South Korea will scrap an intelligence-sharing pact with Japan amid an intensifying dispute over history and trade, South Korea's presidential office said on Thursday.
The decision was made after a meeting of the presidential National Security Council. The deal was due to be automatically renewed on Saturday, unless either side decided to cancel it.
Japan created a "grave change" in the environment for bilateral security cooperation by removing South Korea's fast-track export status, said Kim You-geun, a deputy director of the National Security Council.
Relations between the two countries soured after the South Korean Supreme Court ordered some Japanese firms to compensate Korean wartime workers last October, a move strongly condemned by Tokyo, which says the matter was resolved by a 1965 treaty normalising ties.
The feud has spilled over into trade, after Japan tightened export controls on materials vital to South Korean chipmakers and then dropped Seoul from a list of countries eligible for fast-track exports, prompting South Korea to take a similar step towards Japan.
The number of South Korean tourists visiting Japan fell last month to its lowest in nearly a year, amid a far-reaching boycott of Japanese products and services, from cars to beer and tours.
Abe last month tightened curbs on exports to South Korea of three high-tech materials needed to make memory chips and display panels. The government this month cancelled South Korea's fast-track trade status.
Removing South Korea from a "white-list" of favoured export destinations means some Japanese exporters face more paperwork and on-site inspections before they can win permits, which could slow Korea-bound exports for a wide range of goods.
Relations between the two countries soured after the South Korean Supreme Court ordered some Japanese firms to compensate Korean wartime workers last October,