South and North Korea agree to reopen Kaesong

South and North Korea agree to reopen Kaesong

South and North Korea agree to reopen Kaesong

Updated 14 August 2013, 21:36 AEST

North and South Korea have agreed to re-open the Kaesong joint industrial zone which Pyongyang closed in April.

North and South Korea have agreed to re-open the Kaesong joint industrial zone which Pyongyang closed in April at the height of military tensions.

After a seventh round of talks, the two countries have committed to making "active efforts" to resume normal operations as soon as possible after the plants have been inspected.

According to a copy of the accord released to reporters, a joint committee will be set up to discuss compensation for economic losses suffered as a result of the closure of the complex.

In April, the North pulled its 53,000 workers out of the industrial zone at the height of nuclear tensions between the two sides, with North Korea threatening to attack both the United States and South Korea.

The agreement will help lower tensions ahead of the start of joint exercises between South Korea and the US military next week.

North Korea had warned the exercises could bring the Korean Peninsula "to the brink of war".

Established in 2004 as a rare symbol of inter-Korean cooperation, Kaesong was a key hard-currency earner for the North and the decision to shut it down took many observers by surprise.

The project had managed to ride out previous North-South crises without serious disruption, but it eventually fell victim to an extended period of heightened tension after the North's third nuclear test in February.

Pyongyang initially barred access to the park, which lies 10 kilometers inside the North Korean border and then withdrew its workforce from the 123 South Korean firms based there.

The previous six rounds of talks had foundered on the South's insistence that North Korea provide a binding guarantee that it would not close the complex again.

The North proposed the seventh round of talks last week, just hours after Seoul announced it was going to start compensation payments totalling $US250 million to businesses impacted by Kaesong's closure.

The payout move was widely seen as the first step towards a permanent withdrawal from the zone.

AFP/Reuters