Seoul, South Korea ? North and South Korea agreed Sunday to restart high-level talks next week, getting their stalled reconciliation process back on track, according to a South Korean new report.

The agreement, reached at three-day meeting at a North Korean mountain resort, called for the two sides to stage Cabinet-level talks Aug. 12-14 in Seoul, said YTN, an all-news cable network.

The talks would be the seventh time Cabinet-level officials have met since 2000, but the first since President Bush labeled North Korea part of an “axis of evil,” straining relations between the North and the South.The last such meetings were at the North Korean mountain resort in November.

Last week’s working-level talks, at the Diamond Mountain resort on the North’s east coast, followed an expression of regret by North Korea for a deadly June 29 naval clash along a disputed sea border which left casualties on both sides. The three-day session ends today.

The conciliatory North Korean gesture came in tandem with moves to improve ties with the United States and Japan. During an Asian regional security forum in Brunei, Pyongyang agreed to reopen normalization talks with Japan and accept a visit by a U.S. envoy.

Next week’s talks will focus on more reunions between separated family members, the connection of a cross-border rail line and joint inter-Korean economic projects in the impoverished North, said YTN, quoting unidentified sources close to this week’s talks.

The talks were overshadowed by a dispute about which side was responsible for the naval clash that sank one South Korean patrol boat and killed four sailors. North Korea acknowledged an unspecified number of casualties.

South Korea urged the North to apologize clearly and punish those responsible for the clash, according to pool reports Saturday by South Korean journalists.

No foreign journalists were allowed to cover the talks.

The pool reports did not say how North Korea responded to the South Korean demand.

But the communist country’s media reported over the weekend that similar clashes could be avoided only when the disputed border in the Yellow Sea is redrawn.