KYODO NEWS - Aug 28, 2019 - 00:50 | All, World, Japan

Japan revoked South Korea's status as a trusted trade partner on Wednesday, a move that is certain to add fuel to the diplomatic row between the neighboring countries.

South Korea was taken off a list of countries that enjoy minimum trade restrictions on goods such as electronic components that can be diverted for military use. The measure, approved by Prime Minister Shinzo Abe and his Cabinet earlier in the month, took effect at midnight.

Countries other than the 26 remaining on the "white list" must receive case-by-case approval from the Ministry of Economy, Trade and Industry before such goods can be exported.

On Tuesday, trade minister Hiroshige Seko vowed to go through with the move despite criticism that it was intended to strike a blow on the South Korean economy.

(Hiroshige Seko)

"This is a domestic decision aimed at implementing the appropriate export controls. It's not meant to impact relations between Japan and South Korea," he told a press conference.

South Korean President Moon Jae In had warned that the move would have repercussions. Last week, the presidential Blue House announced the termination of a military intelligence-sharing pact with Japan that helps the U.S. allies counter missile threats from North Korea.

Lee Nak Yeon, South Korea's prime minister, said Monday the decision to pull out of the General Security of Military Information Agreement, or GSOMIA, could be reconsidered if Japan cancels its trade measures

But Seko rejected the olive branch, saying the issue of trade controls is in a "completely different dimension" from military intelligence. "I can't at all understand why South Korea would connect the two."

Japan had already implemented in July tighter controls on exports of some materials needed by South Korean manufacturers of semiconductors and display panels including Samsung Electronics Co. and SK Hynix Inc.

The move was widely seen as retaliation for South Korean court decisions last year ordering compensation to be paid to people claiming to have been forced to work in Japanese factories during Japan's colonial rule of the Korean Peninsula from 1910 to 1945.

Japan maintains that the issue of compensation was settled "finally and completely" by a 1965 bilateral agreement under which it provided South Korea with $500 million in financial aid.

Japan will remove South Korea from a "white list" of 27 countries that enjoy minimum trade restrictions on sensitive goods including electronic components. Unlisted countries must receive case-by-case approval from the Ministry of Economy, Trade and Industry before such goods can be exported.

The measure is set to take effect at midnight Tuesday having already been approved by the Cabinet of Prime Minister Shinzo Abe.

Seoul has reacted strongly, saying last week it will terminate a military intelligence-sharing pact with Tokyo that helps the U.S. allies counter missile threats from North Korea.

South Korean Prime Minister Lee Nak Yeon said Monday the decision to pull out of the General Security of Military Information Agreement, or GSOMIA, could be reconsidered if Tokyo cancels its trade measures, an olive branch Seko rejected.

Trade controls as an issue are in a "completely different dimension" from military intelligence, Seko said, adding that he "can't at all understand why South Korea would connect the two."

Tokyo has already implemented tighter controls on exports of some materials needed by South Korean manufacturers of semiconductors and display panels including Samsung Electronics Co. and SK Hynix Inc.

Seoul views the move as retaliation for South Korean court decisions last year ordering reparations be paid to people claiming to have been forced to work in Japanese factories during Japan's colonial rule of the Korean Peninsula from 1910 to 1945.

Japan maintains that the issue of compensation was settled "finally and completely" by a 1965 bilateral agreement under which it provided South Korea with $500 million in financial aid.

Related coverage:

South Korea calls on Japan to agree to talks to repair ties

Tokyo-Seoul intel pact breakup feared to benefit N. Korea