordingly (if a trading partner) operates the system that runs counter to the ground rules or (the partner) repeatedly runs the system inappropriately,” Sung said, adding that it is difficult to seek close international cooperation with such nations. 

The government announcement comes as Japan, early this month, resolved to remove Korea from its whitelist of 27 countries that receive preferential trade treatment. It is widely seen as retaliation for the recent Korean Supreme Court decisions holding Japanese companies liable for having taken advantage of forced labor during World War II. The Japanese revision will take effect Aug. 28.

Korea and Japan have similar export control systems. At present, Korea divides countries into two groups under its export control system: group A and group B. The nations in group A are those that abide by the rules of all four international export control systems. All other countries fall into group B.

“We will divide group A into group A-1 and group A-2 to run a total of three groups. Japan will be included in group A-2,” said Industry Minister Sung.

The newly established group, A-2, will comprise countries that abide by the rules of all four international export control systems, yet whose export control systems violate the norms governing international export controls.

Nations in group A-2 will be treated the same as countries in group B with respect to the level of export controls, with some exceptions, the ministry said.

Korean exporters that are part of the government’s compliance program for strategic goods have blanket permission to export those goods to countries in group A-1. But for countries in groups A-2 and B, strategic goods can only be exported under certain conditions -- for instance, if the Korean exporters are dealing with the same importers more than three times within a two-year period or if they have long-term export contracts spanning more than two years.

For countries in group A-2, importers of strategic items from Korea cannot resell those goods to other nations. Korean exporters seeking to export strategic items to countries in group A-2 will have to submit an increased number of documents, and those documents will have a shorter period of validity.

Procedures for groups A-2 and B differ slightly. For instance, to get individual approval for a shipment, Korean exporters will have to submit three types of documents to export strategic items to group A-1. The number of documents increases to five for group A-2 and seven for group B.

The changes to Korea’s export control system are expected to take effect in September after certain procedures are carried out, including soliciting opinions over the next 20 days and submission of the changes for review by the Office of Legislation, Minister Sung said.

Sung went on to say that the Korean government was “ready to respond anytime and anywhere if the Japanese government asks for consultations during this period to (offer its) opinion.”

Korea initially planned to announce the revision of its export control system Thursday last week. But the government delayed it, apparently because Japan had announced a day earlier that it would grant approval to export extreme ultraviolet photoresists to Korea. 

By Shin Ji-hye (shinjh@heraldcorp.com)