Photo/Illutration Japanese Foreign Minister Toshimitsu Motegi, right, with his South Korean counterpart Kang Kyung-wha before their talks in Nagoya on Nov. 23 (Pool)

NAGOYA--Japan and South Korea agreed on Saturday to hold formal talks next month, taking a step towards improving relations strained by decades of acrimony over their wartime past and exacerbated by a simmering trade dispute.

The decision to return to the table was announced at a Group of 20 (G-20) meeting and came a day after Seoul made a last-minute decision to stick to a critical intelligence-sharing deal with Japan. The dramatic reversal--after months of worsening relations--was later hailed as a "breakthrough" by South Korea.

The dispute has its roots in a decades-old disagreement over compensation for South Korean laborers requisitioned to work at Japanese firms during World War II. It has deepened this year, and upended trade after Japan curbed exports of materials critical to making the semiconductors that are a pillar of the South Korean economy.

"We bought time for intense discussions, but there's not much time left for us," South Korea's foreign minister, Kang Kyung-wha, told reporters after meeting with her Japanese counterpart, Toshimitsu Motegi, at a gathering of G-20 foreign ministers in the central Japanese city of Nagoya.

Motegi had earlier said that he wanted to discuss the issue frankly.

"I aim to hold a candid exchange of views on the matter of laborers from the Korean Peninsula, which is the core problem, and other bilateral issues," Motegi told reporters in Nagoya.

South Korea made a last-minute decision on Friday to stick with its General Security of Military Information Agreement (GSOMIA) intelligence-sharing pact with Japan. The agreement was set to expire at midnight on Friday and South Korea had earlier indicated it would let it lapse.

The decision was welcomed by Washington. The United States has pressured its two allies to set aside their feud and maintain the pact, seen as linchpin of trilateral security cooperation.