By Joori Roh and Hyonhee Shin
SEOUL (Reuters) - A senior U.S. diplomat met officials in Seoul on Wednesday amid a worsening political and economic dispute between allies South Korea and Japan as South Korea vowed to unveil plans soon to cut dependence on Japanese industries.
Washington has been hesitant to publicly wade into the row, but the dispute, which threatens global supplies of memory chips and smartphones, has overshadowed the visit by David Stilwell, the top U.S. diplomat for East Asia policy.
Asked on Wednesday if the United States would play a role in resolving the disagreement, Stilwell did not respond directly, but said he would "engage in all issues that are related to South Korea and the United States," the Yonhap news agency said.
Last week Stilwell had told Japan's NHK broadcaster the United States would not intervene in the dispute, and instead encouraged dialogue between Washington's two biggest allies in Asia to settle it.
Simmering tension, particularly over a case for compensation of South Koreans forced to work for Japanese occupiers during World War Two, took a sharp turn for the worse this month, when Japan restricted exports of high-tech materials to South Korea.
On Wednesday South Korean Finance Minister Hong Nam-ki repeated his call for Tokyo to end the curbs, while adding that South Korea wanted to make its supply chain more independent.
"The government is working on comprehensive plans to reduce the country's dependence on Japan's materials, components and equipment industries and will announce them soon," he said at the start of a regular meeting of ministers responsible for aspects of the economy.
Japan has denied that the dispute over compensation for labourers is behind the export curbs, even though one of its ministers cited broken trust with South Korea over the labour dispute in announcing the restrictions.
On Wednesday a Japanese government spokesman urged Seoul to take "appropriate steps" to resolve the labour issue, which was reignited by a South Korean court ruling late last year that ordered Japanese companies to pay compensation.
The dispute is also bleeding into North Korea policy, a key agenda item for Stilwell, who arrived on Tuesday.
Japanese media say South Korea violated international sanctions by exporting banned goods to the North.
The Japanese government has said it did not make any accusation about materials going to North Korea but South Korean President Moon Jae-in called the reported accusation a "grave challenge".
On Tuesday, a South Korean intelligence official fired back, telling lawmakers that Japan had been "lukewarm and passive" in enforcing U.N. sanctions.
Relations between the neighbours have long been plagued by memories of Japan’s 1910-45 colonisation of the peninsula.
(Reporting by Joori Roh and Hyonhee Shin; Additional reporting by Kaori Kaneko in Tokyo; Writing by Choonsik Yoo and Josh Smith; Editing by Paul Tait)
