TOKYO >> Japan and South Korea agreed on steps toward resolving a trade dispute that has been one of the strains the nations’ leaders aimed to resolve at a highly anticipated summit Thursday.

Japanese Prime Minister Fumio Kishida and South Korean President Yoon Suk Yeol will meet later in the day in Tokyo in a bid to overcome disputes over history and quickly rebuild their nations’ security and economic ties. A North Korean missile launch and encounters between Japanese and Chinese vessels in disputed waters earlier Thursday show what’s at stake for the two countries.

South Korean Trade Minister Lee Chang-yang said following talks this week, Japan agreed to lift export controls on South Korea, which will withdraw its complaint to the World Trade Organization once the curbs are removed.

Japanese Economy, Trade and Industry Ministry said Japan acknowledged improvement in South Korea export controls during the talks and that as a result of Seoul’s decision to drop the WTO case, Japan decided to drop restrictions against South Korea and restore the country to the status it had before July 2019.

Lee’s ministry said the countries will continue to discuss restoring each other to preferred trade status, after downgrading each other in 2019.

Japanese export controls had covered fluorinated polyimides, which are used in organic light-emitting diode (OLED) screens for TVs and smartphones, and photoresist and hydrogen fluoride, used for making semiconductors.

The two countries, which have often been at odds over their history, are seeking to form a united front with their mutual ally, the U.S., driven by shared concerns about an restive North Korea and a more powerful China. Their summit comes as a series of dramatic events underscores how Northeast Asia is dividing into blocs.

NORTH KOREA WELCOMES SUMMIT WITH MISSILE TEST

A North Korean missile launch early Thursday, just before Yoon departed for Tokyo, could increase momentum for he and Kishida to move their countries closer diplomatically. The intercontinental ballistic missile was launched on a steep trajectory to avoid land and fell into open waters off Japan’s northern island of Hokkaido.

The test comes after a year in which North Korea has escalated its nuclear threats, and is likely intended to send a message both about the summit and simultaneous joint military exercises including the U.S., which the isolated country views as directed against it.

“The peace and stability in the region are important for the region, and we must further strengthen cooperation among allies and like-minded countries,” Kishida said, referring to the missile launch.

Chief Cabinet Secretary Hirokazu Matsuno said Japan at the summit wants to reaffirm cooperation with Seoul and Washington in responses to North Korea’s missile threats.

Yoon, in a written response Wednesday to questions from foreign media including The Associated Press, said strained Korea-Japan relations must be mended as soon as possible. “I believe we must end the vicious cycle of mutual hostility and work together to seek our two countries’ common interests.”

REGION IN FLUX AS WASHINGTON, BEIJING TUSSLE FOR INFLUENCE

Washington will welcome better Japan-South Korea ties, as feuding over historical issues has undermined a U.S. push to reinforce its alliances in Asia to better cope with North Korean nuclear threats and China’s rise.

China’s dispute with Japan over tiny islands in the East China Sea heated up Thursday, with both sides accusing the other of violating their maritime territory after China coast guard vessels entered waters around an uninhabited island group that Japan controls and calls the Senkakus, and which Beijing also claims and calls the Diaoyu Islands. The islands are just north of Taiwan, which also claims them as its own.

The summit also follows a series of Chinese diplomatic successes in regions traditionally seen as more influenced by the U.S. Honduras announced Wednesday that it would end diplomatic recognition of Taiwan in favor of China, marking progress in Beijing’s efforts to isolate the autonomously governed island, while last week Saudi Arabia and Iran announced a surprise deal to renew diplomatic ties brokered by China.

The U.S. is also making efforts to shore up regional alliances. Washington apparently worked to bring about today’s summit, and Thursday began joint anti-submarine warfare drills with South Korea and Japan as well as Canada and India.

SOUTH KOREA OFFERS CONCESSIONS IN EFFORT TO MOVE PAST HISTORY

The focus of attention at the two nations’ first summit in Japan since 2011 is how Kishida responds to Yoon’s plan for the fund, a major concession by Seoul, and if or when they may resume defense dialogues and leaders’ regular visits.

Kishida and Yoon are to have dinner together after the summit, then informal talks, according to Kishida’s office. Media reports said Kishida will host a two-part dinner: “sukiyaki” beef stew for a first round, then “omu-rice,” or rice topped with omelet — reportedly Yoon’s favorite dish — at another restaurant.

Japan and South Korea have long had disputes over the 1910-1945 Japanese colonization of the Korean Peninsula and atrocities during World War II, which included forced prostitution of “comfort women” for Japanese soldiers, and territorial disputes over a cluster of islands.

Ties plunged after South Korea’s Supreme Court in 2018 ordered two Japanese companies, Nippon Steel and Mitsubishi Heavy Industries, to compensate some of their former Korean employees for forced labor during World War II.

Japan has insisted all compensation issues were settled by a 1965 treaty that normalized bilateral ties and was accompanied by $800 million in economic aid and loans from Tokyo to Seoul.

The history disputes spilled over to trade and defense. The two countries agreed to negotiate to restore their trade relations to the status quo before Japan imposed restrictions in 2019.

On Thursday, a powerful Japanese business lobby, Keidanren, or the Japan Business Federation, announced that it and its South Korean counterpart have agreed to establish a pair of private funds for bilateral projects such as youth exchanges.

A dozen business leaders traveling with Yoon are to meet their Japanese counterparts on Friday.