Japan’s export restrictions on three key industrial materials critical for South Korea’s chip and display industries has had little impact against the target materials, but worsened overall trade between the two countries, a major business representation group here said Tuesday.

Releasing an analysis, the Federation of Korean Industries urged Japan and its new Prime Minister Fumio Kishida to lift the export restrictions the country imposed against Korea in July 2019.

According to the FKI report, Korea’s imports of photoresists, etching gas and fluorinated polyimide -- the three industrial materials that Japan put restrictions on -- from Japan were $729.5 million in 2017-2019.

After Japan imposed the trade restrictions, the imports decreased just 0.67 percent for 2019-2021, to $724.6 million.

Korea’s dependence rate on Japan for imports of the three materials also decreased by 1.3 percentage points, from 75.9 percent to 74.6 percent in the same period, the FKI said.

On the other hand, overall trade has dwindled due to Japan’s measures, the FKI said.

Korea’s total trade with Japan has declined 9.8 percent, as the economic conflict between the two countries spread a sense of distrust among traders, according to the business group.

Affected by the COVID-19 pandemic, Korea’s overall trade decreased by 5.1 percent.

“The unprecedented economic dispute between Korea and Japan in the past two years after July 2019 has only created anti-Korean and anti-Japanese sentiments to reduce trade and investment and hurt the economies, while having little effect to reduce imports of the three industrial materials,” said Kim Bong-man, head of the International Affairs Department at the FKI.

“With the new administration sworn in, Japan should handle the export regulations separately from the diplomatic issue, and negotiate with Korean authorities to end the restrictions soon.”

The restrictions also weakened Japan’s investment sentiment for Korea. In the two years before the restriction in 2019, the amount of direct investment from Japan to Korea was $2.19 billion, but it went down by 28.5 percent to $1.57 billion in 2019-21, the FKI said.

As for the direct investment of Korea to Japan, it increased by 24.4 percent with Korea’s participation in the US-led consortium to purchase the chip unit of Japan’s Toshiba, according to the FKI.

But Japanese firms operating in Korea witnessed their sales drop by 9.4 percent in 2019 from the year earlier amid a nationwide boycott of Japanese products here. The number of companies also decreased by 2.4 percent.

By Jo He-rim (herim@heraldcorp.com)