"The United States is ready to facilitate economic normalization!" White House National Security Advisor Robert O'Brien said in a tweet.

In two days of talks brokered by Trump special advisor Richard Grenell, Washington hopes the two sides can finalize proposals to open up road, rail and air communications, which Grenell says could boost the economies of both sides.

But the two remain bitter over a bloody war fought two decades ago, in which 13,000 died.

Kosovo, which broke away and declared its independence with widespread international support, wants Serbia to recognize it as a separate independent nation.

"Our expectations are extremely positive," Hoti told Kosovo media ahead of the two-day talks.

"I believe that today's agreement that can be reached on economic cooperation is a step closer to the final normalization of relations with Serbia, and mutual recognition itself."

"We will do our best to reach a compromise on important economic issues," Vucic said in a statement posted online.

"We want peace, we want stability, we want the progress of Belgrade, Pristina and our entire region," he said.

Later O'Brien tweeted that the two sides were already making progress.

And Hoti said he was positive. And agreement on economic cooperation is a step closer to the final normalization of relations with Serbia, and that is mutual recognition itself," he told local media.

But Serb finance minister Sinisa Mali told reporters at the White House that in addition to economic issues, mutual recognition of Kosovo was placed on the table as one of 16 points proposed by Kosovo.

"The talks are very difficult, the pressures great, enormous," Mali said. "The negotiations are continuing. Of course, we will defend ourselves until the end."