Archive for the ‘China’ Category

Rason serves as Hunchun port (again)

Thursday, July 2nd, 2015

Back in 2011, an experimental project saw the shipment of coal from Hunchun (China) to Shanghia via the North Korean port of Rason. Since then, no such effort is known to have been repeated.

Until now, apparently…

According to UPI:

A maritime route that includes the North Korean port of Rajin has enabled Chinese shippers to significantly reduce costs over a more time-consuming land route, South Korean news agency Yonhap reported.

Chinese cargo from the northeastern city of Hunchun has made the journey to bustling Shanghai twice in June, according to Chinese authorities.

Hunchun officials said 38 containers that left the city on June 24 arrived in Shanghai on June 27, and on June 11, 42 containers were delivered to China’s eastern coast – all using Rajin as a key point where cargo could be loaded onto ships.

I have not been able to locate any additional information.

Read the full story here:
China, North Korea cooperate on Rajin shipping route
UPI
Elizabeth Shim
2015-7-2

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Yanji – DPRK charter flight resumes

Sunday, June 21st, 2015

According to Xinhua:

An oft-suspended tourist route between China and North Korea has been reopened after its latest closure.

A charter flight carrying 73 tourists left from Yanji, in the Korean autonomous prefecture of Yanbian in northeast China’s Jilin province, for Pyongyang in North Korea on Thursday.

The route will be open until early October, with a planned 32 charter flights on Thursdays and Sundays. All seats on the flights in June have been booked, according to Yanbian Tianyu Travel Agency, which runs the route with North Korea’s Air Koryo.

A four-day trip costs 3,980 yuan (US$650) per person while a five-day trip costs 4,480 yuan (US$720) per person, according to the agency.

The route between Yanji and Pyongyang was first opened in July 2012, but it was closed for the whole of 2013 due to tensions in North Korea. It resumed on June 29 last year and was suspended again in October. A total of 90 flights had been completed on the route by October.

Read the full story here:
Yanbian-Pyongyang tourist route reopens
Xinhua
2015-6-21

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North Korea’s trade volume in 2014: $7.6 billion USD

Wednesday, June 17th, 2015

Institute for Far Eastern Studies (IFES)
2015-6-17

Last year North Korea’s foreign trade volume (excluding economic exchanges with South Korea) totaled 7.6 billion USD, a 3.7 percent increase over the previous year. According to a report recently put out by KOTRA (Korea Trade-Investment Promotion Agency) entitled “North Korea’s International Trade Patterns in 2014,” last year North Korean exports totaled 3.16 billion USD, while imports totaled 4.45 billion USD. This represents a 1.7 percent decrease in exports and 7.8 percent growth in imports over the previous year. As a result North Korea’s trade deficit in 2014 leaped to 1.29 billion USD, a 41 percent increase over 2013. This expansion of trade appears to be a product of growth in the import of goods such as plastics, machinery and electricity, as well as growth in the export of clothing.

Among North Korea’s main exports, mineral fuels such as coal, at 1.18 billion USD, represented 37.2 percent of total exports and was the country’s main export product. Meanwhile, exports of clothing and components saw the biggest growth rate, at 23.7 percent, and amounted to 640 million USD. In regards to other exports, iron ore totaled 330 million USD (18.3 percent decrease over 2013), fish and crustaceans totaled 140 million USD (21.9 percent increase), and steel amounted to 130 million USD (22 percent increase).

North Korea’s main imports were as follows: mineral fuels (750 million USD – 4.7 percent decrease), electric equipment (430 million USD – 54.8 percent increase), furnaces and machinery (330 million USD – 3.3 percent increase), motor vehicles and parts (230 million USD – 9.6 percent decrease), and plastic (200 million USD – 31.8 percent increase).

