As she wound down a long day of official events in Tokyo before preparing for the next leg of her Asia tour in Indonesia, Clinton said North Korea's threatened missile test would harm its prospects for improved relations with the United States and other neighbors.
"The possible missile launch that North Korea is talking about would be very unhelpful in moving our relationship forward," she said, adding that if Pyongyang wants to end its isolation, it would have to act on pledges made to previous Bush administration negotiators to scale back its nuclear weapons efforts.
"The decision as to whether North Korea will cooperate in the six-party talks, end provocative language and actions is up to them and we are watching very closely," Clinton said, referring to North Korea's continuing talks with the U.S. and four other major nations over efforts to nudge the North to abandon nuclear weapons.
Clinton's first day of talks with Japanese officials to reaffirm the U.S.-Japan alliance was overshadowed by North Korea's rhetoric. Japan, too, is concerned about North Korean intentions, and its diplomats, along with envoys from the U.S., China, Russia and South Korea, have been involved in the six-nation talks that were to resume later this week in Moscow.
"If North Korea abides by the obligations it has already entered into and verifiably and completely eliminates its nuclear program, then there will be a reciprocal response certainly from the United States," Clinton said in Tokyo. "It is truly up to the North Koreans."
The U.S. response would include a chance to normalize relations with the United States, formally ending the 1950-53 Korean War with a peace treaty to replace the current armistice, as well as energy, financial and humanitarian assistance, she said.
But on Monday, three days after Clinton first floated the incentives, North Korea used the 67th birthday of its leader Kim Jong Il to claim it has the right to "space development" - a term it has used in the past to disguise a long-range missile test as a satellite launch.
Then Tuesday, after Clinton's warning, North Korea repeated accusations that Washington intends to attack it and warned the U.S. of "destruction" if it does so. Successive U.S. administrations have said they have no intention of attacking the North.
North Korea "has not made a concession despite threat and blackmail from the U.S. nor will make one in the future," the country's official Korean Central News Agency said in an English-language dispatch. It was not clear if the dispatch was a direct response to Clinton's comments.
Speaking at a news conference with Japanese Foreign Minister Hirofumi Nakasone, Clinton also stressed the Obama administration's commitment to Japan's security.
The two signed a deal to reduce tensions caused by the presence of U.S. troops on Japanese soil. Under the deal - which has been in the works for years - 8,000 Marines now stationed on the Japanese island of Okinawa will be moved to the U.S. Pacific territory of Guam. There are roughly 50,000 American troops in Japan, about 20,000 of them on Okinawa.
Clinton also vowed to keep up pressure on the North to resolve Japan's concerns about the status of Japanese citizens abducted by Pyongyang in the 1970s and '80s. She met with relatives of some abductees in a private session at the U.S. Embassy to promise such steps.
Many abductee families were angered by the Bush administration's decision last year to remove North Korea from the U.S. list of state sponsors of terrorism as an incentive in the nuclear talks without addressing their concerns.
At the meeting, representatives of families gave Clinton a letter repeating their disappointment with the step and asked that the Obama administration put North Korea back on the list pending a resolution to the abductee issue. A senior U.S. official said Clinton was sympathetic but made no commitments on the matter.
To underscore the U.S.-Japan ties, Clinton invited Japanese Prime Minister Taro Aso to Washington next week.
Aso, deeply unpopular at home, will be the first foreign leader to visit President Barack Obama at the White House, and the Feb. 24 summit is a sign the world's two largest economies know they have a special responsibility to deal with the global financial crisis, Clinton said.
CBS News correspondent Wyatt Andrews reported that the bad economic news in Japan has turned strange.in a press conference where he appeared so drunk that he could hardly speak. Nakagawa was the salesman for the country's huge stimulus spending proposal, however Clinton seemed confident Japan's government is committed to the measure, Wyatt reported.
Clinton heads to Indonesia on Wednesday hoping to refocus attention on the Obama administration's broader agenda for Asia, including climate change, development and green energy after two days in Japan dominated by North Korea.