It appears almost certain Japan will widen its export curbs on South Korea,... by striking the country off its "whitelist" of favored trading partners.
Once that occurs,... experts believe it will negatively impact a range of local industries... from cars, electronics to high-tech goods.
Yoon Jung-min reports.
It is highly likely that Japan will exclude South Korea from its so-called whitelist... of 27 countries that receive preferential treatment on trade.
Once removed, Japanese exporters won't be able to ship goods to South Korea... unless they are approved on a case-by-case basis, along with the required documentation.
The process will take about three months, causing inevitable delays in shipping and the production of goods.

Experts say... industries that are heavily dependent on intermediary goods from Japan will be affected.
Nearly 1-thousand-100 items will fall under new restrictions, including those related to automobiles, electronics and machinery.
Among them are silicon wafers used in semiconductors,... which are almost monopolized by Japanese firms.
Carbon fibers used in aircraft and automobiles, machine tools, and goods related to fine chemicals could also be affected.

"Japan is more likely to target South Korea's high-tech industries instead of the conventional one. For example, cars using internal combustion engine wouldn't cause so much of a problem, but hydrogen cars may bump into trouble if a key material is missing. (...) Also, Japan may target non-memory semiconductors rather than DRAM."

Some experts pointed out that South Korean companies should look for alternative suppliers in other countries... to cushion themselves against the imminent blow.

"Companies may consider taking over high-tech firms through M&As to shorten the time. Aside from Japan, hydrogen fluoride used in semiconductors and displays also come from China and Taiwan. So, turning the attention to companies in those countries can be one of the possible measures."

But experts also point out that for some materials,... there are no viable alternatives to Japanese suppliers.
In the long term, they say Seoul and Tokyo must sit down for talks to solve the issue diplomatically and dial down the conflict.
Yoon Jung-min, Arirang News.