Seoul opts to settle urea issue diplomatically with Beijing instead of WTO action

2021.11.18 15:42:45 | 2021.11.18 15:43:25

[Graphics by Song Ji-yoon]이미지 확대

[Graphics by Song Ji-yoon]

The South Korean government is pursuing to settle the urea crisis diplomatically with China instead of challenging Beijing’s export curb at the World Trade Organization (WTO) as it had done with Japan’s restriction on IT component material shipments to Korea.

After a meeting between the Ministry of Trade, Industry and Energy and the Ministry of Foreign Affairs, the government has ruled out the option of taking Beijing’s suspension of urea exports to the WTO.

The shortage of urea and liquid urea, essential to power diesel vehicles under emission regulations and 97 percent of which is relied on China, has nearly destabilized ground shipping in Korea as stock ran out fast after Beijing tightened exports last month.

Urea solution, also known as diesel exhaust fluid, is put into diesel vehicles to reduce harmful emissions. Most cargo trucks run on diesel as well as ambulances, fire trucks, and construction site machines.

The government conducted a legal review on the idea of bringing a complaint with the WTO by arguing Beijing had violated a set of international trade rules including Article 11 of the General Agreement on Tariffs and Trade (GATT), which bans the use of voluntary export restraints other than legitimate duties or taxes.

The trade ministry said it saw no benefit in filing a WTO complaint, especially when it is uncertain whether the WTO will side with Korea.

Instead, Seoul will be trying to resolve the affair diplomatically.

[Graphics by Lee Soo-min and Song Ji-yoon]이미지 확대

[Graphics by Lee Soo-min and Song Ji-yoon]

Seoul and the Chinese commerce department will discuss the issue through videoconferencing later this month, according to the foreign ministry on Wednesday.

The Korea-China Economic Joint Meeting is an annual vice ministerial-level meeting held to discuss regional and multilateral economic cooperation between the two countries but this year’s theme will be mainly on the supply issues.

For longer-term security, the deputy prime minister for economy Hong Nam-ki pledged to reexamine the imported supply network to reduce over-reliance rate on a certain country from 84 percent to 34 percent. As many as 79 imported items rely more than 70 percent on China.

The soft response towards China’s unilateral action however could stoke criticism for bias in Seoul diplomacy.

In 2019, the Moon administration lodged a WTO complaint over Japan’s export controls on high-tech materials including hydrogen fluoride and fluorinated polyimides used in chipmaking and smartphone displays to raise international awareness on the unfairness of Japan’s moves.

By Han Ye-kyung, Baek Sang-kyung, Song Gwang-sup and Lee Soo-min

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