Clasping each other's hands and then raising a toast on Thursday, the leaders of the two Koreas celebrated the signing of a historic reconciliation pact to end a decades-long Cold War standoff between their countries.

South Korean President Roh Moo-hyun, left, toasts with North Korean leader Kim Jong-il after exchanging joint declaration documents at a farewell luncheon in Pyongyang, North Korea, on Thursday.
(Korea Pool via Yonhap/Associated Press)

North Korean President Kim Jong-il and his South Korean counterpart Roh Moo-hyun agreed Thursday to replace a 1953 armistice with a new permanent peace treaty.

Under the previous ceasefire agreement, struck 54 years ago, North and South Korea were technically engaged in war until now. Thursday's pledge commits the leaders of both countries to push for a final peace settlement.

Kim and Roh reached the bilateral agreement at the end of a rare three-day summit in the North Korean capital Pyongyang. It was only the second time in seven years that the leaders of both countries met to discuss relations in the divided Korean Peninsula.

"The South and North shared the view that they should end the current armistice regime and establish a permanent peace regime," the pact said.

North vows disarmament by Dec. 31

They "agreed to closely co-operate to end military hostility and ensure peace and easing of tension on the Korean peninsula," according to a joint statement.

In order to achieve official peace, however, North and South Korea will need to seek the backing of the other parties that battled in the conflicts — China and the United States. South Korea never signed the 1953 Korean War armistice ending the war.

U.S. President George W. Bush had said he would discuss the prospect of accepting the peace treaty, but that it would first depend on Pyongyang fully honouring its promise to scrap its nuclear weapons program.

Thursday's settlement between the North and South came a day after the two countries and four other nations reached a joint agreement in Beijing for Pyongyang to disable its main nuclear facilities by Dec. 31. The deal also requires the North to declare all its nuclear activities and submit to U.S.-led progress inspections.

Pyongyang shut down its sole operating reactor at Yongbyon in July after the U.S. reversed its hard-line policy against the regime, the first concrete progress from years of talks that also have included China, Japan, Russia and South Korea.

Boost economic ties

But the Koreas accord Thursday cited the nuclear issue in a single sentence, saying the North and South would make "joint efforts to ensure the smooth implementation" of previous accords from the six-nation arms talks "for the solution of the nuclear issue on the Korean peninsula."

The Koreas also pledged to boost economic ties, open regular cargo railway service along restored tracks crossing the Demilitarized Zone and create a joint fishing zone on their disputed sea frontier.

They will also open an air corridor between Seoul and North Korea's tallest peak, Mount Paektu, for tours to the site that is sacred to all Koreans.

The sides also agreed to send a joint cheering squad for the Koreas to next year's Beijing Olympics and also increase reunions between relatives separated by the border.

Since the first summit between the Koreas in June 2000, some 18,000 Koreans from separated families have met through face-to-face or video reunions.

With files from the Associated Press