TEHRAN,Young Journalists Club (YJC) -Japan dropped South Korea from a so-called "white list" of favored trade partners this month, which could mean more paperwork and on-site inspections for some Japanese exporters and potentially slow supplies of a range of goods.
The move, which came into force on Wednesday, prompted South Korea to drop Japan from its favored trading list and scrap an intelligence-sharing agreement.
South Korea called in Japan's ambassador to lodge a formal complaint and demand that the "white list" decision be reversed, a South Korean foreign ministry official said.
Government officials at a meeting in Seoul also agreed to provide 5 trillion won ($4.12 billion) from 2020-2022 to stabilize supply chains in affected sectors of the economy.
"We once again urge Japan to refrain from further worsening the situation and sincerely respond to our offer of dialogue to restore relations," Prime Minister Lee Nak-yon told the meeting.
Relations between the two countries worsened late last year after South Korea's Supreme Court ordered compensation for some Koreans forced to work at Japanese firms during Japan's 1910-45 occupation of Korea.
The escalating row has raised US concerns about three-way security cooperation with its top two regional allies in the face of North Korea's growing nuclear and missile programs.
A senior State Department official said on Tuesday that Washington hopes the dispute has hit "rock bottom" and the neighbors will start to rebuild their relationship.