South Korea said Monday it will consider taking Japan to the World Trade Organization over Japan's tightening of restrictions on semiconductor-related exports to its neighbor.
The Japanese government said earlier in the day it is imposing new curbs on the export of materials used to make smartphones and display screens, citing "significant damage to the relationship of mutual trust" between the countries.
Trade, Industry and Energy Minister Sung Yun Mo called Japan's move deeply regrettable and said it amounts to a retaliatory measure that violates the spirit of free trade.
The South Korean government "will take necessary measures according to international and national laws, including filing a suit with the WTO," Sung told reporters.
He added that Japan's move also goes against a declaration issued at the two-day Group of 20 summit in Japan over the weekend that calls for a free and fair trade environment.
Separately, First Vice Foreign Minister Cho Sei Young summoned Japanese Ambassador Yasumasa Nagamine to convey South Korea's concern about Japan's export curbs and called for the measure's withdrawal.
Japan's Economy, Trade and Industry Ministry said that, effective Thursday, individual applications will be necessary for exports to South Korea of fluorinated polyimide, resist and high-purity hydrogen fluoride.
Major South Korean media reported that Japan's move would deal a critical blow to the country's manufacturing sector.
Yonhap News Agency, citing an industry source, reported the materials are essential for the manufacture of semiconductors and display screens.
It pointed out the industry is highly dependent on Japanese exports and that tighter restrictions would be a significant blow, adding the impact would be greater for South Korean firms that import the materials than the Japanese firms that export them.
The Dong-A Ilbo newspaper, citing a high-ranking official in the semiconductor industry, said it has been preparing for such a move from Japan since late last year, but that the restrictions cannot continue longer than three months because stocks may run out after that.
However, the Chosun Ilbo newspaper said semiconductor-related companies in South Korea have roughly just one month of supplies.
"We are looking into the matter," said a spokeswoman for South Korea's biggest chipmaker, Samsung Electronics Co.
Economists largely agree that Japan's export curbs would likely be a short-term factor for the South Korean economy as the move is more a product of a political dispute than of an economic one.
"The new restrictions do have some influence on the economy...but Japan accounts for about 20 percent of South Korea's total imports and about 5-6 percent of total exports, less than half of the pie China represents," said Kim Doo Un, an economist at Seoul-based KB Securities Co. "That means they will not be as critical as to change South Korea's current export momentum."
Kim predicted that the situation would normalize within one or two months.
Ties between Seoul and Tokyo have sunk to their lowest point in years since South Korea's top court last autumn ordered Japanese firms to compensate South Koreans over wartime forced labor.
The firms have refused, however, as Japan says claims stemming from Japan's 1910-1945 colonization of the Korean Peninsula have been settled "completely and finally" under a 1965 bilateral accord.
Lawyers for the plaintiffs have seized the Japanese firms' assets in South Korea through local courts, and are threatening to sell them if they continue to refuse to engage in compensation talks.
South Korea proposed last month that companies from both countries fund compensation for the plaintiffs, but Japan rebuffed the proposal.