South Korea's foreign minister has again criticized Japan over new trade restrictions on Seoul, warning the measures could threaten the regional economies.

KANG KYUNG-WHA SOUTH KOREAN FOREIGN MINISTER "These measures taken by Japan could inflict serious damage on the regional economies in our region. Under these circumstances, we really need to do everything we can to expand trade rather than shrink it, and that is indeed the fundamental principle of free trade."

Speaking in Bangkok during the ASEAN foreign ministers' meeting, Kang Kyung-wha said Southeast Asian countries are also vulnerable to rising protectionism. The trade dispute between Japan and South Korea took a turn for the worse on Friday, when Tokyo's cabinet approved a decision to remove South Korea from a white list of favored trading partners. The move drew widespread criticism in South Korea. Analysts say the dispute has the potential to hamper global tech supply chains, including the prices of smartphones and other gadgets. Our correspondent Shane Hahm reports from Seoul.

Two Asian economic heavyweights entangled in a trade dispute.

Japan's Cabinet approving a plan to remove South Korea from its so-called trade "white list".

That means Japanese exporters will now face more scrutiny and paperwork to obtain a permit to ship products to South Korea.

YOSHIHIDE SUGA JAPANESE CHIEF CABINET SECRETARY "From the standpoint of Japan's national security, this revision was necessary to manage Japan's export system properly. For Japan-South Korea relations, there has been negative movements from the South Korean side, and it is a severe situation."

South Korea is hitting back.

President Moon Jae-in has said his administration won't sit idly by.

MOON JAE-IN SOUTH KOREAN PRESIDENT "I unequivocally warn that the Japanese Government will be held entirely accountable for what will unfold going forward."

Relations turned sour last year when a South Korean court ruled in favor of compensating laborers forced to work for Japanese companies during World War Two.

And then last month, Japan began regulating shipments to South Korea of high-tech materials used in the production of computer chips and semiconductors.

South Korean chipmakers produce nearly two-thirds of the world's memory chips, which are supplied to companies like Apple and Huawei for use in their smartphones.

In response, South Korea announcing it's removing Japan from its own white list and other possible diplomatic measures.

HONG NAM-KI SOUTH KOREAN FINANCE MINISTER "We will step up our preparations to file a WTO (World Trade Organisation) complaint as the reinforcement of Japan's export restrictions is violating WTO rules."

In Thailand, top diplomats from the United States, South Korea, and Japan meeting for a regional security forum.

But the trade spat loomed over what was supposed to be talks on the DPRK and denuclearization.

KANG KYUNG-WHA SOUTH KOREAN FOREIGN MINISTER "I was told that the United States has great concerns about this situation and it would play a role (in helping resolve the matter). I think the Japanese side should take responsibility for this situation, immediately withdraw the measure, and make efforts to resolve the issue through dialogue."

South Korea is also reportedly considering pulling out of a military information sharing agreement with Japan, proving that this trade dispute could expand into other areas. But it's not just a concern for countries and their economies in this part of the world, the potential fallout from this could shake up global supply chains, meaning, ultimately, prices of smartphones and other electronics, for instance, will likely go up.