Finance Minister Hong Nam-ki (3rd from right), Prime Minister Lee Nak-yon (4th from right) and ruling Democratic Party Chairman Lee Hae-chan (5th from right) pose beside other Blue House officials, ministers and top party officials ahead of a meeting held at the National Assembly in Seoul on Aug. 4, 2019. [Photo by Kim Ho-young]

South Korea will earmark more than 1 trillion won ($830 million) in the 2020 budget bill to aid the local industry from disruptions in supplies from Japan and to back self-sufficiency in the value chain in key industrial products.

The presidential office, the government and the ruling party agreed in a tripartite meeting Sunday to set aside more than 1 trillion won in next year’s budget to address Japan’s trade sanctions.

This comes two days after the parliament passed a supplementary budget of 5.83 trillion won to prop up the sluggish economy against an additional whammy from Tokyo’s export curbs, with 273.2 billion won allocated specifically to cope with the restrictions.

Japan last Friday took Korea off its preferential trade partner list for fast-track export clearance, taking the diplomatic rift sparked by tensions over wartime claims for Japan’s 1910-1945 occupation of Korea to an unprecedented level. Japanese exporters are now required to apply for case-by-case clearance when shipping dual-purpose items and technologies to Korea.

The action broadened from export curbs imposed in early July of three chemicals going into the production of Korea’s pillar chip and display industries.

Korean officials in the weekend meeting agreed to set up a special committee devoted to boosting the country’s competitiveness in materials, components and equipment to be led by Hong Nam-ki, the deputy prime minister and finance minister.

They said research spending on key strategic sectors would be expanded and preliminary feasibility studies waived to speed up budgeting. They also revealed plans to offer various tax benefits and financial assistance to 100 designated tech companies over the next five years in hopes of strengthening Korea’s technological independence.

“The government plans to actively carry out measures in the face of Japan’s economic attacks to turn this risk into an opportunity,” said Prime Minister Lee Nak-yon.

Talks of pulling Korea out of an intelligence sharing accord with Japan, known as the General Security of Military Information Agreement (GSOMIA), were not on the agenda of the Sunday meeting. Cho Jeong-sik from the ruling Democratic Party, however, said “a comprehensive review from the government is to come in the following weeks.”

Seoul and Tokyo signed the GSOMIA in 2016 to counter nuclear threats from North Korea. The agreement is automatically renewed every August, but Korea has hinted at backing out of the security alliance amid the escalating row with Japan.

By Kim Hyo-sung and Kim Hyo-jin

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