South Korea said it will resume imports of Canadian beef suspended in 2003 after an outbreak of mad cow disease, agreeing to allow meat from cows younger than 30 months old.

A wider choice of beef imports may help tame inflation in Asia's fourth-largest economy, still recovering from its worst outbreak of foot-and-mouth disease.

Both countries also agreed to withdraw their World Trade Organization (WTO) panel disputes over the resumption of the beef imports, a statement from the agriculture ministry said.

It added that the government would submit a motion to the South Korean parliament to review the bilateral agreement before announcing details of the import safety criteria.

"The Canadian government told us that all the procedures would be completed by December 31 of this year to resume beef imports, and our government said that we would do our best to resume the imports within the period," the ministry statement said.

The statement noted Canadian beef accounted for 12,000 tonnes, or four percent, of South Korea's total beef imports in 2002 before the import ban was imposed.

Canada is the world's third-biggest beef shipper and South Korea was its No. 4 market in 2002 prior to the ban.

South Korea's former farm minister told Reuters in April that the country was likely to lift the eight-year ban on Canadian beef imports by the end of June.

Canadian Agriculture Minister Gerry Ritz said in March that the two countries were close to resolving the import dispute ahead of any decision from a World Trade Organization panel on the issue.

South Korea has imported a total of 129,000 tonnes of beef in the first five months of this year, the ministry statement noted.

Of the total, Australian beef accounted for 47.2 percent, the United States for 37.9 percent, New Zealand for 13.9 percent and Mexico for the rest, it added.

Due to outbreaks of foot-and-mouth disease, Seoul culled a third of its hog and about five percent of its cattle populations to contain its worst foot-and-mouth outbreak.

The government has turned to imports to alleviate meat price spikes. It cut import tariffs on pork to ease the shortage while the domestic livestock population recovers- which may take as long as two years.

"The government is trying to diversify import channels of food and agricultural products to minimise supply volatility and price hike impacts," said Sun Yoo, an economist at Woori Investment & Securities.

Government data showed annual consumer inflation eased in May for a second consecutive month after setting a 29-month high of 4.7 percent in March, although it remained above the upper end of the central bank's 2-4 percent target band. (Reuters)