It appears North Korea’s main trading partner is still China. Last year its trade volume with China reached 6.86 billion USD (exports – 2.84 billion USD, imports – 4.02 billion USD), a 4.9 percent increase over 2013. This contributed to a slight increase in North Korea’s reliance on trade with China. Its proportion of trade with China went from 89.1 percent in 2013 to 90.1 percent in 2014. After China, the countries that North Korea traded most with were Russia, India, Thailand, and Bangladesh, in that order. Hong Kong and Ukraine dropped off the list of North Korea’s top ten trading partners, and Pakistan and Germany newly appeared on the list at 8th and 10th place, respectively. Trade with Japan has been nonexistent since 2009. Due to its economic sanctions against North Korea, the United States also had no economic exchanges with North Korea in 2014 outside of relief aid, mostly in the form of medical supplies and equipment.

As North Korea’s over-reliance on trade with China continued, its trade deficit widened due to the decrease in exports and surge in imports. Considering factors such as the complementary trade structure (including contract processing and natural resource trade), the protraction of North Korea’s political and economic isolation, and their highly interdependent relationship, it seems likely that North Korea’s strong reliance on trade with China will continue in the future.

[NOTE: KOTRA data excludes inter-Korean trade. If South Korean trade were included, it would be North Korea’s second largest trading partner, and the composition of trade allotted to China would fall.]

Here is coverage in Yonhap:

North Korea’s global trade expanded in 2014 from a year earlier, but its trade deficit also widened due to a drop in exports, a report showed Friday.

According to the report by the Korea Trade-Investment Promotion Agency, North Korea’s trade came to US$7.61 billion last year, up 3.7 percent from a year earlier. The figures did not count its trade with South Korea.

North Korea’s exports shrank 1.7 percent on-year to $3.16 billion last year, while imports grew 7.8 percent to $4.45 billion over the same period, the report showed.

Based on the figures, North Korea posted a trade deficit of $1.29 billion last year, with its shortfall jumping 41 percent from the year before.

Minerals and fossil fuels, including coal, were among the country’s major export items as its overseas sales stood at $1.18 billion, which accounted for 37.2 percent of its total annual exports.

The report showed that North Korea continues to depend heavily on China for its trade.

Last year, bilateral trade between the two countries reached $6.86 billion, up 4.9 percent from a year earlier. North Korea’s dependence on China in trade increased slightly from 89.1 percent in 2013 to 90.1 percent last year, according to the report.

Read the full story here:
N. Korea’s global trade expands but trade gap widens: report
Yonhap
2015-6-5

Here is coverage in UPI:

South Korea’s trade promotion agency KOTRA stated North Korea’s trade with the outside world rose to $7.61 billion in 2014, a marginal increase from the previous fiscal year.

In its annual report on North Korea trade trends released Friday, KOTRA noted North Korean exports scaled down while demand for outside materials was up between 2013 and 2014, Yonhap reported.

Numbers indicated North Korea’s exports decreased by 1.7 percent to $3.16 billion in 2014, while imports rose by 7.8 percent to $4.45 billion.

North Korea’s trade deficit jumped to $1.29 billion, up 41 percent from 2013.

In 2014 North Korea imported more electrical equipment, machinery and plastics than it did a year earlier, while exporting more clothing and accessories, according to KOTRA.

The country’s primary export is coal, a trade valued at $1.18 billion and comprises 37.2 percent of North Korea exports.

Clothing and accessories inched up in its share of total exports, rising to $640 million – up 23.7 percent from 2013.

The country’s primary import was fossil fuels at $750 million, followed by electrical equipment at $430 million and boilers, machinery at $330 million.

China remained North Korea’s No. 1 trading partner, reported South Korean newspaper Kyunghyang Sinmun.

In 2014 China-North Korea trade inched up 4.9 percent to $6.87 billion. North Korea imported more than it exported from China. Exports were estimated at $2.84 billion while imports totaled $4.03 billion.

A KOTRA official told Yonhap North Korea’s protracted political and economic isolation has led to a high dependence on trade with China, facilitated by a complementary trade structure between the two countries.

South Korea’s report stated North Korea’s trade dependence on China was as high as 90.1 percent, dwarfing Pyongyang’s next major trading partner, Russia, as well as India, Thailand and Bangladesh.

