Officials signed a short-term agreement on Sunday to boost South Korea's contribution toward the upkeep of US troops on the peninsula, after a previous deal lapsed amid US President Donald Trump's call for the South to pay more.
The new deal must still be approved by South Korea's parliament, but it would boost its contribution to 1.03 trillion won ($890 million) from 960 billion won in 2018.
Unlike past agreements, which lasted for five years, this one is scheduled to expire in a year, potentially forcing both sides back to the bargaining table within months.
"It has been a very long process, but ultimately a very successful process," South Korean Foreign Minister Kyung-wha told reporters before another official from the foreign ministry initialled the agreement.
While acknowledging lingering domestic criticism of the new deal and the need for parliamentary approval, Kang said the response had "been positive so far".
US State Department senior adviser for security negotiations and agreements, Timothy Betts, met Kang before signing the agreement on behalf of the United States, and told reporters the money represented a small but important part of South Korea's support for the alliance.
"The United States government realizes that South Korea does a lot for our alliance and for peace and stability in this region," he said.
About 28,500 US troops are stationed in South Korea, where the United States has maintained a military presence since the 1950-53 Korean War.
The allies had struggled to reach a breakthrough despite 10 rounds of talks since March, amid Trump's repeated calls for a sharp increase in South Korea's contribution.
South Korean officials have said they had sought to limit its burden to $1 trillion won and make the accord valid for at least three years.
A senior South Korean ruling party legislator said last month that negotiations were deadlocked after the United States made a "sudden, unacceptable" demand that Seoul pay more than 1.4 trillion won per year.
But both sides worked to hammer out a deal to minimise the impact of the lapse on South Korean workers on US military bases, and focus on nuclear talks ahead of a second US-North Korea summit, Seoul officials said.
Trump said in his annual State of the Union address to Congress on Tuesday he would meet North Korean leader Kim Jong Un on February 27-28 in Vietnam, following their unprecedented meeting in June in Singapore.
After the June summit, Trump announced a halt to joint military exercises with South Korea, saying they were expensive and paid for mostly by the United States.
Major joint exercises have been suspended, but some small-scale drills have continued, earning rebukes from North Korea's state media in recent months.
About 70 percent of South Korea's contribution covers the salaries of some 8,700 South Korean employees who provide administrative, technical and other services for the US military.
Late last year, the US military warned Korean workers on its bases they might be put on leave from mid-April if no deal was agreed.
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