(ATTN: ADDS more info in paras 5, 11)
By Song Sang-ho
SEOUL, July 18 (Yonhap) -- South Korea is considering "various scenarios" for what to do with an escalating row over Japan's wartime forced labor, depending on how Tokyo reacts after its deadline for an arbitration panel on the issue passes, officials said Thursday.
Tokyo has given Seoul until Thursday to respond to its June 19 request to form the panel consisting of three third-country members. On Tuesday, South Korea's presidential office Cheong Wa Dae publicly spurned the request, calling it "unacceptable."
"We are considering various scenarios depending on how Japan will move," a diplomatic official in Seoul told Yonhap News Agency without elaborating on the scenarios. "Our response will hinge on Japan's course of action."
The foreign ministry here believes that it is not mandatory for Seoul to meet the deadline as Japan has unilaterally imposed it over the highly charged issue stemming from Tokyo's 1910-45 colonization of the peninsula.
"The deadline is one that Japan has designated at will," the official said.
In an effort to address the acrimonious dispute, Seoul has proposed that South Korean and Japanese firms create a joint fund to compensate victims of forced labor. But Tokyo immediately rejected the overture.
Japan has been protesting last year's Supreme Court rulings here that ordered Japanese firms to compensate South Korean victims. It claims that all reparation issues related to its past colonial rule were settled under a 1965 treaty on normalizing bilateral ties.
Tensions flared anew on July 4 when Tokyo imposed tighter restrictions on exports to South Korea of three key industrial materials used in semiconductors and displays -- a measure that Seoul sees as a retaliatory step that would erode free trade principles and hurt the global economy.
Seoul has been bracing for the possibility of Tokyo taking additional retaliatory steps, such as removing South Korea from the so-called whitelist of countries given preferential treatment in trade procedures.
To defuse tensions with Tokyo, Seoul has also been calling for Washington to "engage" to find a dialogue-based solution or forestall an escalation of the increasingly rancorous dispute between the two U.S. allies.
During his visit to Seoul on Wednesday, David Stilwell, the top U.S. diplomat for East Asian affairs, said that the U.S. will do "what it can" to support the efforts to resolve the Seoul-Tokyo spat.
Japan has been pushing for the formation of an arbitration panel based on dispute settlement procedures enshrined in the 1965 accord between the two countries.
The accord stipulates that Seoul and Tokyo are to settle any dispute concerning the interpretation or the implementation of it primarily through diplomatic channels.
If they fail to settle it, the case can then be referred to a commission involving a third-country arbitrator agreed on by the two sides. Should this fail again, the two sides are to form a panel consisting of three third-country members.