12/7/06 PUTRAJAYA, Malaysia (AP) -- Malaysia and North Korea on Thursday inked a $20 million palm oil barter trade pact, with the communist nation possibly shipping steel and magnesia to the Southeast Asian nation in exchange for the much-needed commodity.
 
The agreement was forged long before North Korea's missile tests last week, Malaysia's Minister of Plantation and Commodities Peter Chin said, adding that there were "no politics involved" in the pact.

The agreement allows Malaysia to sell hundreds of tonnes (U.S. short tons) worth of palm oil -- that can be used for cooking to Pyongyang. Chin said North Korea had the option of purchasing the commodity in cash or by selling steel, cement and magnesia to Malaysia.

The agreement was signed by North Korea's Minister of Foreign Trade Rim Kyong-man and Chin at a hotel near the administrative capital of Putrajaya.

Rim said the deal was a sign that Malaysia had a "correct understanding of the events" surrounding the nuclear issue. He declined to speak to the media.

Malaysia said it was purely a trade deal -- made on humanitarian grounds.

"This decision was reach in consideration of the adverse economic conditions in the country, as well as based on humanitarian grounds," Chin said.

Malaysia was approached by North Korea over the deal in 2005, Chin said.

There was "nothing about the firing of missiles. Nothing about U.S. views on North Korea" at the time the government approved the latest pact.

Thursday's signing is an extension of an agreement between the two nations over the sale of palm oil that began in 2000, but was the first to involve barter trade.

Chin said North Korea produces between 30 percent to 60 percent of its own supply of oil and fats. It is also highly reliant on foreign food aid.

It comes in the wake of last week's internationally condemned missile tests, which resulted in angry responses from both Japan and the United States -- two of Malaysia's key trading partners.