DPRK bans South Korean, overseas goods from Markets

Institute for Far Eastern Studies (IFES)
NK Brief No. 09-1-20-1
1/20/2009

It was revealed by Open Radio for North Korea on January 19 that DPRK authorities had handed down a decree to begin enforcing a ban the sale of imported goods in markets across the country on January 20. On January 3, North Korean authorities announced a measure to the Sinuiju Citizen Association and in the Chaeha Market banning the sale of imported goods, telling traders in the market to get rid of imported goods they had with them.

According to the report, the market management office in Sinuiju (operated under the control of the City People’s Committee) posted the decree at the entrance to the Chaeha Market, emphasizing that goods manufactured overseas were banned, while goods made domestically with imported materials were allowed to be sold. The report added that among goods banned from sale, those made in South Korea would be cracked down on especially hard.

Authorities are clamping down not only on markets in the city, but are also strengthening crackdowns on homeless vagrants, known as kotjebi, or literally, ‘flower swallows’. The report stated, “The Party, security office, trade association, youth association, and other organizations in Sinuiju are at the forefront of a coordinated crackdown on Kotjebi,” and, “As the crackdown is currently underway, between 20 and 30 vagrants, on average, are caught each day…those captured vagrants at the jail are sentenced to around 6 hours of forced labor in quarries or farms outside of the city, and must work hard before being given food.”

This same source reported that due to the Beijing Olympics last August, security on the border between North Korea and China had been tightened, and as winter rolled around and the river froze, this security was further strengthened, and, “recently, due to strengthened blockade of the border, the price of bribes to cross the river have more than doubled.”

In October 2008, the number of guards along the border near Hyesan was increased, and the distance between guardposts was halved from 200 to 100 meters. In addition, not only were military border patrols dispatched to the area, civilian patrols were also set up, increasing surveillance. This led to the cost (bribe) of a river crossing to jump from 1,000-2,000 Yuan (150-300 USD) in 2008 to as much as 4000-5000 Yuan (approx. 600-800 USD) this winter.

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Some immediate thoughts:

1. This is the kind of information that should be posted on the leaflets South Koreans are sending across the DMZ.

2. The Daily NK recently posted the “Top Nine” most popular goods list in the North Korean markets. Many of these are imported.

3. Lets hope that these restrictions are as difficult to enforce as the previous directives. As we all know, banning a product does not make it go away—even in North Korea. It raises the price to the final consumer and enriches smugglers at the expense of the state and party organs (though individual party members and security personnel benefit as smugglers).

4. These trade restrictions, if enforceable, effectively amount to an import substitution policy….a policy that has pretty much been thoroughly discredited.

5. According to this IFES article, markets are controlled by a local “Market Management Office” which is in turn subordinate to each “City People’s Committee.” According to the Worker’s Party organizational chart (view here), Each City People’s Committee is subordinate to a Provincial People’s Committee (PPC). All PPCs are subordinate to the Central Committee of the Workers Party. I am skeptical, however, that this is the only channel of authority. Are the DPRK’s markets part of any ministry’s portfolio?

This entry was posted on Thursday, January 22nd, 2009 at 2:05 pm and is filed under Central Committee, General markets (FMR: Farmers Market), Institute for Far Eastern Studies, International trade, Worker's Party. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

greenman

Furthermore, the directive will enrich the People’s Security Agents who will be patrolling the markets. In any case, cracking down on South Korean goods is not a risk to people’s survival, since such goods are usually the top-price variation for which a number of lower priced Chinese examples are also available.

When the state is NK, enriching smugglers is not a bad thing to do, i feel.

It’s surprising to see the claim on a Korea-related website that import substitution development has been discredited, when much of the early development of South Korea was achieved by exactly that method, and the continuing dominance of Korean cars and cellphones domestically is largely achieved by what we might call “import subsitution by stealth;” that is, putting up subtle, often technologically prohibitive barriers to foreign entrants that allow domestic makers to rule the roost.
NKeconWatch

Thanks, Greenman. I agree with your points about agents who patrol the markets and enriching smugglers.

As for your last point, I am not an expert in South Korean industrial policy, but I remain skeptical of “import substitution” and “infant industry” policies. The basic argument being that “infant industries” have a poor track record of “growing up” in the absense of international competition. Instead, domestic capital and labor are reallocated from areas in which they have a comparative advantage to areas in which they have a domestic “political” advantage. Consumers end up paying more for goods, exports fall, and living standards decline.

If you are ever in DC we can talk about it over coffee some day, but since this blog is not about South Korea I am going to leave it at that.
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DPRK bans South Korean, overseas goods from Markets