Relations between Japan and South Korea have been strained for quite a few months, following a diplomatic altercation over wartime labor. In October last year, the South Korean Supreme Court ordered some Japanese companies to provide monetary compensations to South Korean forced to work for Japan during its colonial rule.
Now, Japan has seemingly retaliated by planning to impose restrictions upon tech exports to South Korean companies. As per this decision, Japanese suppliers will need to gain government approval before selling some specific products to their prospective Seoul customers.
The limitations will reportedly be levied upon three types of materials and chemicals. Interestingly, these includes polyimides - a material which is used to make flexible OLED displays, such as those made by Samsung and LG. The implications of this move for tech giants, such as the aforementioned, and many other South Korean firms could prove to be concerning. Production timelines may be disrupted following the new regulations, and some of these firms could look towards other countries for the required materials. However, it will perhaps unavoidably complicate matters for Japanese companies as well, and Tokyo's commitment to free trade may also come under question.
Japan recently increased scrutiny of foreign investment in its tech and telecom industries, presumably as a result of the United States' warning against tech supplied by Chinese firms such as Huawei. However, the US seems to be slightly backing out from a full-blown trade war with China.
Furthermore, Japan is considering removing South Korea from the "white list" of countries that do not have to undergo restrictions with regards to tech trade that has national security implications. The proposed changes are planned to formally come into effect in the coming weeks, and Seoul's response to this move could perhaps determine how both countries' trade relations pan out in the future.
Source: Nikkei Asian Review