ROK raises barriers to trade with DPRK

According to Yonhap, the South Korean government is subsidizing firms as they transition away from trade with North Korean firms:

South Korea will provide low-interest loans worth a total of about 60 billion won (US$50 million) to companies troubled by a government ban on trade with North Korea, an official said Monday.

The loans are aimed at alleviating the financial trouble of the companies, which started when South Korea implemented a ban in May in retaliation for the March 26 sinking of its warship near the Yellow Sea border with North Korea, Unification Ministry spokesman Chun Hae-sung said in a briefing.

“Each company will be eligible to receive a loan of up to 700 million won with a 2 percent interest rate, based on the volume and type of trade the companies have been doing for the past year,” he said, adding the measure will take effect next week.

Hundreds of companies had to stop trading with North Korea after South Korea announced that a multinational investigation found the communist state responsible for the Cheonan sinking, which claimed the lives of 46 sailors.

Yonhap also reports  South Korean companies operating in the DPRK will once again be banned from shipping goods and materials for consignment trade with the DPRK from early next month:

The application deadline was set for Aug. 10, when the temporary lift of the existing ban will end, the ministry said.

On May 24, South Korea prohibited all shipments to the North as part of punitive actions against the communist neighbor it blamed for a deadly torpedo attack on one of its warships. The March 26 sinking in the Yellow Sea killed 46 sailors.

More than 500 hundred South Korean companies were doing consignment trade with the North, in which they send raw material and bring back processed goods. Such trade amounted to US$254 million in 2009.

Seoul’s shipment ban seriously affected South Korean businesses operating at the North’s border city of Kaesong, where some 120 firms from the South operate manufacturing lines using the North’s relatively cheap labor costs.

The companies’ complaints forced the government to temporarily lift the ban, on condition that the business contracts were made before May 24.

Read the full stories here:
S. Korea to offer loans to companies banned from trading with N. Korea

S. Korea to re-impose ban on materials shipments to N. Korea after temporary lift


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