Korea’s Trade Deficit with Japan Hit Record High

Korea’s trade imbalance with Japan is nothing new. Korea imports many capital goods, core components and material from Japan in the high tech sectors.

It was a problem 10 years ago. It is still a problem. What is the reason for that?

From Yonhap:

South Korea's trade deficit with Japan reached an all-time high in the first half as the country imported more industrial components and machinery from its neighbor, government data showed Friday.

According to the data by the Bank of Korea (BOK) and the Korea Customs Office, Seoul's trade deficit with Japan reached US$18.07 billion in the January-June period as local companies exported $12.83 billion worth of goods to Japan, with imports amounting to $30.90 billion.

South Korean companies rely on Japanese partners to provide them with parts, components and manufacturing equipment that cannot be made locally. This reliance translates into a rise in the trade deficit with Japan whenever there is an overall increase in Korea's exports.

http://english.yonhapnews.co.kr/news/2010/08/13/34/0200000000AEN20100813001800320F.HTML