BANGKOK (Yonhap News) -- South Korea and Thailand agreed Saturday to launch preliminary talks and a joint study toward a possible free trade deal as their leaders pledged to upgrade relations between the two countries to a "strategic partnership."

South Korean President Lee Myung-bak and Thai Prime Minister Yingluck Shinawatra reached the agreement during summit talks in Bangkok, pledging to work closely together to expand bilateral trade volume to US$30 billion by 2016, according to a joint statement.

The leaders also agreed to put in "serious efforts" to conclude a trade and economic cooperation "action plan" for 2013-2017 at an early date to further energize trade and minimize trade barriers.

They asked the joint trade committee of the sides to start negotiations at an early date.

Trade between South Korea and Thailand reached an all-time high of $13.9 billion last year.

"Both sides agreed to seek preliminary discussions and a joint study about forging a comprehensive economic partnership agreement

(CEPA) in order to strengthen economic links between the two countries," the joint statement said. CEPA is the equivalent of a free trade agreement.

Lee and Yingluck also called for launching aviation talks at an early date to facilitate people-to-people exchanges and transfers of goods and services at a time when the number of people visiting each other's nation topped 1.3 million last year.

The leaders also agreed to look into the possibility of establishing Korean banks in Thailand and welcomed cooperation in various Thai infrastructure projects, especially its water management system, high-speed railway and power plant construction projects.

After last year's devastating floods, Yingluck has expressed keen interest in South Korea's project to refurbish the four major rivers in a way that prevents floods, preserves water resources and promotes tourism along the waterways.

Later Saturday, Lee planned to tour the Chao Praya river and the Lad Pho canal, a move seen as underlining South Korea's willingness to share its water management experience and know-how.

Thailand is working on a massive $11.3 billion project to build a large-scale water management system.

The bidding process is under way for the project. A total of 34 bidders have applied for the project, and eight of them, including two involving South Korean firms, have passed a preliminary qualification test.

The successful bidder is expected to be chosen around April.

Lee, who arrived in Bangkok on Friday, is the first South Korean president to make an official bilateral visit to Thailand in

31 years. Some of his predecessors have visited the country in between, but all of those trips were to attend multilateral conferences.

Thailand was one of the first countries to dispatch troops to help South Korea repel invading troops from North Korea during the

1950-53 Korean War. A total of 15,708 Thai soldiers participated in the war and peacekeeping efforts thereafter, and 136 of them were killed and 1,160 wounded.

Upon arrival in Bangkok on Friday, Lee immediately headed off to a Korean War memorial set up at an army base, some 90 kilometers east of the capital, to lay a wreath and pay his respect. Lee was the first South Korean president to do so.

Thailand is the last stop of Lee's two-nation Southeast Asian trip that already took him to Indonesia's resort island of Bali for a regional democracy forum and summit talks with Indonesian President Susilo Bambang Yudhoyono.

Lee is scheduled to return home on Sunday.