A Study on South Koreas Decoupling from Japan Response to Japans Reinforcement of Export Regulations

Abstract

The purpose of this research is to provide a preliminary methodology to predict the sustainability of South Koreas decoupling from Japan in response to Japans strengthening of export regulations. To this end, the reinforcement of Japans export regulations is here identified as weaponized interdependence, and South Koreas response as decoupling from Japan. Currently it is difficult to conclude that Japan has weaponized interdependence because the ruling of the Supreme Court of Korea has not yet been implemented. Even after the implementation of the Courts decision, it might be difficult for Japan to weaponize at least the three most important regulated items, Photoresist (PR), Hydrogen Fluoride (HF), and Fluorinated Polyimides (FP), because of the highly interdependent relation of the two countries on the global supply chain (GSC). Japans hub position in the production of the semiconductor GSC does not seem predominant enough to achieve the panopticon effect, or the chokepoint effect. Regardless of the types of decoupling employed by South Korea, either decoupling from Japan (DJ) or decoupling from Japanese firms (DJF), the major production arena is still within South Korea due to the strong competitiveness and purchasing power of the South Korean semiconductor industry. The essence of South Koreas decoupling from Japan policy is to increase the robustness and resilience of the supply chain, including not only South Korea and third countries, but also Japan. On the other hand, it is noteworthy whether the DJF type will become a touchstone for South Korea, which faces Japans weaponized interdependence, to show its capability to escape from the Japanese-hub network or build its own. In this regard, the phenomenon of South Koreas decoupling from Japan spreading to other non-regulated items requires careful observation.