2 Koreas talk days after exchanging gunfire at sea

By HYUNG-JIN KIM, Associated Press Writer

SEOUL, South Korea – Officials from the two Koreas met Monday in North Korea to discuss their joint industrial complex just days after a gunfire exchange at sea emphasized the fragility of the peace between them.

North Korea lobbed dozens of shells near the western sea border during a military exercise last week, prompting South Korea to respond with a barrage of warning shots. No casualties or damage were reported, and South Korean officials said North Korea's artillery landed in the water.

The poorly marked sea border is a constant source of tension between the Koreas. Their navies fought a skirmish in November that left one North Korean sailor dead and three others wounded, and engaged in bloodier battles in the area in 1999 and 2002.

Despite the flare-up in border tension, officials met at the North Korean border town of Kaesong as scheduled to discuss their joint factory park in their first working-level talks on the issue since July, Seoul's Unification Ministry said.

In the two-hour morning session, the North repeated an earlier demand to put wage hikes on the agenda while the South argued the talks must focus on easing border crossings and customs clearances for South Koreans who travel to and from the complex, according to ministry spokeswoman Lee Jong-joo. Little progress was made, but the sides met later Monday, Lee's office said.

The Kaesong complex combined South Korean capital and know-how with cheap North Korean labor when it opened in 2004 and has been a key symbol of inter-Korean cooperation. About 110 South Korean factories at Kaesong employ some 40,000 North Korean workers.

However, tensions between the Koreas last year put the project in jeopardy. The two Koreas technically remain in a state of war because their three-year conflict ended in 1953 with a truce, not a peace treaty.

The nuclear-armed North has been reaching out to the U.S. and South Korea in recent months, and joined South Korean officials in touring industrial parks in China and Vietnam in December.

The two Koreas met last month at Kaesong to assess the joint tour but made no significant progress.

"We have told them that of course we can discuss issues such as wage hikes after productivity and competitiveness go up," chief South Korean delegate Kim Young-tak told reporters before crossing into the North via the heavily fortified border.

Meanwhile, South Korea's mass-circulation Chosun Ilbo newspaper reported that North and South Korean officials met secretly at Kaesong twice in November to discuss a possible summit but failed to reach a breakthrough.

The paper, citing unidentified government and ruling party officials, said North Korea had prepared a draft summit agreement.

However, the two sides disagreed on the wording of North Korean denuclearization and Seoul's demand for the repatriation of hundreds of South Korean prisoners of war and civilian abductees believed held in the North, the newspaper reported.

South Korea's Unification Ministry and the ruling Grand National Party said they could not confirm the report.

South Korean President Lee Myung-bak told the British Broadcasting Corp. in an interview aired Friday from Davos, Switzerland, that a meeting with North Korean leader Kim Jong Il "could probably" take place within the year.

Lee's office said the president was only repeating his willingness to meet Kim at any time if such a summit promotes peace on the peninsula and North Korea's nuclear disarmament.

Kim met Lee's two predecessors in summits in North Korea in 2000 and 2007. Lee, however, has taken a tougher approach toward North Korea since taking office in 2008.