Japan's government agreed on Friday to remove South Korea from a so-called white list of favoured export partners, defying warnings from Seoul that the move would have "grave consequences" for security ties between the US allies.
Japan says the move is necessary for national security, accusing Seoul of violating export rules, but the measure comes with the countries mired in a long-running dispute over World War Two forced labour in South Korea.
"The government at a cabinet meeting today approved a revision to the export control law... South Korea, the only Asian nation on the list, will be removed," Japan's Trade Minister Hiroshige Seko told reporters.
The decision comes despite calls from Washington for the two US allies to set aside their differences.
Seoul said Friday it would respond "sternly" to the "unfair" decision, with South Korean Foreign Minister Kang Kyu-wha calling it "unilateral and arbitrary."
They say South Korea has repeatedly violated the rules governing sensitive exports and the moves are necessary for "national security."