Japan Economy
A Daikin Industries Ltd employee works the production line of outdoor air conditioning units at the company's Kusatsu factory in Shiga (Photo: Reuters / Yuya Shino)

Despite its ongoing trade quarrel with South Korea, Japan has reportedly chosen to approve the first batch of sensitive material shipments to the country. The move has somewhat eased trade tensions between both nations, but Japan has warned that it could expand restrictions if South Korea misbehaves.

On Thursday, the Japanese government revealed that it has greenlit a shipment of high-tech materials bound for South Korea. The materials, which include chemicals such as fluorinated polyimides, photoresists, and hydrogen fluoride, are necessary components used by South Korea's semiconductor industry. Companies such as Samsung and LG use the chemicals to make products such as computer chips and flat-screen televisions.

According to Japanese chief cabinet secretary Yoshihide Suga, the first shipments were approved after officials were able to carry out strict screenings. Japanese officials reportedly made sure that the transactions posed no national security concerns before they were allowed to proceed.

Suga clarified during a press conference that the restrictions on the materials were not a trade ban and that Japan still allowed the importation of the materials for appropriate cases. Japan's minister of economy, trade, and industry, Hiroshige Seko, mentioned in a statement posted online that the country is prepared to expand the trade restrictions if it finds that South Korea is improperly using the materials.

Japan initially imposed strict export restrictions on sensitive materials last month. The country citing mounting national security concerns as the main reason for the restrictions. Apart from being used in the semiconductor industry, these materials can be used to make weapons such as nuclear devices, missiles, and biochemical weapons.

Under the restrictions, South Korean companies that wanted to purchase the chemicals from Japan would have to apply for a license for each material. The arduous process typically takes up to 90 days. Following the imposition of the restrictions, South Korea slammed Japan's decision and publicly called it a "reckless" move that could lead to an "economic war."

Apart from imposing the restriction on the sensitive materials, Japan also announced plans of possibly removing South Korea from its list of preferred trading partners. The move further escalated tensions between both nations, threatening to destabilize the global supply chain for electronic devices such as smartphones and television sets.

Following the announcement, South Korea immediately responded with its own threat of removing Japan from its own trade white list. However, the country has since held off with the threat following Japan's approval of the shipment of sensitive materials.