Read the full story here:
North Korea’s trade deficit continued to grow, says SKorea
UPI
Elizabeth Shim
2015-6-4

Here is coverage in the Joong Ang Ilbo:

North Korea’s international trade volume reached $7.6 billion in 2014, rising by 3.7 percent year-on-year, according to a report on Friday by the Korea Trade-Investment Promotion Agency (Kotra).

The growth was backed by Pyongyang’s increased import of electronic devices and machinery and its rising export of clothing, according to the agency.

Kotra said North Korea’s export volume was worth $3.2 billion last year, a 1.7 percent decline from the previous year.

On the other hand, the reclusive state imported $4.5 billion worth of goods, up 7.8 percent. The widening disparity between imports and exports extended the North’s trade deficit by 41 percent to $1.3 billion.

China remained Pyongyang’s biggest trading partner in 2014, the report said, followed by Russia, India, Thailand and Bangladesh. Its trading volume with China increased to $6.9 billion, with imports from that nation accounting for $4 billion and exports $2.9 billion. The overall figure is a 4.9 percent increase from 2013, nudging up the North’s overall degree of dependence on foreign trade with China to 90.1 percent from 89.1 percent.

Hong Kong and Ukraine were no longer in the North’s top 10 trading partners, but Pakistan and Germany made their way onto the list. By contrast, Japan has not traded with the North since 2009, while the United States only provided it with aid and medical equipment.

Kotra noted that the North’s key export products include mineral resources such as coal and brown coal, which account for 37.2 percent of all its exports. Clothing and fisheries products were also among its major exports, with garment shipments recently seeing rapid growth.

The country’s other major export products consist of crude oil, refined oil, machinery, electronic devices, cars and auto parts. The value of resource imports decreased by 4.7 percent last year, while those of electronic machines surged by 54.8 percent.

Kotra expects that the North will continue to rely on its neighboring key ally going forward.

“2014 saw increasing dependence on China, while North Korea extended trade deficits due to the increase in imports and the decline in exports,” Kotra said in a statement. “When considering geopolitical factors and mutually beneficial trade structure, the North is expected to show further reliance on China.”

The Korea Development Institute, a state-run think tank, released its own report that paints dim prospects for the North’s exports.

The institute said the North’s exports of anthracite coal to China are expected to fall in the years to come due to China’s dwindling steel industry and stronger environmental regulations. Its exports of the coal to its ally have been considered the backbone of its economy, accounting for about 40 percent of its overall exports.

The report called on the North to reorganize its trade structure in order to avoid being seriously affected.

“The time has come for North Korea to reshape its external trade structure,” it noted.

Read the full story here:
North’s trade volume rises
Joong Ang Ilbo
2015-6-6

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Chinese firms urged to remain confident in DPRK

Thursday, May 14th, 2015

According to Yonhap:

China has encouraged its companies doing business in North Korea to remain confident, despite strained political ties between the two neighbors.

The Chinese ambassador to North Korea, Li Jinjun, made the remarks at a meeting on Wednesday with a group of Chinese businessmen in North Korea, the Chinese Embassy in Pyongyang said in a statement.

Li told the Chinese businessmen that he has briefed North Korean officials on China’s ambitious Silk Road project aimed at reviving the ancient trade route between Asia and Europe.

Taking advantage of the Chinese Silk Road project, Li “encouraged Chinese companies to seize the opportunity to remain confident in their businesses in North Korea,” according to the statement.

Since taking up office in March, the Chinese ambassador has held a series of meetings with North Korean officials, including North Korean Vice Foreign Minister Ri Gil-song and Minister of Foreign Trade Ri Ryong-nam.

With a US$40 billion fund, the Silk Road project, known as “One Belt, One Road” in China, is designed to build ports, expressways, railways and other infrastructure with its neighboring countries.

China is North Korea’s economic lifeline and diplomatic backer, but political ties have strained in recent years, particularly after the North’s third nuclear test in early 2013.

