SEOUL - Moon Jae-in, president of the Republic of Korea, said on Monday that Japan's accusations that his country has violated international sanctions by exporting banned goods to the Democratic People's Republic of Korea posed a "grave challenge" to Seoul.

Moon warned at a meeting with senior aides that Japan's recent imposition of curbs on exports of high-tech materials to the ROK would inflict greater damage on the Japanese economy and urged Tokyo to return to talks.

Japan has tightened restrictions on the export of three materials used in high-tech equipment, citing what Tokyo has called "inadequate management" of sensitive items it exported to the ROK.

The dispute between the two US allies in Northeast Asia has further soured relations already troubled over Japan's colonial rule of the Korean Peninsula up to the end of World War II.

Moon accused Japan of abusing its leverage in trade to punish Seoul over their historical dispute. The ROK sees the trade curbs as retaliation for ROK court rulings earlier this year that ordered Japanese corporations to compensate victims for forced labor during the war.

Seoul plans to file a complaint with the World Trade Organization and raise the issue at next week's WTO General Council in Geneva. Trade officials from the countries failed to resolve the dispute in a working-level meeting in Tokyo on Friday.

Moon also said his country will use the dispute as an opportunity to reduce its dependence on Japan by strengthening its technology industry and diversifying import sources.

"Japan's export restrictions have broken the framework of economic cooperation between the ROK and Japan that had continued over a half-century based on mutual dependence," Moon said in the meeting.

"The shattered credibility of cooperation with Japan in the manufacturing industry will inspire our companies to break out of their dependence on Japanese materials, components and equipment and work toward diversifying import sources or localizing the technologies. I warn that, eventually, it will be the Japanese economy that will be damaged more."

Moon spoke hours after dozens of ROK small-business owners rallied in Seoul, calling for boycotts of Japanese consumer goods.

The Japanese measures, which went into effect earlier this month, have stoked public anger in the ROK, where many believe Japan still hasn't fully acknowledged responsibility for atrocities committed during its colonial occupation of Korea from 1910 to 1945.

Kim Sung-min, president of the Korea Mart Association, urged shop owners to boycott the distribution of Japanese products until Tokyo apologizes over the trade curbs and withdraws them. Other demonstrators held up signs that read: "Our supermarket does not sell Japanese products."

Thousands of ROK citizens have signed petitions, posted by citizens on the presidential office's websites, calling for boycotts of Japanese products and of travel to Japan and for the ROK to skip next year's Tokyo Summer Olympics. Retailers have also reported modest drops in the sales of Japanese beer.

Agencies