North and South Korea will take another swing Wednesday at finding a way to reopen their joint industrial park in Kaesong, after six rounds of talks produced little beyond mutual recrimination.

The seventh round of discussions comes just days before South Korea kicks off an annual military exercise with the United States -- an event that could suck the divided peninsula into another dangerous cycle of escalating tensions.

Similar joint exercises earlier this year were cited by North Korea as the main factor behind its surprise decision in early April to effectively shut down Kaesong -- a key foreign currency earner for Pyongyang.

The North initially barred access to the park, which lies 10 kilometres (six miles) inside the North Korean border, and then withdrew its 53,000-strong workforce that keeps the 123 South Korean firms in Kaesong running.

Wednesday's talks look set to be dominated by the issue that deadlocked the previous six rounds: South Korea's demand that the North provide a binding guarantee not to close Kaesong again in the future.

North Korea insists ensuring Kaesong stays open is a joint responsibility that requires mutual assurances.

"There have been signs that both sides really want to move forward this time, but the guarantee issue is still the main obstacle," said Yang Moo-Jin, a professor at the University of North Korean Studies in Seoul.

"If the talks collapse, we'll likely see a new cycle of tensions with the North using the coming military exercises to get the ball rolling," Yang said.

Although the joint drill which begins next Monday is largely computer-simulated, it is viewed as highly provocative by North Korea, which has already issued dire warnings of its impact.

"If the drill takes place, conditions in the region will become unpredictable and escalate to the brink of war," the North's ruling-party newspaper Rodong Sinmun said last month.

Built in 2004 as a rare symbol of inter-Korean cooperation, Kaesong had survived previous cross-border political swings, but became the most high-profile victim of the tensions that followed Pyongyang's nuclear test in February.

An association representing the owners of the 123 South Korean companies in Kaesong said Tuesday that the time had come to make a lasting deal on resuming operations.

"This time, our government and the North's authorities must reach agreement on reopening Kaesong without fail," it said in a statement.

The North's proposal last week for a seventh round of talks came just hours after Seoul announced it was going to start compensation payouts totalling $250 million to businesses impacted by Kaesong's closure.

The move was widely seen as the first step towards a permanent withdrawal from the zone.