Read the full story here:
Chinese firms urged to remain confident in N. Korea
Yonhap
2015-5-14

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DPRK – China Trade in 2015

Sunday, April 26th, 2015

Yonhap reports that DPRK – China trade has fallen in the first quarter of 2015:

Trade between North Korea and China, its economic lifeline, slipped 13.4 percent on-year in the first three months of this year amid frayed bilateral ties, data showed Sunday.

Bilateral trade volume fell to US$1.1 billion in the January-March period, compared with $1.27 billion for the same period last year, the Beijing unit of South’s Korea Trade and Investment Promotion Agency (KOTRA) said, citing Chinese customs data.

China is North Korea’s top economic benefactor, but its political ties with Pyongyang have been strained since the North’s third nuclear test in February 2013.

No crude oil was officially sent to North Korea from China for all of last year.

China’s shipments of crude oil to North Korea were also absent during the first quarter of this year.

South Korean diplomatic sources in Beijing, however, have cautioned against reading too much into the official Chinese trade figures because China has provided crude oil to North Korea in the form of grant aid in the past and such shipments were not recorded on paper.

Read the full story here:
N. Korea’s trade with China dips 13.4 pct in Q1
Yonhap
2015-4-26

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China tries to involve DPRK in Silk Road Initiative

Friday, April 24th, 2015

According to Yonhap:

China has asked North Korea to join its ambitious Silk Road project to revive the ancient trade route between Asia and Europe.

Chinese ambassador to North Korea, Li Jinjun, made the request on Tuesday when he held a meeting with North Korea’s Minister of Foreign Trade, Ri Ryong-nam in Pyongyang, according to a statement posted on the website for the Chinese Embassy in North Korea.

With a US$40 billion fund, China has aggressively pushed the so-called “One Belt, One Road” initiative aimed at building ports, expressways, railways and other infrastructure with its neighboring countries.

“Ambassador Li introduced the concept and vision of ‘One Belt, One Road’ and hopes the two sides will work together to seize the opportunity to promote China-North Korea economic and trade cooperation,” the statement said.

Li said, “Developing friendly and cooperative relations with North Korea is the unswerving policy of the party and the government of China. China is ready to work together with North Korea.”

The statement did not say how the North Korean minister responded.

Political ties between North Korea and China remain strained due to the North’s defiant pursuit of nuclear weapons, but China is the North’s economic lifeline and diplomatic backer at the United Nations.

Read the full story here:
China seeks N. Korea’s cooperation in Silk Road initiative
Yonhap
2015-4-24

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Chinese car tours to DPRK continue following Ebola quarantine

Wednesday, April 15th, 2015

According to Yonhap:

A Chinese border city has offered its first driving tour to North Korea since the North lifted travel restrictions it imposed due to concerns over the Ebola virus, according to a local media report on Monday.

The report was the latest sign that North Korea has approved more cross-border tours for Chinese nationals after lifting the travel restrictions about a month ago.

A group of 11 Chinese tourists drove their cars across the border from the Chinese city of Hunchun to North Korea’s northeastern coast port of Rajin on April 6, the Yanbian Daily newspaper reported, citing an unnamed tour guide who led the Chinese tour group.

The Chinese tourists gave “favorable comments” about the three-day trip as North Korea provided them with almost hassle-free visas, the report said.

In October, North Korea banned foreign tourists from visiting the isolated country and imposed a strict 21-day quarantine on all people, including diplomats, entering the country.

Meanwhile, North Korea hosted an international marathon race on Sunday, drawing about 650 foreign runners from more than 30 countries, China’s Xinhua news agency reported from a dispatch from Pyongyang.

Read the full story here:
China offers 1st driving tour to N. Korea after Ebola ban
Yonhap
2015-4-13

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China rejects DPRK coal shipment (Again)

Saturday, April 4th, 2015

UPDATE 1 (2015-4-4): For the second time this year, the Chinese have rejected a shipment of North Korean coal. According to the Korea Herald (Yonhap):

China has returned a shipment of anthracite coal to North Korea because it failed to meet standards for mercury emissions, according to a local report on Saturday.

