South Korea calls for 'cooling-off' period in trade row with Japan

South Korea is exploring all options in a bitter trade row with Japan, including scrapping an intelligence sharing pact, but wants a cooling off period with Tokyo, a senior South Korean official said on Saturday.

The trade row escalated on Friday when Japan removed South Korea from a favoured trading nations list, prompting Seoul to warn it would not be defeated again by its neighbour, laying bare decades-old war time animosity.

South Korea may consider revoking a military information sharing pact as a countermeasure, a view raised during a trilateral foreign ministers' meeting with the United States and Japan on Friday in Bangkok, said the South Korean official.

The accord, the General Security of Military Information Agreement (GSOMIA), facilitates three-way intelligence gathering with Washington, and is crucial for both South Korea and Japan in dealing with North Korea's nuclear and missile threats. The deal is automatically renewed annually on Aug. 24.

"GSOMIA plays a quite significant part in three-way security cooperation," said the official told reporters on the sidelines of a regional security forum in Bangkok.

"We've made clear that for our part, we are in a situation to put all options on the table."

The trade dispute has intensified since Japan imposed curbs last month on exports to South Korea of three high-tech materials needed to make memory chips and display panels, threatening the global supply chain.

The move was seen as a response to a South Korean court ruling last year that ordered Japanese firms to compensate some of their wartime forced labourers, though Tokyo cited unspecified security reasons.

Japan says the issue of forced labour was settled by a 1965 treaty that normalised ties between the two countries.

The South Korean official said a "cooling-off period" with Japan was necessary to craft a solution.

"The export curbs confined room for diplomacy for both sides, and the situation is now even more difficult due to another retaliatory measure," said the official, referring to Japan's actions on Friday.

"It's difficult to think about a long-term strategy under such a heightened, agitated situation."