According to South Korea's news agency Yonhap, the International Handball Federation has informed the Korea Handball Federation that North Korea will not participate in this year's Women's Handball World Championships, due to take place in Kumamoto between November 30 and December 15.
However, the North also said "it would not mind the South remaining in the office".
South Korea's Vice-Unification Minister Chun Hae-sung revealed they would continue to operate from the joint liaison office.
The inter-Korea liaison office was opened in September 2018 as a way to establish full-time, person-to-person interaction between the two Koreas.
An unnamed defense ministry official told local reporters that the South Korean side recently proposed to the DPRK on holding military talks and was waiting for a response from the DPRK.
The failure by Kim and Trump to reach agreement in Hanoi last month on walking back Pyongyang's nuclear program in exchange for relaxation of the measures against it has raised questions over the future of the wider process.
The Trump administration had moved to tighten sanctions on Pyongyang for its continued efforts to build nuclear weapons and ballistic missiles.The Treasury Department had slapped sanctions on the Chinese companies for illicitly shipping goods to and from North Korea, violating the current sanctions regime.
Even so, one expert said Friday's move is, in fact, not as serious as it might appear.
A South Korea-flagged ship named Lunis was also added to a list of vessels that the U.S. government believes engaged in ship-to-ship transfers with North Korean tankers, though the U.S. Treasury Department said the ship has not been sanctioned.
"We want to monitor the situation for a bit longer and respond to the developments, instead of making predictions or premature judgments", Chun said.
South Korea's foreign minister has intervened over a provincial proposal to apply stickers to some Japanese-made items in schools as "made by a Japanese firm responsible for war crimes". It is for lack of a better alternative.
Observers are also closely watching whether Kim will map out a new diplomatic policy at the assembly, after he and U.S. President Donald Trump fell short of a deal at their February 27-28 summit in Hanoi over the scope of North Korea's denuclearization and sanctions relief. "One way to get headlines in the United States is to do this".
North Korean state media have recently demanded that South Korea distance itself from the US and resume joint economic projects that have been held back by the USA -led sanctions against the North.