This appears to be the second rejection by China of the North Korean mineral this year.

The shipment arrived at the Longkou port of China’s northern coastal province of Shandong late last month, but was returned as its quality did not satisfy China’s environmental regulations, iQiru.com, a local Shandong Internet news site, reported, citing an unnamed Longkou port official.

The report did not elaborate further or include the volume of the rejected North Korean coal.

In September last year, China announced strict regulations against the sale and import of coal with high toxic pollutants, including mercury and sulfur, to improve the country’s air and water quality.

Anthracite coal accounted for 39.8 percent of North Korea’s total exports to China last year.

China’s imports of North Korean coal plunged 53.2 percent from a year earlier to 16.78 million tons in January this year, according to Chinese customs data.

ORIGINAL POST (2015-3-9): Back in October of 2014, Kevin Stahler was the first person to point out (as far as I am aware) that the DPRK’s coal exports to China were in decline. Quoting Kevin:

However, this year North Korea’s anthracite exports to China are on course for a hard landing. The total value of imported anthracite is down 23 percent in the first half of 2014 compared to a year earlier. That’s an annualized $340 million hit to North Korea’s balance of payments. But North Korea is not alone: China has seen a double-digit decline in both the value and volume of its total world coal imports from January – August 2014.

On March 4, 2015, Yonhap reported that China returned a shipment of coal to the DPRK for reasons related to domestic environmental protection regulations:

China has rejected imports of some North Korean anthracite coal because the coal failed to meet domestic standards for mercury emissions, a local newspaper reported Wednesday, in what appeared to be China’s first rejection of North Korean minerals over environmental concerns.

The shipment was returned to North Korea on Feb. 27 from the Rizhao port of China’s northern coastal province of Shandong, the National Business Daily newspaper reported, citing an unnamed port official.

The report did not elaborate further, or include the volume of the rejected North Korean coal.

After three decades of rapid industrialization, China regularly sees hazardous air pollution with levels of particulate matter rising to nearly 40 times the limits set by the World Health Organization during the winter months.

In September, China announced strict regulations against the sale and import of coal with high toxic pollutants, including mercury and sulfur, to improve the country’s air and water quality.

Anthracite coal accounted for 39.8 percent of North Korea’s total exports to China last year.

In January, China’s imports of North Korean coal plunged 53.2 percent from a year earlier to 16.78 million tons, according to Chinese customs data.

On March 9, UPI reported on one of the key aspects of China’s new environmental policies and how it will affect the DPRK:

China’s crackdown on coal-related pollution will take a heavy toll on the North Korean economy, South Korean newspaper Donga Ilbo reported Monday.

China’s plan is to drastically reduce coal consumption by 160 million tons in the next five years. The plan, presented at the National People’s Congress in Beijing, aims to reduce the fossil energy use that is contributing to severe pollution in big cities, The Australian reported.

Countries exporting coal to China are all affected, but the plan could create an economic crisis in impoverished North Korea. Coal and iron-ore exports are two of North Korea’s biggest exports to China, its biggest trading partner.

According to the Donga Ilbo, more than 97 percent of North Korean exports are shipped to China*, and coal, iron ore comprise 60 percent of all North Korean exports.

China’s anti-pollution policy is affecting North Korean cargo. A North Korean ship delivering coal to China was turned away at the coastal city of Rizhao on Feb. 27. The Donga Ilbo reported the coal did not satisfy China’s environmental regulations.

The rising ban and other factors are placing the impoverished North Korean economy in a tight squeeze.

Anna Fifield also covered this story for the Washington Post and Guardian.

*The article reports that China accounts for 97% of the DPRK’s international trade. This is only true if one excludes South Korean trade–which South Korea does because they consider North-South trade as “inter-korean” trade.

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And just how much are overseas North Koreans earning?

