The Japanese government plans to include South Korea on a list of favored trade partners for the first time in years.
Industry ministry officials excluded South Korea in 2019, citing deficiencies in the country's trade control system.
They also tightened export controls to South Korea for three materials used in products such as semiconductors.
Japan lifted the controls in March.
Ministry officials say they have now decided to reinstate South Korea as a favored trade partner after a series of checks.
The officials say they have confirmed that Seoul is taking measures to prevent imported goods from being diverted to countries such as North Korea.
The South Korean government announced last week that it will put Japan back on its own list of preferential trade partners. Seoul has been asking Tokyo to do the same.
The developments come after the leaders of the two countries held a summit in March.