Japan and South Korea have failed to hammer out their differences over Japan's export controls in the second round of bilateral talks at the World Trade Organization.
The talks are part of a WTO dispute settlement procedure that South Korea launched in September in response to Japan's decision to tighten controls on exports of three high-tech materials to the country.
Tuesday's meeting at the WTO headquarters in Geneva lasted for more than six hours.
Junichiro Kuroda, who represents the Japanese trade ministry, told a news conference the tighter controls were needed to prevent high-tech materials from being diverted for military use.
Kuroda rejected Seoul's argument, saying the export controls do not violate any WTO rules.
South Korea's representative, Chung Hae-kwan, criticized Japan's controls, calling them discriminatory trade restrictions. He said his country will consider the next step in looking further into the case at the WTO.
Under WTO rules, South Korea can request the establishment of a panel at the WTO Dispute Settlement Body unless both parties reach an agreement within 60 days.
But the threshold has already been passed. The question now is whether the South Korean government will seek the formation of the panel, which is effectively a WTO court that can rule on the issue.