Diplomatic relations between Japan and South Korea have hit a new low amid a bitter dispute over trade policy and wartime history, with no resolution in sight, despite U.S. concerns.

It was hoped that a three-way meeting Friday between Japanese Foreign Minister Taro Kono, his South Korean counterpart Kang Kyung Wha and U.S. Secretary of State Mike Pompeo would be an opportunity for Washington to persuade its two major Asian allies to work out their differences.

Pompeo had said he would encourage the two to "find a way to move forward together" amid worries that the spat could weaken the effectiveness of their trilateral security cooperation and eventually lead to a decline of the U.S. presence in the region.

"If the relationship between these two countries gets much worse, it will threaten to undermine the alliance structure in Northeast Asia," said Sheila Smith, senior fellow for Japan studies at the Council on Foreign Relations, a New York-based think tank. "It will present us with a pretty significant problem."

But those hopes turned out to be a nonstarter. Just before the meeting in Bangkok on the sidelines of a regional forum, Japan turned up the heat on South Korea by approving plans to remove it from a list of trusted countries that enjoy minimum trade restrictions. Seoul promptly said it would do the same to Tokyo.

The tit-for-tat trade restrictions followed Japan's decision in early July to tighten controls on South Korea-bound exports of key materials used to manufacture semiconductors and display panels.

Seoul views the tightening of the export controls as an attack against its world-leading tech industry, with powerhouses such as Samsung Electronics Co. relying on Japanese suppliers.

At an emergency Cabinet meeting on Friday, South Korean President Moon Jae In said Japan's decision on the delisting was "reckless" and clearly intended to "attack and hurt our economy."

((From L) South Korean Foreign Minister Kang Kyung Wha, U.S. Secretary of State Mike Pompeo and Japanese Foreign Minister Taro Kono.)

Japan's tightening of export controls, which it says is meant to address national security concerns, has caused outrage in South Korea. In the weeks following, two men, both in their 70s, set themselves on fire in apparent protest. One of them died.

Boycotts of Japanese products are becoming widespread in the country, with South Korean shoppers being encouraged not to buy clothes from fashion chain Uniqlo, while some stores are under pressure to stop selling Sapporo beer. Flights connecting the southeastern city of Busan and Japanese cities have also been halted amid a wave of cancellations.

The heated response is a sign of the simmering resentment over Japan's brutal colonial rule of the Korean Peninsula from 1910 to 1945.

Lee Young Chae, a professor at Keisen University in Tokyo, said there is growing dissatisfaction in South Korea over arrangements made after the war, including a 1965 treaty that established diplomatic ties between the two countries.

"I wouldn't go so far as to say there is anti-Japanese sentiment, but certainly it is a difficult situation for Japan," he said.

Seoul views the trade restrictions as retaliation for South Korean court rulings ordering compensation for workers forced to work in Japanese factories during that era.

"There are deep wounds between Korea and Japan due to our unfortunate history. However, our two countries have long endeavored to heal the wounds by using stitches, medicine and bandages," Moon said in the Cabinet meeting.

"Nonetheless, if Japan, the aggressor, reopens the old wounds after so long, an international community aware of the facts will never tolerate it. Japan must squarely face up to this."

Tokyo, meanwhile, has long maintained that the issue of compensation for wartime labor was settled "finally and completely" by the 1965 treaty, under which it provided South Korea with a $500 million lump sum in financial aid.

Officials in the government of Japanese Prime Minister Shinzo Abe say they are frustrated by Seoul's constant "moving of the goalposts," including its recent reneging on a hard-won agreement on compensation for Korean women who were forced to work in Japanese military brothels during the war.

With mediation by the United States seemingly off the table, there appears to be little that can be done while the feud plays out, says James Schoff, a senior fellow at the Carnegie Endowment for International Peace, a Washington-based think tank.

"I don't think there is much that Washington can do in the current environment except help facilitate communication between Japan and Korea and encourage both sides to 'wall-off' trilateral cooperation as a sort of safe-haven."

(Ko Hirano contributed to this story.)

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