S. KOREA-JAPAN TALKS PRODUCE NO RESULTS

[Anchor Lead]

South Korea and Japan held a second round of talks at the World Trade Organization over Tokyo's export restrictions. The talks ended in the early hours of Wednesday, but the two sides again failed to narrow differences. The Korean government said it will consider requesting the establishment of a panel at the WTO Dispute Settlement Body.

[Pkg]

South Korea and Japan's second round of talks at the WTO began at 6 p.m. Tuesday Korea time. The negotiations lasted for nearly 9 hours but eventually fell through. Korean negotiators reiterated their call for Japan to withdraw its export restrictions against Korea as they violate WTO regulations and are not based on objective grounds, but Tokyo refused to accept.

[Soundbite] CHUNG HAE-KWAN(MINISTRY OF TRADE, INDUSTRY & ENERGY) : "We pointed out Japan's measures are arbitrary and discriminatory and go against WTO regulations. We asked Tokyo to swiftly withdraw them."

Japan, again, cited security reasons for the basis of its export curbs. It argued that Korea failed to properly control exports of items that were subject to regulations.

[Soundbite] JUNICHIRO KURODA(JAPAN'S MINISTRY OF ECONOMY, TRADE & INDUSTRY) : "... potential risk of being diverted for military use and thus allegation of WTO inconsistency is completely baseless."

The Japanese government did allow the export of three high-tech materials to Korea in recent months, including liquid hydrogen fluoride. But Tokyo insists the trade restrictions will remain in place. There is a 60 day time period for countries engaged in trade disputes to hold discussions after a complaint has been filed with the WTO. Given this time line, experts say the latest round of talks was essentially the last opportunity for negotiations. Seoul says it will now review the next step of measures, including requesting the establishment of a panel at the WTO Dispute Settlement Body.

[Soundbite] CHUNG HAE-KWAN(MINISTRY OF TRADE, INDUSTRY & ENERGY) : "I don't believe either side has changed its stance. Not ruling out the possibility of another round of talks simply means that it's not entirely impossible."

The latest round of talks has failed to achieve breakthrough in the trade dispute. If a WTO panel is established, the process will likely take over a year before a conclusion is reached. The two sides may be in for a protracted battle.