The World Trade Organization formed a panel to rule on Japanese export controls on vital chipmaking materials to South Korea, marking the first step in what could be a yearslong process to resolve the dispute.

The WTO Dispute Settlement Body on Wednesday granted Seoul's request for a dispute settlement panel, which was made at the end of June. The panel as a general rule is supposed to issue its final report within six months, though the process has often taken 12 months or longer in recent years.

If either country decides to appeal the ruling, the case will be reviewed by the Appellate Body, which will have the final say. But the seven-seat Appellate Body currently has too few members to decide on new cases, due to the U.S. blocking new appointments.

"With the bottleneck at the WTO, this case will not reach any conclusion for several years," said a diplomat in Geneva.

The trade spat began a year ago when Japan slapped curbs on South Korea-bound shipments of etching gas, photoresist and fluorinated polyimides, which are used in manufacturing semiconductors and other high-tech devices that form the backbone of the South Korean economy. Tokyo says the curbs are needed for national security, citing Seoul's poor management of the materials, which can potentially be used for military purposes.

Some WTO officials are worried that allowing too many exceptions to trade rules for security reasons would encourage unnecessary trade restrictions.

Tokyo and Seoul have fought many trade disputes in recent years. In April 2019, the WTO upheld South Korea's ban on seafood imports from eight Japanese prefectures most affected by the 2011 Fukushima nuclear disaster. In September, Japan won a case against South Korean anti-dumping duties on industrial valves.

Source: Nikkei Asian Review