By Park Song-wu
Staff Reporter

The two Koreas Monday agreed to establish an office in the North’s border city of Kaesong in September to discuss measures for economic cooperation, said a 12-point joint communique that was released after the end of a three-day meeting in Seoul.

The Kaesong office, which was first conceived of in November 2003, will function as a business center for companies from the two Koreas, South Korean officials involved in the talks said.

It would be the first time for the two Koreas to have such an office since the division of the Korean Peninsula in 1945.

``Both sides needed to create it because the current communication channels in China require higher costs,’’ Yang Moon-soo, professor at the University of North Korean Studies in Seoul, told The Korea Times.

The two sides are currently making contacts in Beijing and Dandong to discuss cross-border business measures.

Kaesong, just north of the heavily fortified border, is the place where the two Koreas are constructing an industrial complex, hoping to use North Korea’s cheap labor and South Korea’s capital.

The 10th vice ministerial-level economic cooperation talks also decided to open cross-border railways and adjacent roads within this year, the press release said.

The two Koreas said they will conduct a test run for the reconnected railways in October after carrying out a joint safety check next month. They plan to hold a ceremony for the opening of the roads in October.

Light and mining industries were selected for the two Koreas to develop jointly in their mutual interests.

First of all, South Korea will likely invest in North Korea’s magnesite mines, sources said. The raw material is mainly used in the steel industry. North Korea and China are the world’s primary sources of it.

``Magnesite is one of the North’s major export items,’’ Park Joon-young, North Korea expert and a professor of Ewha Womans University in Seoul, said in a telephone interview. ``It is a good attempt to exploit the North’s resource and the South’s money and technology. Both sides can get benefits from the joint project.’’

Park, however, warned that the development of North Korea’s magnesite industry could trigger a conflict between Seoul and Washington as the raw material could be used to produce ``strategic items’’ on which the United States can impose sanctions.

The talks went smoothly as North Korea agreed Saturday to come back to the six-nation talks in the final week of July, ending a year-long boycott of the dialogue on Pyongyang’s nuclear ambition.

The two Koreas will see a three-day fishery meeting start in Kaesong on July 25 _ the nearest event which the two sides agreed to hold out of their mutual interest for peace on the West Sea.

The Seoul meeting was agreed to be held when the two Koreas resumed high-level political meetings last month.

The North’s five-member delegation, led by Choe Yong-gon, deputy minister of the construction and building material industries, is scheduled to return home via Beijing Tuesday.

im@koreatimes.co.kr