South Korea on Wednesday slammed Japan for effectively downgrading Seoul's trade status and accused Prime Minister Shinzo Abe of treating the neighbour as an "adversary".
The comments are the latest in a bitter tit-for-tat row stemming from a long-running diplomatic dispute over Japan's use of forced labour during its colonial rule over the peninsula from 1910 to 1945.
They came as Tokyo's removal of the South from its "white list" of trusted trade partners went into effect -- Seoul has already announced it will reciprocate, and last week said it will terminate a military information-sharing pact with Japan, raising concerns in Washington, which has security treaties with both.
"Prime Minister Abe commented twice that Korea cannot be trusted and is treating us like an adversary," said Kim Hyun-chong, a national security official at the Blue House.
He insisted Seoul's decision to terminate the intelligence-sharing deal, known as the General Security of Military Information Agreement (GSOMIA), would not lead to "fissures" in the alliance between the US and the South.
But last week's announcement caught many off guard, including Washington, with Secretary of State Mike Pompeo saying the US was "disappointed" by the move.
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Separately, Seoul's foreign ministry summoned the Japanese ambassador to protest the "white list" removal.
Both Japan and South Korea are market economies and major US allies faced with an overbearing China and nuclear-armed North Korea.
But their relationship continues to be heavily affected by Japan's 35-year colonial rule of the Koran peninsula in the early 20th century.
Japan says all reparations claims were settled under a 1965 treaty that normalised relations and an associated economic agreement.
Blue House official Kim said Japan had triggered the dispute by imposing restrictions in July on exports crucial to South Korean tech giants such as Samsung.
Tokyo says the decision was made on national security grounds but it followed a series of South Korean court rulings ordering Japanese firms to pay for forced labour during World War II.