The move will allow "most consumer goods to be available for export to North Korea and will allow the importation of most North Korean-origin goods into the United States," White House press secretary Joe Lockhart said.
In addition, reports CBS News White House Correspondent Mark Knoller, commercial air and sea travel between the U.S. and North Korea will be allowed, as will direct financial transfers between individuals and businesses. However, the ban on trade involving products with military applications remains.
The U.S. coordinator for North Korea policy, former Defense Secretary William Perry, had recommended quick pursuit of an accommodation with North Korea if Pyongyang agreed to forgo long-range missile testing -- missiles that threaten to destabilize the entire region.
Washington had feared that North Korea was on the verge of testing a long-range missile conceivably capable of striking Alaska or Hawaii.
North Korea pledged in 1994 to freeze a suspected nuclear weapons program, although questions linger among some officials about its compliance.
"For 40 years, the threat of another war on the Korean Peninsula has hung over our heads like a dark cloud," said Perry. "Today, that cloud is beginning to lift away."
Lockhart said, "This is a very conditional lifting of sanctions. I think we've made very clear that if they resume testing, the sanctions will be put back on."
But opponents say no sanctions should be lifted until we understand how that might increase North Korea's ability to threaten U.S. interests, reports CBS News Senior White House Correspondent John Roberts.
James Lilley, former U.S. ambassador to South Korea, says trading goods with North Korea is better than the past practice of trading humanitarian aid for a few scraps of arms and nuclear development control. But there are few assurances Pyongyang will get out of the missile business.
"You've done nothing about their exports in this," says Lilly. "You've done nothing about their development of missiles. All you've done is suspend shots, so it's really no big deal at all."
The agreement also provides no mechanism to monitor and verify North Korea's nuclear development program -- a program the CIA has said may be one of the most significant threats the U.S. will face in the next decade.