Moon said during a meeting with his senior aides that his administration will make "calm" efforts for the diplomatic resolution, noting that the vicious cycle of measures and countermeasures will never be desirable for the economies of both South Korea and Japan.
On Monday, President Moon Jae-in urged Japan to withdraw export restrictions that hurt South Korea's semiconductors and display panels industries and called for honest negotiations between the two countries.
Samsung Electronics Co Ltd and SK Hynix are seeking to buy more of the materials from countries like Taiwan or China, said Park Jea-gun, head of the Korean Society of Semiconductor & Display Technology.
Japan explained that the measures taken by Japan simply revert the existing simplified procedures applied to South Korea to usual procedures, which are fully consistent with WTO agreement.
South Korea raised the issue at a meeting of WTO member nations on Tuesday and will also raise it with USA officials in Washington, South Korean officials said.
This expected loss of business could bring Tokyo to the negotiating table-either through the WTO or bilaterally with South Korea-but likely will not given the extend to which Japan controls the market.
Tokyo has been frustrated by what it calls a lack of action by Seoul over issues stemming from a top South Korean court ruling last October that ordered another Japanese company, Nippon Steel, to compensate former forced laborers.
Seoul argues that the move violates the WTO's rules. Its trade minister was also considering travelling to the United States, a spokeswoman said.
The export restrictions cover 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.
Japan's Chief Cabinet Secretary Yoshihide Suga speaks during a press conference at the prime minister's official residence in Tokyo Tuesday, July 9, 2019.
Seoul also escalated the dispute to worldwide channels, announcing Tuesday that it reported Japan's new export restrictions to the World Trade Organization's (WTO) Council for Trade in Goods meeting.
South Korea's benchmark index.
South Korea on Tuesday denied accusations in Japanese media that it had transported Japanese high-tech material to North Korea, calling for an immediate halt to such comments.
South Korea warned that the tightening export control measures will disrupt the global value chain for electronic products and affect companies worldwide, requesting Japan to withdraw its measures.
Also caught in the fray are Japanese chemical suppliers such as JSR and Stella Chemifa, which are exploring ways to supply South Korean clients from plants outside Japan.
The forced wartime labour issue is the latest flashpoint in a relationship long over-shadowed by South Korean resentment of Japan's 1910-1945 occupation of the Korean peninsula.