TOKYO — South Korea on Thursday scrapped an agreement to share military intelligence with Japan, significantly escalating the stakes in the U.S. allies’ dispute over trade and historical grievances.

The decision was met with disappointment in the United States, which views intelligence sharing between the allies regarding North Korea as critical.

“We’re urging each of the two countries to continue to engage,” Secretary of State Mike Pompeo said during a news conference in Ottawa. “There is no doubt that the shared interests of Japan and South Korea are important and they’re important to the United States of America. And we hope each of those two countries can begin to put that relationship back in exactly the right place.”

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Kim You-geun of the National Security Council in Seoul said Japan’s decision to drop South Korea from a list of trusted trading partners earlier this month, citing security issues, “brought about fundamental changes to the environment for security cooperation between the two countries.”

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“Under these circumstances, the government of the Republic of Korea decided that maintaining this agreement, which was signed to facilitate the exchange of sensitive military information, does not serve our national interest.”

The pact, known as the General Security of Military Information Agreement (GSOMIA), was signed in 2016 in the face of a growing threat from North Korea’s nuclear weapons program. 

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South Korea’s decision comes just a day after both nations’ foreign ministers met at a trilateral event in China, where they agreed to keep talking but did not announce any progress in the dispute.

Japanese Foreign Minister Taro Kono called the decision “extremely regrettable” and said Tokyo would lodge a firm protest.

The United States had urged the two allies to settle their differences, with Pompeo stressing their “incredibly important” cooperation on North Korea. But some critics say the Trump administration should have acted sooner and more forcefully to defuse the row.

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“This will only get worse, and it’s only American leadership that can bring the parties together,” tweeted Harry Kazianis, senior director at the Center for the National Interest in Washington.

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Some experts had expected that South Korean President Moon Jae-in would shy away from canceling the agreement for the sake of his country’s alliance with the United States. But Foreign Minister Kang Kyung-wha said the decision is “an issue separate from the alliance.”

“Cooperation on the alliance front will continue to be strengthened,” she said. “This is a decision we made because of situations triggered by the issue of trust between South Korea and Japan.” 

Seoul’s willingness to listen to American advice may have been undermined by the way President Trump has mocked Moon and badgered South Korea for more money to pay for the presence of U.S. troops.

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But more fundamental forces are also at work. 

The GSOMIA was signed by a conservative South Korean government, which traditionally puts more value on the alliance with the United States and takes a more tolerant attitude toward Japan than liberal or left-wing governments, such as Moon’s. 

“I don’t think a lot of western analysts realize that the S Korea left doesn’t share the GSOMIA assumption that Japan is a partner and NK an opponent,” tweeted Robert E. Kelly, a political science professor at Pusan National University. “To the left here, it’s the opposite. The world is now learning just how sharply polarized South Korea is over Japan and North Korea.”

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Either way, the biggest losers may be the South Koreans.

“Not renewing GSOMIA is a stunningly stupid decision by South Korea that will hurt itself more than anyone else,” tweeted Mintaro Oba, a speechwriter at West Wing Writers and a former Korea desk officer at the State Department. “Seoul will pay a very grave price for this in Washington. It is not in keeping with a constructive approach to the U.S.-Korea alliance.”

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And the biggest winner is likely to be North Korea.

“With Pyongyang bolstering its military capability through repeated weapons tests, intelligence sharing is more important than ever to counter nuclear threats from North Korea,” said Lee ­Ho-ryung, a researcher at the state-run Korea Institute for Defense Analyses in Seoul.

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“South Korea’s withdrawal from GSOMIA undermines trilateral security cooperation between the United States and its two most important allies in East Asia at a critical time,” Lee said, adding that it also would send a “wrong signal to North Korea.”

The dispute between Japan and South Korea flared over compensation for wartime forced labor. It has since escalated into tit-for-tat measures fueled by nationalist sentiment in both countries, with moves that have affected South Korea’s electronics industry, Japan’s consumer goods and more.

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The dispute began with consecutive South Korean Supreme Court rulings last year ordering Japanese companies to compensatevictims of forced labor during Japan’s occupation of Korea from 1910 to 1945. 

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The judgments infuriated Japan’s government, which gave South Korea an economic aid package as final compensation and settlement of historical grievances when the countries restored diplomatic relations in 1965.

Japan’s response was to strike at South Korea’s status as a trusted trading partner, first imposing export controls on three chemicals vital for South Korea’s world-leading semiconductor industry and then removing the country from a “white list” of 27 nations that are trusted to import goods that may have ­military uses without jumping through bureaucratic hurdles.

Tokyo says it took the trade measures on national security grounds because of lax South Korean export controls, but the moves were widely viewed as retaliation.

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Nationalist outrage has been fierce in South Korea, where bitterness about the country’s treatment during the Japanese occupation remains very much alive. There have been widespread boycotts of Japanese goods, including beer, cigarettes and clothes, and fewer South Korean tourists are visiting Japan.

Kim reported from Seoul. John Hudson in Ottawa contributed to this report.

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