UPDATE 1-Defying U.S. pressure, S.Korea to end intelligence pact with Japan

South Korea is set to let an intelligence-sharing pact with Japan lapse on Saturday over a feud about history and trade, defying U.S. pressure to maintain an important element of trilateral security cooperation in Asia. The expiry of the General Security of Military Information Agreement (GSOMIA) is likely to intensify discord between South Korea and the United States, which does not want the dispute between its two Asian allies to undermine security cooperation.

South Korea gave Japan notice in August that it would end the GSOMIA after Japan imposed restrictions on the export to South Korea of materials necessary for its semiconductor and display industries. At the root of their dispute is anger stemming from Japan's 1910-45 colonization of the Korean peninsula.

The security accord will expire at midnight on Saturday unless South Korea renews it. But both sides are being intransigent, with South Korea saying Japan must lift its trade restrictions first. Japan has called for the security agreement to be maintained.

"Unless there's a change in Japan's attitude, our position is we won't reconsider," South Korean Foreign Minister Kang Kyung-wha told parliament late on Thursday. Moon's senior secretary for political affairs, Kang Gi-jung, said on Thursday that the Japanese government was refusing to acknowledge its mistake, and instead expected South Korea to "wave a white flag".

"So progress is not really going well," the Yonhap news agency cited Kang as saying. Japanese Defence Minister Taro Kono said the ending of the agreement would not have a direct impact on Japan's security, but it could send the wrong signal to North Korea.

"But given the current situation with North Korea I have the concern that this could send a mistaken message to North Korea and other countries in the region," he said, adding he thought Seoul would make a "sensible decision". GSOMIA was sealed in 2016 after a years-long U.S. push for a better joint response to North Korea's growing military threat.

QUESTIONS ABOUT U.S. TROOPS The United States has been unusually strident in its criticism of South Korea's decision, which has not been the only source of tension in their relationship.

On Tuesday, U.S. negotiators broke off talks after South Korea rejected a U.S. demand that it increase its share of the cost of maintaining 28,500 U.S. soldiers in South Korea, as a buffer against North Korean aggression. U.S. President Donald Trump has insisted that South Korea pay more - and has suggested pulling the troops out - but the United States on Thursday denied a South Korean news report it was considering cutting troop numbers.

Foreign Minister Kang, asked if ending the GSOMIA risked harming the alliance with the United States, said the decision was made "solely within the context" of Japan ties. South Korea has pledged to continue security cooperation with Japan, including via the 2014 Trilateral Information Sharing Arrangement. But that is limited to information on North Korea's nuclear and missile programs, whereas GSOMIA covers broader intelligence.

Relations between South Korea and Japan have been plagued for years by bitterness stemming from Japan's colonization of the peninsula. The latest anger began last year when South Korea's Supreme Court ordered two Japanese companies to compensate wartime workers in a ruling that Japan said violated international law.

Japan believes the issue of compensation was settled under a 1965 treaty. South Korean President Moon Jae-in did not refer to the security pact in a Friday speech but alluded to Japan's export restrictions, saying South Korea would be a semiconductor powerhouse if it could secure a reliable supply of materials.

"No one will be able to shake South Korea," he said in his speech at a semiconductor plant.