South Korea has proposed an international probe into Japan's accusations that it shipped sensitive industrial materials to North Korea, with the presidential office demanding an apology and a withdrawal of Japan's recent export curbs if the claim turns out to be untrue.
Mr Kim You-geun, deputy chief of national security at the presidential Blue House, said yesterday that South Korea has been thoroughly imposing United Nations sanctions against North Korea, and asked Japan to provide evidence of its claims that Seoul illegally shipped some sensitive materials to Pyongyang.
Seoul insists that Tokyo's claims are groundless.
"If the investigation shows that our government did something wrong, we will immediately apologise and rectify the situation," Mr Kim said. "But if the results show we did nothing wrong, the Japanese government should not only apologise but also immediately withdraw its exports restrictions. And there should be a thorough investigation into any violation by Japan."
Japan had cited concerns about national security and lack of trust when it imposed, from July 4, restrictions on the export of three chemicals crucial to South Korea's thriving semiconductor industry, a move that observers fear will trigger a ripple effect and affect the global supply chain as South Korean chipmakers dominate 70 per cent of the world market.
Japan's Trade Ministry is also considering further restrictions, such as removing South Korea from a "white list" of countries that gets preferential treatment for trade.
Although Japan controls up to 90 per cent of the global supply of the sanctioned materials - fluorinated polyimide, photoresists and hydrogen fluoride - Russia has reportedly offered to supply hydrogen fluoride to South Korea. But industry observers said it would take time to test the quality of the Russian materials.
South Korea has urged its semiconductor firms - the largest being Samsung Electronics and SK Hynix - to source for alternative supplies or to start producing locally.
The government is also hoping that the United States will step in to help resolve the dispute, which stemmed from a previous row over wartime forced labour.
Mr Kim Hyun-chong of the Blue House's national security office said the US has offered to hold high-level trilateral talks while one of its high-level officials is in Asia.
"We would like to seek a constructive solution, but the Japanese side has not responded yet," he said from Washington before his meeting with US Trade Representative Robert Lighthizer. Mr Kim did not say who the US official is.
However, Mr David Stilwell, the new top US diplomat for East Asia who is currently visiting Japan and slated to make a stop in Seoul next week, told Japan's NHK that the US has no plans to intervene.
Professor Lee Jae-min of Seoul National University stressed the need for a diplomatic solution.
"The two leaders must meet and try to find a compromise," he told The Straits Times, adding that both sides stand to lose a lot.