The pact was signed in the wake of North Korea's abandonment of the Nuclear Nonproliferation Treaty  and a military buildup by the United States near the country and had been touted as a major achievement of the Clinton administration.
In October 2002 North Korea admitted to having violated the pact.
Terms of the pact included the shutdown of the Yongbyon nuclear reactor and the removal of spent fuel which could have been reprocessed to create plutonium for a nuclear weapon in exchange for the construction of two light-water nuclear reactors at a cost of $4 billion, to be primarily supplied by Japan and North Korea. In the interim, North Korea would be supplied with 500,000 tons of heavy fuel oil, at no cost, to make up for lost energy production.
The Korea Energy Development Organization, or KEDO, is a consortium of the United States, South Korea, Japan, and the European Union that is responsible for carrying out the 1994 U.S.-North Korea nuclear pact.
There were increasing disagreement between North Korea and U.S. on the scope and implementation of the treaty. When by 1999 economic sanctions had not been lifted and full diplomatic relations between U.S. and North Korea had not been established, North Korea warned that they would resume nuclear research unless the U.S. kept up its end of the bargain. U.S. has repeatedly stated that further implementation would be stalled as long as suspicions remained that the North Korean nuclear weapons research program continued covertly.
Construction of the first reactor began in August 2002. Construction of both reactors is behind schedule. Both reactors were to be operational by 2003.
In November 2002, KEDO members considered whether to halt the fuel oil shipments in response to North Korea's October 2002 announcement that it had been continuing its nuclear weapons program in violation of the pact. U.S. Assistant Secretary of State James Kelly warned Japanese officials that the U.S. Congress would not fund such shipments in the face of continued violations.