South Korea and Japan’s latest efforts to restore bilateral ties will give a “significant positive spillover” to Asia’s No. 4 economy, the finance minister said Friday.
On Thursday, South Korea completed procedures to drop a complaint it filed with the World Trade Organization (WTO) against Japan over Tokyo’s trade curbs as it began domestic procedures to put Japan back on its “white list” of trusted trade partners.
The move came after President Yoon Suk Yeol held summit talks with Japanese Prime Minister Fumio Kishida last week, with Tokyo vowing to lift its export curbs on three materials critical for the production of semiconductors to its Asian neighbor.
“As the latest bilateral summit has paved the road for the restoration of the relationship, it is expected to give a significant positive spillover to our economy,” Finance Minister Choo Kyung-ho said ahead of a closed-door meeting on trade issues.
Finance Minister Choo Kyung-ho speaks during a meeting on trade issues in Seoul on March 24, 2023. (Yonhap)
In 2019, Tokyo imposed the export controls in apparent retaliation for Seoul’s Supreme Court’s ruling that ordered Japanese companies to pay compensation to Korean forced labor victims.
Choo pointed out that the restoration will contribute to South Korea’s exports and domestic consumption.
“Considering the normalization of the supply chain of key products, including semiconductors, along with the bilateral cooperation in cutting-edge sectors, the economic effect (of restoration) will be even bigger,” Choo added.
The two countries will also join forces in coping with shared global issues, including the U.S. Inflation Reduction Act (IRA) and the EU Carbon Border Adjustment Mechanism (CBAM), the minister said.
South Korea will seek cooperation with Japan for an envisioned semiconductor cluster set to be built in Yongin, 40 kilometers south of Seoul, as well, and increase the number of flights between the two countries, he added.
Meanwhile, Choo warned of greater uncertainties in the real economy due to aggressive monetary tightening measures, and vowed to enhance monitoring and devise necessary countermeasures.
He made the remarks during a meeting with experts on macroeconomics Friday, noting that high borrowing costs have led to the recent turmoil surrounding Silicon Valley Bank and Credit Suisse, and to high volatility in the global financial sector.
Experts in attendance said that the failure of SVB and other lenders would have limited impact on the South Korean financial market, but it could worsen the domestic economic situation at a time when the country is facing high household debts and a weak property market, according to the ministry.
They also called on the government to focus on measures to improve financial soundness rather than shifting to expansionary financial spending to better prepare for an aged society and the subsequent necessary expenditures, it added.
Source: Yonhap News Agency