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North Korea's Vice Foreign Minister Kim Kye-gwan (R) leaves his hotel in New York March 4, 2007. North Korea is fully prepared to shut down its nuclear facilities and allow inspections, a South Korean official said in New York, where envoys from Pyongyang and Washington are set to begin rare talks on improving ties. [Reuters]

NEW YORK - US and North Korean negotiators will start talks on Monday aimed at normalizing diplomatic ties as part of a complex agreement under which Pyongyang has pledged to scrap its nuclear arms programs for aid.

The talks at the US mission to the United Nations mark the highest-level meeting on American soil since North Korea's leader Kim Jong-il sent a top envoy to Washington in 2000 in an abortive effort to improve relations.

North Korean envoy Kim Kye-gwan will meet his American counterpart, Assistant Secretary of State Christopher Hill, to begin resolving problems between two countries that have been bitter foes since the 1950-53 Korean War.

"This is the beginning of the implementation of the agreement of a couple of weeks ago," Secretary of State Condoleezza Rice said on Friday.

Issues to be discussed include the US designation of North Korea as a state sponsor of terrorism and American trade sanctions against the North under the Trading with the Enemy Act, the State Department said.

WORKING GROUP PHASE

The United States will seek North Korea's assurances that it is committed to following through on an agreement to shut down within 60 days its main nuclear facility and allow inspectors in return for 50,000 tons of fuel oil.

"They certainly will have to tell Hill what are they doing, what is the timetable, and the results of that will indicate how far and how fast this process is going to move," said Don Oberdorfer, a Korea expert at Johns Hopkins University's School of Advanced International Studies.

The New York meeting is part of the first stage in implementing the February 13 deal reached in Beijing by the two Koreas, the United States, Japan, Russia and China after three years of talks that were punctuated by a North Korean nuclear test last October.

Further steps to fully "disable" North Korea's nuclear weapons program will gain North Korea another 950,000 tons of oil or other forms of aid of equivalent value.

Before the next round of six-party nuclear talks on March 19, North Korea is set to hold discussions with Japan in Hanoi, as well as separate meetings on energy aid, the denuclearization of the Korean peninsula and regional security.

A senior South Korean official who met Kim Kye-gwan in New York on Saturday was quoted by media in Seoul as saying North Korea intended to "fully do its part" to implement the initial steps of the February 13 agreement.

The United States is removing stumbling blocks by acknowledging doubts about what it knows of a secret North Korean uranium enrichment program that triggered the nuclear dispute, analysts said.

Washington is also preparing to release millions of dollars in North Korean funds that were frozen due to suspicions of money laundering and counterfeiting, US officials said.