Monday, March 16th, 2015

Anna Fifield, in this interesting Washington Post story, actually gets a current data point:

Kim is part of the economic lifeline that is keeping North Korea afloat. He manages a factory in a small town outside Dandong, China’s commercial gateway to North Korea, where North Korean women work making clothes for a Chinese company. The women are allowed to keep one-third of the $300 a month they earn, while the rest goes back to Kim Jong Un’s regime in Pyongyang.

In a second article, she provides a little more information:

In the clothing factory, the women work 13 hours a day, 28 or 29 days a month, and are paid $300 each a month — one-third of which they keep. The rest goes back to the government in Pyongyang.

“Even though I want to pay them more, I have to send a certain amount home to my country, so this is all I can give them,” Kim said in his office at the factory. On his desk, an open laptop revealed that visitors had interrupted his game of solitaire.

North Korea is thought to have at least 50,000 workers outside the country earning money for the regime, and 13,000 of them work in Dandong.

Assuming that there are 50,000 workers earning $200 each / month for Pyongyang (a low-ball figure in my opinion), this would imply a cash transfer of $120 million per year. Not a lot of money on a national scale, but remember this is a lower-bound estimate.

At the same time in Geneva, special rapporteur Marzuki Darusman said he was launching an inquiry into the “bonded labourers” working for the DPRK. Read more about this in The Guardian.

The full articles are worth reading here:
“Talking kimchi and capitalism with a North Korean businessman”
Washington Post
Anna Fifield
2014-3-16

North Korea’s growing economy — and America’s misconceptions about it
Washington Post
Anna Fifield
2014-3-13

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Korea-China FTA (as it relates to the DPRK)

Wednesday, March 11th, 2015

UPDATE 1 (2015-3-11): Dandong tries to position itself as gateway to North Korea via China – [South Korea] FTA. According to Yonhap:

The Chinese border city of Dandong, known for its bustling trade with North Korea, has unveiled a plan to become a “bridgehead” to boost trade between South Korea and China as the two nations work to formally sign a bilateral free trade deal.

The plan, put forward by the Dandong city government in Liaoning province on Tuesday during the country’s annual session of the Communist Party-controlled parliament, came as the bilateral trade deal between South Korea and China is expected to be signed within the first-half of this year.

“China and South Korea completed free trade negotiations. Dandong will make efforts to serve as a bridgehead of trade between China and South Korea,” the Chinese city government said in a statement.

The trade deal is expected to give a big boost to the city’s ambition to become a trade hub in the northern parts of the Yellow Sea and the Bohai Strait, adjacent to the Korean Peninsula, it said.

Details of the Chinese city’s plan are sketchy, but the city is expanding its logistics and marketing facilities to cope with rising trade if the South Korea-China free trade deal is implemented, according to the statement.

As much as 80 percent of bilateral trade between North Korea and China is conducted through Dandong.

Although China’s trade with North Korea appears largely unaffected, large-scale economic projects between the allies have made little progress as China’s leadership has been increasingly frustrated with the North’s defiant pursuit of nuclear weapons.

Last week, Chinese Premier Li Keqiang said Beijing will spare no effort to formally sign a bilateral free trade agreement with South Korea “as soon as possible.”

The deal calls for South Korea and China to remove tariffs on about 90 percent of goods traded between the two nations over the next two decades. However, rice and cars were excluded from the deal.

ORIGINAL POST (2015-2-26): Goods at teh Kaesong Complex will be included in the China-[South] Korea FTA. According to the Joong Ang Daily:

More than 300 products manufactured in the Kaesong Industrial Complex in North Korea will be given special tariff reductions for export to China once the Korea-China Free Trade Agreement (FTA) takes effect, the South Korean government said Wednesday.

This is the largest number of products from Kaesong that will be eligible for tariff reductions in a bilateral trade pact signed by Korea. Its FTAs with the United States and the European Union don’t deal with products manufactured by South Korean companies in the North Korean industrial park.

New agreements have been negotiated in the three months since President Park Geun-hye and Chinese President Xi Jinping announced the free trade pact last November in Beijing.

