The South Korean prime minister has blasted Japan over its decision to strip South Korea of preferential trade status, saying Tokyo has "crossed the line."
Lee Nak-yon told a Cabinet meeting on Saturday that Japan's decision was a second retaliatory act. Japan imposed tighter export controls in July on key high-tech materials.
He said the measures could threaten the free trade system and cause a crack in the three-way security alliance with the United States.
Lee said South Korea will use 273.2 billion won, or about 230 million dollars, to support businesses affected by the tightened export controls. He said this would help the country develop its own materials for chip production.
He added the fund will be allocated from a supplementary budget that passed parliament on Friday.
The prime minister also said South Korea will seek recognition from the United States and other countries of what he described as unfair treatment by Japan.
President Moon Jae-in also strongly criticized the move by Tokyo, calling it a "reckless decision" that has "made matters worse."
He warned Japan would be responsible for any consequences.