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3 Mar, 2022 08:37

Seoul gets Russian sanctions exemptions from US

Turmoil stemming from the offensive in Ukraine and the West’s drive to punish Moscow will come at a cost to South Korea
Seoul gets Russian sanctions exemptions from US

Seoul has secured exemptions from US sanctions on exports to Russia for some South Korean products, the government said on Thursday. But it still expects the national economy to be hit hard due to trade disruptions stemming from the war in Ukraine and anti-Russian sanctions.

The US agreed to allow South Korea to sell some goods to Russia, including smartphones, cars and washers, Seoul’s Ministry of Trade, Industry and Energy said on Thursday. Washington will allow the exports as long as it is certain that the products don’t have military applications, US officials reportedly told their South Korean counterparts during a working-level meeting on Tuesday. Among other things, it could allow South Korean firms to supply their factories based in Russia, but that will require examination on a case-by-case basis.

Seoul joined the US-led effort to punish Russia with financial and export sanctions this week, but sought exemptions from Washington. Many South Korean products rely on American technology and software and are thus subject to US national export restrictions. South Korea isn’t on the list of 32 nations who got blanket exemptions from the US Foreign Direct Product Rule (FDPR).

“Russia’s invasion of Ukraine has had negative fallout on global supply chains and financial and real economy sectors, and chances are that such impacts will deepen,” South Korean Finance Minister Hong Nam-ki said during a committee meeting, as quoted by news agency Yonhap.

The South Asian US ally imports a large portion of the energy it consumes. It also needs raw materials like neon and krypton for electronics production and relies on Russia and Ukraine for supplies, the minister said.

Russia is an important trading partner for South Korea, ranking 10th largest and accounting for 1.6% of exports last year. For some products like auto parts or synthetic resins, about half of all South Korean exports went to Russia.

As it seeks to protect its own economy from the sanctions fallout, Seoul is considering ways of providing support to Kiev. According to Yonhap, the government may change the rules on how to spell the names of Ukrainian cities in English, using side-by-side both the traditional spelling and the one preferred by the Ukrainian government (Kiev/Kyiv).

In another symbolic gesture, South Korea flew thousands of drones to form the national and Ukrainian flags during a holiday celebration on Wednesday.