By Janine Zacharia and Holly Rosenkrantz

June 26 (Bloomberg) -- The U.S. began removing North Korea from its list of state sponsors of terrorism after the communist regime released an inventory of nuclear plants and materials, removing an obstacle to future ties between the two countries.

The declaration was required under a September 2005 agreement by the government in Pyongyang and the U.S., China, South Korea, Japan and Russia to rid the Korean peninsula of atomic weapons. North Korea's refusal to submit information on its programs had stalled the negotiations for months.

``The United States has no illusions about the regime in Pyongyang,'' President George W. Bush said in the White House Rose Garden, citing concerns about human rights and nuclear proliferation. ``Yet we welcome today's development.''

The twin moves -- formally declaring North Korea no longer an enemy by lifting the provisions of the Trading with the Enemy Act, and announcing that North Korea will be removed from the terrorism list -- are largely symbolic.

``The two actions America is taking will have little impact on North Korea's financial and diplomatic isolation,'' Bush said. ``North Korea will remain one of the most heavily sanctioned nations in the world.''

Today's declaration of nuclear activities totaled 60 pages, a U.S. State Department official told reporters in Kyoto, where Secretary of State Condoleezza Rice is meeting with foreign ministers of the Group of Eight industrial powers. A separate two-page statement delivered earlier by North Korea to China acknowledged U.S. concerns about highly enriched uranium and nuclear assistance to Syria.

Other Nuclear Issues

The North Koreans had insisted on keeping those two issues separate from today's formal declaration to the six parties about its plutonium activities.

``The North Koreans will link these other nuclear issues to a number of other political and economic incentives that they want to receive,'' said Gary Samore, a former adviser to President Bill Clinton on nuclear proliferation and an analyst at the Council on Foreign Relations in New York. ``They're not going to do it for free.''

The U.S. and other nations involved in the disarmament talks will review today's declaration to see how much plutonium North Korea has produced and try to gain insight into the extent of North Korea's weapons' program, Rice said in Kyoto.

``This is a good step forward,'' Rice said. ``The United States and its partners are expecting over the next 45 days to have North Korean cooperation as we move forward to nail down the elements of verification.''

Congressional Skepticism

Bush's decision was met with some skepticism in Congress. Ileana Ros-Lehtinen, a House Republican on the Foreign Affairs committee, said in a statement that it is ``cause for profound concern'' because ``serious verification questions linger.''

John Bolton, Bush's former United Nations ambassador, called the deal ``shameful.''

``It gives North Korea enormous political legitimacy, and we get almost nothing in return,'' he said in a telephone interview.

UN Secretary-General Ban Ki-moon, former South Korean foreign minister, called the North Korean developments ``important steps forward.''

Republican Senator John McCain of Arizona, his party's presumptive presidential nominee, said questions remain about North Korea's nuclear activities, ``so my overall impression is we should be very cautious.''

Direct Talks Important

McCain's Democratic rival, Illinois Senator Barack Obama, in an interview today with Bloomberg Television, said the North Korean declaration ``underscores the importance of direct talks,'' which are ``bearing fruit today,'' and is ``a principle we have to apply to other countries as well.'' Obama has been criticized by McCain for proposing talks with Iran about its nuclear program.

North Korea was placed on the State Department terrorism list 20 years ago after its agents were implicated in the 1987 bombing of a South Korean airliner that killed all 155 people on board. The designation resulted in sanctions, including curbs on aid and a ban on sales of weapons.

While the sanctions under the Trading With the Enemy Act restrict North Korea's trade and financial transactions with the U.S., lifting them is mostly symbolic.

``U.S. persons are still prohibited from dealing with North Korean vessels, and North Korean assets in the United States remain frozen,'' National Security Council spokesman Gordon Johndroe said in Washington.

Sanctions Remain

Sanctions on arms sales and nuclear proliferation transfers remain under U.S. legislation and executive orders punishing North Korea for proliferation and violating human rights.

``The sanctions that North Korea faces for its human rights violations, its nuclear test in 2006, and its weapons proliferation will all stay in effect,'' Bush said. ``And all United Nations Security Council sanctions will stay in effect.''

All U.S. goods for export to North Korea continue to require a license, according to a State Department fact sheet.

``We remain deeply concerned about North Korea's human- rights abuses, uranium enrichment activities, nuclear testing and proliferation, ballistic missile programs, and the threat it continues to pose to South Korea and its neighbors,'' Bush said.

Analyst Samore said ``it's pretty clear none of the really difficult issues are likely to be resolved'' during the remainder of the Bush administration.

North Korea agreed in February 2007 to disable its nuclear programs in return for normal diplomatic ties with the U.S. and Japan and economic aid equivalent to 1 million metric tons of heavy fuel oil.

Yongbyon Nuclear Reactor

North Korea shut down its main Yongbyon nuclear reactor, the source of its weapons-grade plutonium, in July and began disabling it in November.

Kim Jong Il's regime is scheduled to blow up the cooling tower at its Yongbyon plant tomorrow. Sung Kim, director of the U.S. State Department's Korea office, will witness the act, Yonhap news agency reported yesterday.

Political directors from the six nations will meet early next week, probably in Beijing, to work out how inspectors will verify North Korea's claims. The State Department official said it may take months to verify North Korea's assertions on how much plutonium it has produced, perhaps for weapons, and how much waste has gathered.

U.S. estimates on how much plutonium North Korea has produced differ within the government itself.

North Korea released more than 18,000 pages of documents last month in a partial fulfillment of its pledge to declare its programs. The U.S. said earlier this month that the communist state has ``performed on about eight of 11'' disablement tasks required under the accord.