According to the Ministry of Trade, Industry and Energy, a newly upgraded pact was signed and exchanged on Wednesday in Beijing after follow-up negotiations were held recently.

China is the largest importer of Korean goods in the world, and trade with the country has consistently risen over the past decade.

The FTA initialing on Wednesday in Beijing came after three months of continuous negotiations in which the two sides came up with more detailed articles and resolved technical and legal details.

On Wednesday morning, commercial attaches from the Korean embassy in Beijing exchanged the initialed documents with their counterparts.

With the initialing, the two countries confirmed the English version of the FTA document, and the “substantial agreement” announced in November has gotten a step closer to implementation.

The pact still requires official signing and final ratifications from the two countries’ legislatures before going into effect.

“The two governments agreed to do our best to complete an official signing by the first half of this year so that our exporters can start benefiting from the FTA as soon as possible,” Woo Tae-hee, assistant minister for trade and chief FTA negotiator, said at a press briefing at the Sejong government complex on Wednesday morning.

Signings of FTAs are usually done by trade ministers, but an official at the Trade Ministry said this FTA is likely to be signed by the two presidents.

Under the updated agreement, Korean producers of 310 products in Kaesong will benefit from reduced or completely eliminated tariff as if the products were produced locally.

This will improve the price competitiveness of those exports from Kaesong to China.

To be eligible, at least 60 percent of each product’s raw materials should come from China or Korea. The list of 310 products will be renegotiated every year.

The Kaesong provision is a lot more generous than in Korea’s other FTAs, the Trade Ministry says.

Korea’s FTA with the European Free Trade Association (Korea-EFTA), consisting mostly of Scandinavian countries, gave tariff breaks to 267 products from Kaesong. The Korea-India FTA gave breaks on 108 products. The FTAs with ASEAN, Peru and Colombia gave breaks to 100 products.

Korea and China also inserted language into the FTA to launch a group to discuss opening more industrial complexes in North Korea.

The updated Korea-China FTA also includes an article that potentially allows other countries or offshore industrial complexes like Kaesong to join the Korea-China FTA. The article was added on China’s request.

“Through the Korea-China FTA, I think China wants to set up a new trade order within Northeast Asia, which other major Asian economies like Hong Kong and Macau can also participate in and expand this bilateral free trade pact into a larger-scale trade partnership within Asia,” Woo explained.

The two countries also decided to form a separate committee that discusses new business zones in each country to encourage the exploitation of the Korea-China FTA. Discussion of jointly operated business zones received a boost in the wake of Chinese Vice Premier Wang Yang’s visit to Seoul at the end of January.

The locations of such business zones are undecided yet, but candidate regions include Yancheng, Yentai and Guangzhou, cities located on China’s southern and eastern coasts, and Saemangeum on the western coast of Korea.

The Korea-China FTA’s services and investment articles also got more specific.

As soon as the FTA goes into effect, Korean law firms with a China office can do joint projects with local law firms.

The rule will be first tested within Shanghai Free Trade Zone. Also, the Chinese government agreed to lower barriers for business licenses for Korean builders.

However, the Korea-China FTA still seems to be limited to manufacturers, and other areas remain protected by tariffs including farmers and manufacturers in weak sectors.

China excluded most of Korea’s key export items to China in auto parts, steel and petrochemical industries from the tariff elimination list.

Korea’s sensitive agricultural products like rice, meat, vegetables and fruits will still keep their current tariff levels.

The level of tariff reduction and schedule for elimination varies by the product.

But most of Korea’s top exports to China, such as displays, petrochemical products, mobile phones and auto parts, will maintain current tariff levels.

On the other hand, the tariffs on top imports to Korea from China – the list is similar, including semiconductor, mobile phones, computers and displays – will be mostly eliminated as soon as the FTA is implemented.

The details of Korea-China FTA are currently available to the public on the Trade Ministry’s website.

Read the full story here:
Korea-China FTA includes Kaesong
Joong Ang Daily
2105-2-26

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