South Korea is expanding its screening team for strategic exports by 50% to 45 members on Jan. 1, in response to Japanese concerns that chipmaking chemicals shipped to the country were being leaked for military use.

The move represents an olive branch in the countries' trade spat, which began when Japan imposed tougher controls on South Korea-bound shipments of chemicals vital to semiconductor production in July. The countries has since taken each other off their whitelist of trusted trade partners.

Japan has set three conditions for reinstating South Korea to the whitelist: a restart of policy discussions, greater South Korean oversight on trade, and better South Korean controls on exports of products and materials with military uses.

Though Japan and South Korea remain divided over the third condition, they are making inroads on the first two. They have agreed to hold a senior-level meeting on trade from Dec. 16 to 20 in Tokyo. The two sides will hold preparatory talks in Australia on Wednesday.