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SEOUL: North and South Korea failed to reach agreement on Friday in talks on the fate of a joint industrial estate which is their last remaining reconciliation project, Yonhap news agency reported.
Seoul's unification ministry confirmed the talks had ended but gave no details of the outcome. It said the next meeting would be held on July 2.
The future of the Kaesong estate just north of the heavily-fortified border has become increasingly uncertain as North-South relations have worsened and the North's nuclear stand-off with the outside world has intensified.
Pyongyang is demanding extra payments worth hundreds of millions of dollars from Seoul, and refuses to grant access to a South Korean employee it detained at Kaesong.
"The two sides failed to narrow differences on key issues," Yonhap quoted a government source as saying.
But the North slightly eased its stance and said it could ease restrictions on cross-border access imposed last December, according to the source.
However, it reportedly refused to give any information about the detainee.
The communist state last week stunned Seoul by demanding a wage rise for its 40,000 workers at Kaesong to 300 dollars per month from around 75 dollars currently.
It also demanded an increase in rent for the Seoul-funded estate to 500 million dollars, compared with the current 16 million dollars for a 50-year contract.
The South is pressing for the release of the employee detained since March 30 for "slandering" the North's political system and allegedly trying to incite a local female worker to defect.
Unification Minister Hyun In-Taek acknowledged the venture is at a critical stage.
"One step you take and one stone you lay in today's talks will be crucial to inter-Korean relations. In that sense, I ask you to remain cool-headed during the talks," he told the South's delegation before its departure in the morning.
Representatives of the 106 South Korean firms at Kaesong, and President Lee Myung-Bak, have rejected what they describe as excessive financial demands.
"If Kaesong shuts down, 40,000 North Koreans would lose jobs," Lee told a press conference in Washington Tuesday. "This is why the North must stop making excessive demands, for its own interest."
Lee was speaking after a summit with US President Barack Obama, who described a nuclear-armed North Korea as a "grave threat."
The North has angrily rejected UN sanctions imposed for its May 25 nuclear test and has vowed to build more atomic bombs.
The impoverished communist North received 26 million dollars last year in wage payments. Yet some analysts say it may be willing to forgo the cash because it fears the effects of exposing its workers to the South Korean lifestyle.
Cross-border relations have been hostile for the past year after Lee's conservative government rolled back Seoul's previous "sunshine" aid and engagement policy with Pyongyang.
The North has intermittently restricted access to Kaesong and expelled some South Korean staff.
- AFP/ir
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