South Korea's trade minister on Tuesday said an inspection of companies that process and export the chemicals imported from Japan found no sign of illegal transactions allowing them to reach North Korea or any other country affected by United Nations sanctions.
The issue has become a full-blown diplomatic dispute between the neighboring US allies. "It should no longer walk straight toward a dead-end street", Moon said in a meeting with senior executives from 30 of South Korea's biggest companies, including the Samsung, Hyundai, and SK conglomerates.
The Seoul Metropolitan Government will provide emergency funds to domestic companies affected by Japan's export restrictions on South Korea's crucial tech industry, Yonhap News reports, citing Cho In-dong, an economic policy officer at the city's office.
Relations took a turn for the worse this week when Japan said it would tighten curbs on exports of the materials used to make chips and display panels because trust with South Korea had been broken over the forced labour dispute.
Chief Cabinet Secretary Yoshihide Suga said South Korea had asked Japan for an explanation of the curbs and that working-level officials would respond.
Most Japanese support new export restrictions on materials vital to Korean IT giants in a surge of jingoistic sentiment in the island country amid never-ending historical spats between the two countries.
The Japanese prime minister said Sunday on a Japanese television program South Korea "may claim it is regulating trade in compliance with North Korea sanctions" but just as "Seoul is not abiding by worldwide commitments on the wartime labor issue", it is likely "not regulating trade" in accordance with sanctions. He told reporters he would meet officials from the White House and Congress to discuss issues that included Japan's export curbs.
On Japan's claim that it implemented the measure as there had been an inappropriate case on the South Korean side, Paik said that this could not be a reason for the action in light of WTO rules. He did not mention the South Korea-Japan trade dispute, and some analysts are skeptical the USA will want to be heavily involved in mediating.
The countries share a bitter history dating to Japan's colonization of the Korean peninsula from 1910 to 1945, which saw forced use of labor by Japanese companies and the use of "comfort women".
Sheila Smith, senior fellow for Japan studies at the Council on Foreign Relations, said it may be too early for Stilwell to assess what the United States could do to help.
"He is likely to begin with what I would call deep listening".
The dispute stems from Tokyo's frustration at what it calls a lack of action by Seoul over a South Korean court ruling last October that ordered Nippon Steel to compensate former forced labourers.
Samsung Electronics is the world's largest memory semiconductor maker, with its chips accounting for some 20% of South Korean exports.