STEVE INSKEEP, HOST:
Set aside the U.S.-China trade war for a moment. Two U.S. allies in Asia have a trade dispute. Japan just scratched South Korea off its list of preferred trade partners. Here's NPR's Anthony Kuhn.
ANTHONY KUHN, BYLINE: The trade dispute has been on display in recent months on the shelves of some Seoul supermarkets. Yesterday, Hong Chun-ho, director of the Korea Mart Association, showed visitors his store.
HONG CHUN-HO: (Through interpreter) The shelf used to be filled with Japanese bottled drinks and beer, but we've replaced them with Korean and other imported drinks.
KUHN: Cans of Asahi, Kirin and Sapporo are gone, and in their place are Budweisers, Heinekens and Tsingtaos. A sign above the shelf encourages shoppers to join the store's boycott. Today's decision by the Japanese government, though, takes the dispute to a higher level. It imposes controls on the export of a broad range of high-tech and industrial products to South Korea. In Seoul, President Moon Jae-in told a special meeting of his cabinet that Japan will face serious consequences for what he called a reckless action.
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PRESIDENT MOON JAE-IN: (Speaking Korean).
KUHN: "Japan's measure will add even more difficulties to our economy," he said, "which is already in severe circumstances. However, we will never again lose to Japan," he added, in a clear reference to Japan's colonial occupation of Korea. Today, South Korea responded by saying it'll strike Japan from its list of preferred trading partners. Yesterday, Seoul suggested it could consider pulling out of a military intelligence-sharing agreement.
Scott Snyder, a Koreas and Japan expert at the Council on Foreign Relations in Washington, warns that ties between Tokyo and Seoul could quickly end up in a downward spiral.
SCOTT SNYDER: Where that leads us is to a situation where Japan and South Korea, you know, are not linked to each other in economic or security terms.
KUHN: This raises the possibility, Snyder argues, that the three-way alliance between the U.S., Japan and South Korea could disintegrate, not from any external pressure but because of internal divisions. Tokyo says today's decision was about its national security. Seoul says it was a retaliation in a long-running dispute over Koreans forced to work for Japan during World War II. Others say it has a lot to do with geopolitics.
KUNIHIKO MIYAKE: The Korean foreign policy is changing.
KUHN: Kunihiko Miyake, research director at the Canon Institute for Global Studies in Tokyo, says Japan has watched with alarm as Moon Jae-in has rebalanced South Korea's foreign policy away from the U.S. and Japan and closer to North Korea and China.
MIYAKE: They know that the Cold War is over. They know that China is on the rise. They know that Americans are not dependable anymore.
KUHN: Recently, U.S. officials have prodded America's allies to mend fences. But Miyake says they remain silent for too long.
MIYAKE: And Americans might have had opportunities in the past to do something to unwind or solve the - these disputes.
KUHN: Perhaps, he says, Washington could have helped them change course a year or two ago but not at the last minute.
Anthony Kuhn, NPR News, Seoul. Transcript provided by NPR, Copyright NPR.