The bill, co-authored by 13 lawmakers, has the potential to resolve bilateral diplomatic tensions sparked by Japan's protest against the top South Korean court's 2018 rulings on the forced labor issue.

Seoul-Tokyo ties fell to a low point when Japan imposed export curbs against South Korea in July in apparent retaliation for the Supreme Court ordering Japanese firms to compensate Korean victims.

The original version of the bill called for the creation of a 300 billion-won (US$257 million) fund to provide comprehensive compensation for the wartime laborers and victims of Japan's wartime sexual enslavement, euphemistically called "comfort women." It would have used the 6 billion won left over from a now-dissolved Japan-funded foundation on Tokyo's sex slavery.

But Wednesday's draft did not contain provisions for supporting the sexual slavery victims due to objections from comfort women and civil activists. The future of the 6 billion won was not mentioned in the latest bill.

South Korea's legislative efforts may help Seoul and Tokyo find ways to address the forced labor issue, a major diplomatic thorn between the two nations.

But critics said the proposal is tantamount to exempting the Japanese companies from their responsibilities. (Yonhap)