KOREA REMOVES JAPAN OFF WHITELIST

[Anchor Lead]

The South Korean government has announced that it will remove Japan from its own "whitelist" of trusted trading partners in response to Tokyo's recent trade curbs. The government explained that it is difficult to work closely with a country that improperly imposes trade restrictions in violation of international trade principles. The removal will take effect in September.

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Japan currently enjoys preferential trade status when importing strategic materials from South Korea, since it's a member of four international agreements on export controls. However, the South Korean government believes that Japan has violated the basic rules of the agreements and failed to manage the system.

[Soundbite] (KBS NEWS 9 (APR. 8 1996)) : "Japanese police uncovered a secret shipment of substances for making sarin gas to North Korea."

In 1996, Japan was found to have secretly exported substances for producing poison gas to North Korea. Last month, Tokyo imposed export curbs on South Korea-bound shipments of three hi-tech materials in violation of the Wassenaar Arrangement, which stipulates that bona fide civil transactions should not be impeded.

[Soundbite] SUNG YUN-MO(MINISTER OF TRADE, INDUSTRY AND ENERGY) : "A new export control system is necessary, since it is hard to work closely with a nation that is continuously found to have improperly managed the system."

In response, the South Korean government has decided to remove Japan from its list of nations that enjoy preferential export clearance. The government divided its previous list of 29 preferred trading partners into two groups, with Japan being the only nation in the new second group for now. The new rules will require Japan to submit significantly more documents for case-by-case approval by the Korean government. In addition, the processing period will become up to three times longer than it is now. Comprehensive permits will be granted only for exceptional cases, which is equivalent to a non-preferential status.

[Soundbite] PARK TAE-SUNG(MINISTRY OF TRADE, INDUSTRY AND ENERGY) : "The revision is in line with the principles of international agreements, including the Wassenaar Arrangement."

The government will issue an advance administrative notice of the revision on August 14. The new rules will go into effect next month after undergoing reviews by the Ministry of Government Legislation. However, Seoul added that it is ready to hold new discussions with Tokyo anytime and anywhere.