SEOUL, South Korea (AP) — South Korea says it will spend 7.8 trillion won ($6.5 billion) over the next seven years to develop technologies for industrial materials and parts as it moves to reduce its dependence on Japan during an escalating trade row.

Trade Minister Sung Yun-mo said Monday the Seoul government will also financially support South Korean companies in mergers and acquisitions of foreign companies.

The announcement came days after Japan’s Cabinet approved the removal of South Korea from a list of countries with preferential trade status, which followed a July measure to strengthen controls on certain technology exports to South Korean companies.

South Korea says the move could hurt its export-dependent economy and has vowed tit-for-tat retaliation, such as removing Japan from its own trade “white list.”

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