South Korea says it is ready to move forward with what it calls "economic cooperation" with North Korea - but says Pyongyang must move forward with a test of cross-border rail links it abruptly canceled last month.

South Korea says it is ready to pump more money and resources into impoverished North Korea - but with conditions attached.

Delegates from the two countries wrapped up three days of economic talks Tuesday on the South Korean resort island of Jeju. Senior North Korean negotiator Joo Dong-chan says the two sides have agreed to implement an earlier accord.

Joo says Seoul will provide raw materials for the North Korean garment, soap, and mining industries.

However, he adds the agreement will only become effective when "the right conditions are created".

South Korea's chief negotiator, Park Byung-won, says the phrase "right conditions" has a very specific meaning. Park says the necessary condition is for North Korea to revive cross-border rail tests Pyongyang canceled last month.

North Korea called off the test less than 24 hours before it was scheduled to take place on May 25, prompting rare criticism from Seoul.

Pyongyang cited the failure of inter-Korean military talks a week earlier, and also blamed what it called "unstable political conditions" in the South.

The Uri party of President Roh Moo-hyun, which supports a platform of reconciliation and engagement with the North, has slipped dramatically in popularity in recent months. It was resoundingly defeated in nationwide local elections last week by the main conservative Grand National Party, which takes a harder line towards Pyongyang.

Roh administration officials had been trying to speed up the cross-border rail tests in hopes that former President Kim Dae-jung might travel by train to Pyongyang later this month. Mr. Kim is expected to meet with North Korean leader Kim Jong-il to mark the sixth anniversary of their 2000 summit. That meeting, the only summit-level talks to take place between the two Koreas, sparked a thaw in relations and gave rise to an array of new inter-Korean contacts and joint projects.

But economic cooperation has been held back by the standoff over the North's nuclear weapons programs. Pyongyang has refused to return to six-nation disarmament talks with the U.S., China, South Korea, Russia and Japan, saying Washington should lift restrictions on what it alleges are the communist state's illicit financial dealings.

South Korean officials say they hope the delayed rail test might now take place by August.

The divided Koreas remain technically at war since an armistice halted fighting between them in 1953.