Recently, Japan and South Korea trade friction escalation by all parties concerned. On August 2nd Japan's cabinet approved an amendment to the export trade administration order, formally removing South Korea from its "white list" of trade facilitation. In response, South Korea said the same day it would remove Japan from its "white list" of trade. On August 7th Japan's ministry of economy, trade and industry issued a decree to remove South Korea from its "white list". The decree is scheduled to go into effect on August 28.

It is reported that Japan's "white list" refers to the Japanese government's list of trade-friendly countries. Japanese exporters enjoy relatively simple procedures for exporting high-tech goods to countries on the list. Be removed after the "white list", South Korea will no longer enjoy preferential trade facilitation measures, in addition to the already announced three kinds of semiconductor materials (involving for organic EL panel production of fluorinated polyimide, resist and high purity hydrogen fluoride, they are smart phones, chips and other important raw materials of industry), the Japanese government will implement case for all other high-tech products export to Korea. At that time, the export of 15 major categories and hundreds of items in Japan's trade control list may be changed from batch approval to single approval, that is, each export to South Korea should apply to the Japanese government for permission at least three months in advance, and the approval can only be implemented.

The "white list" of south Korean trade includes 29 countries and regions that have received a package of export licenses from South Korea, including Japan, the United States and the United Kingdom. Japan's removal from South Korea's "white list" means it must obtain separate permission from departments such as the ministry of industry, trade and industry to import south Korean goods.

"The move by Japan and South Korea to remove each other from their 'white list' of trade is a rare occurrence in international trade in the past two years. In general, if two countries have a dispute over trade, they adjust tariffs. "But this time, Japan and South Korea are cutting off supply chains. In particular, Japan has taken the initiative to cut off key raw materials from South Korea, which is weaker than Japan." Yu nanping, chief expert of the yu nanping studio, a research base for decision-making and consultation of the Shanghai municipal government, told Shanghai financial news. "The original global industrial chain is highly divided and specialized, which is part of the global value chain. In particular, the industrial chain of Asian electronic processing industry has been booming in recent years, which depends on the high industrial cooperation between Japan, South Korea and the global value chain including China. However, due to historical issues and complex reasons, Japan and the rok are at odds over each other. So Japan took the initiative to cut off the supply chain to South Korea."

South Korea is the first country to be removed from Japan's "white list" of trade, and the controls will affect its core semiconductor and display industries, industrial securities research said. Japan's trade control list includes weapons and weapons of mass destruction, strategic commodities, and sensitive military materials. From the perspective of actual influence range, some advanced materials and manufacturing equipment of Korean enterprises are highly dependent on Japan, which will have a great impact on their semiconductor and display industry chain.

"Globally, Japan's approach can be understood as a new form of protectionism, as well as a blow to industrial chain competition. "This is a precedent set by the United States, and the severing of the supply to huawei and zte is a very bad global example of what can be done without any consequences." "But now South Korea understands that its biggest problem was handing over its fate to others. So, South Korea is now preparing to use its domestic production capacity to quickly restore its own supply of key components in the industrial chain."

South Korea's ruling Democratic Party of Korea, the government and the presidential palace decided on August 4 to set aside at least 1 trillion won ($820 million) in the 2020 budget in response to Japan's measures. According to south Korean media reports, the budget will mainly be used to support nearly 100 south Korean companies affected by Japan's measures, as well as subsidies for research and development of key strategic products and raw materials.

South Korea's ministry of industry, trade and industry announced on August 5 that the government will select 100 key strategic products in six major sectors, including semiconductors, automobiles and basic chemistry, to ensure stable supply through multiple measures. At the same time, we will improve the localization of raw materials, parts and equipment industries and enhance the competitiveness of domestic industries. Under the plan, South Korea will ensure the supply of 20 key strategic products within a year by diversifying its import sources and expanding its production scale. Over seven years, South Korea will spend 7.8 trillion won ($6.42 billion) to support research and development of 80 key strategic products, and strive to localize these products within five years. Measures also include lowering import barriers; Easing restrictions and promoting technological development; We will implement fiscal and tax incentives to encourage south Korean enterprises to acquire high-tech enterprises overseas.

Yu pointed out that although South Korea has taken a series of measures to deal with the situation, the supply of its industrial chain is still broken, which is enough to warn other countries. In the global value chain, countries should pay close attention to the supply security of their key device nodes or pivot points. "Before, in the electronic processing industry, semiconductor industry or high-end electronic products industry, no country could form a whole industrial chain, and all of them were engaged in global division of labor. But now, as the global trade landscape has changed, countries are facing off against each other. In this context, it is particularly important to secure the supply of key components in key industry chains.

"China should also speed up the construction of independent research and development, independent and controllable supply chain security. Through this incident in Japan and South Korea, suppose that the external environment will seriously deteriorate in the future, then where is the supply chain of China's security industry? Is it safe? That's something to consider." Yu nanping points out.

Source: China financial news