The South Korean President has called on Japan to withdraw restrictions on high-technology materials exports to South Korea, saying that countermeasures may be considered.
Japan has tightened controls on exports bound for South Korea, after South Korea's Supreme Court in October highlighted the right of South Koreans, who were forced to work for Japan's Nippon Steel during World War Two, to be compensated by the company.
President Moon Jae-in of South Korea said that his country may have to take countermeasures if the Japanese trade restrictions cause damage to South Korean companies, although he said that he does not want it to happen.
"The vicious cycle of actions and counteractions is not desirable at all for both countries," Moon told a meeting with his senior aides.
Furthermore, South Korea is planning to resort to filing a complaint with the World Trade Organization over these restrictions.
Currently, South Korea will prioritise local high-technology equipment and materials, Moon said, expecting South Korea to improve the trade deficit with Japan in the long term.
Among the damages expected to be caused by Japan's recent restrictions, which took effect on Thursday, is that South Korea's Samsung Electronics Co and SK Hynix Inc, who both supply Apple and China's Huawei Technologies can face delays.
Japan does not like the South Korean court's ruling, describing it as "unthinkable". It also insists that the issue of South Korean forced labour was fully settled in 1965 when the two countries announced restoring diplomatic ties.