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Japan downgrades South Korea's trade status amid dispute

Key Points
  • As of 12:01 a.m. Wednesday, Japanese manufacturers must apply for approval for each technology-related contract for South Korean export.
  • South Korea's previous status as a preferential trade partner meant simpler checks on exports.
  • Since Japan announced the decision, South Korea decided to similarly downgrade Tokyo's trade status, which will take effect next month.

SK Hynix 32GB Double-Data-Rate (DDR) 4 memory modules are arranged for a photograph at the company's office in Seongnam, South Korea, on Monday, July 22, 2019.
SeongJoon Cho | Bloomberg | Getty Images

Japan's downgrading of South Korea's trade status has taken effect, a decision that already set off reaction and hurt bilateral relations.

As of 12:01 a.m. Wednesday, Japanese manufacturers must apply for approval for each technology-related contract for South Korean export, such as fluorinated polyimides used for displays. South Korea's previous status as a preferential trade partner meant simpler checks on exports.

Since Japan announced the decision, South Korea decided to similarly downgrade Tokyo's trade status, which will take effect next month. Seoul has also canceled a deal to share military intelligence with Japan.

South Korea has accused Japan of weaponizing trade because of a separate dispute linked to Japan's colonial rule of the Korean Peninsula from 1910 to 1945.

Japan denies retaliating and says wartime compensation issues were already settled.