In a reciprocal move, South Korea has decided to remove Japan from its "white list" of favoured export partners, after Japan initially decided to remove Seoul from their program.

Japanese and South Korean national flags seen at a hotel where the South Korean embassy is, Tokyo, June 22, 2015
Japanese and South Korean national flags seen at a hotel where the South Korean embassy is, Tokyo, June 22, 2015 (Reuters)

Japan's cabinet on Friday approved a plan to remove South Korea from a list of countries that enjoy minimum export controls.

In a tit-for-tat move South Korea's finance minister said Seoul will remove Japan from its "white list" of trusted trading partners.

The Japanese government's decision "fundamentally destroys the relations of trust and cooperation that the two countries established" in the past, said Hong Nam-ki.

"For this, we express our strong protest and deep regret, and urge Tokyo to immediately withdraw its vengeful trade measures."

Tokyo's move came with the countries mired in a long-running dispute over the use of forced labour during World War II, but Japan insisted it was related to national security and was not retaliatory.

Japan's decision comes a month after it tightened curbs on exports to South Korea of three high-tech materials needed to make memory chips and display panels.

South Korea would be the first country to be removed from Japan's white list, which currently has 27 countries including Germany, Britain and the United States.

The measure could require both sides to take extra administrative procedures to obtain export licenses, potentially slowing down exports of a wide range of goods that could be used to produce weapons.

Seoul has reacted furiously, with President Moon Jae-in calling it "very reckless" and saying it would cripple global supply chains.

"We will continue making efforts to solve this issue diplomatically," said finance minister Hong.

"But we will also remove Japan from our white list and go through a process to strengthen our export controls."

South Korean officials have also warned they may reconsider an intelligence sharing accord with Japan if the feud worsens.

The United States has urged its two key Asian allies to consider reaching a "standstill agreement" to buy more time for talks, a senior US administration official told reporters in Washington on Tuesday.

Source: Reuters