Archive for June, 2012

China offers large-scale food aid to North Korea from February

Friday, June 22nd, 2012

Institute for Far Eastern Studies (IFES)

China began to provide large-scale food assistance to North Korea from late February, reported KOTRA (Korea Trade-Investment Promotion Agency) in its recent report.

The Korea Business Center (KBC) in Canton, KOTRA’s overseas branch, released a report about the details of China’s food assistance to North Korea. “China is the largest supplier of material goods to North Korea but even the major North Korean experts in China do not have the exact figures of aid provided to North Korea.” Based on the information gained from local media and interviews with experts, “North Korea requested food assistance of at least 200,000 tons, as well as assistance in construction materials. The amount is estimated at more than 600 million yuan RMB.”

According to Chian Grain Reserves Corporation and Dalian Commodity Exchange, 6,600 million yuan RMB is equivalent to 150,000 tons of rice or 26.5 million tons of corn, calculated with the wholesale price in the Northeast China region. 600 million yuan RMB of rice exported to Shinuiju from Dandong can purchase about 17.1 million tons of rice.

Old rice and flour is being gathered in Dandong from all over China, and is being sold to North Korea at a very low cost without ever entering the Chinese domestic market. The KBC report evaluates that this is a welcomed change because North Koreans are not selective about their food, since they do not have enough money to buy food. It reports, “Cheap food is considered the best food,” and “North Korean customs automatically allows the food to enter the country and small amounts of a few tons of food is not even tariffed,” said an unnamed North Korean trader.

China’s recent food aid to North Korea was conducted largely in two ways: First, it was provided quietly without the public being notified; second, it went via the World Food Programme (WFP) and other international organizations. According to the WFP China Office, the recent 600 million yuan food aid to North Korea was not related to WFP aid to North Korea.

China is careful about releasing information related to its food aid to North Korea. However, what is known is that the aid consists of selling food at a low-cost and through nongovernmental exchanges. There are several trading companies in Dandong that ships food and other materials to North Korea when charitable organizations in Beijing make the request for shipment.

On the other hand, the May 24 (2010) Measures (of South Korea) has suspended all trade between North and South Korea. This has propelled North Korea-China trade to expand and the trade volume between the two nations increased 32 percent or 1.9 billion USD from January to April, compared to the same period of the previous year, according to the Korea International Trade Association.

During this period, North Korea’s export to China recorded 793 million USD, which also jumped 33 percent against last year and the revenues from import also increased 32.8 percent equalling 1.16 billion USD.


The natural state: The political-economy of non-development

Tuesday, June 19th, 2012

Economic historians Douglass C. North, John Joseph Wallis, and Barry R. Weingast published a paper in 2005 (later included in their book Violence and Social Orders, 2009) titled “The Natural State: The Political-Economy of Non-Development”.

You can read the paper here (PDF). Please do so with the DPRK in mind.

Though written at a theoretical level (not-specific to the DPRK) the authors do what I consider a remarkable job at creating a model that coherently explains some of the inconsistencies and peculiar behaviors of the DPRK government–particularly with respect to economic policy.

Implications of the model: Natural states use economic policy (privileged access to valuable resources or rights) as a mechanism to promote the stability of the ruling coalition. However, since natural orders rely on personal exchange, contracts and agreements cannot be credibly enforced over a horizon longer than the ruler’s life. As a result natural states can achieve some low levels of economic growth but are not able to easily achieve “development” (and there is a difference).

I have pasted some relevant sections of the paper below:



White House issues statement on DPRK

Tuesday, June 19th, 2012

Here is the statement as posted on the White House web page (2012-6-18):

Notice — Continuation of the National Emergency with Respect to North Korea

– – – – – – –

On June 26, 2008, by Executive Order 13466, the President declared a national emergency pursuant to the International Emergency Economic Powers Act (50 U.S.C. 1701-1706) to deal with the unusual and extraordinary threat to the national security and foreign policy of the United States constituted by the existence and risk of proliferation of weapons-usable fissile material on the Korean Peninsula. The President also found that it was necessary to maintain certain restrictions with respect to North Korea that would otherwise have been lifted pursuant to Proclamation 8271 of June 26, 2008, which terminated the exercise of authorities under the Trading with the Enemy Act (50 U.S.C. App. 1-44) with respect to North Korea.

On August 30, 2010, I signed Executive Order 13551, which expanded the scope of the national emergency declared in Executive Order 13466 to deal with the unusual and extraordinary threat to the national security, foreign policy, and economy of the United States posed by the continued actions and policies of the Government of North Korea, manifested by its unprovoked attack that resulted in the sinking of the Republic of Korea Navy ship Cheonan and the deaths of 46 sailors in March 2010; its announced test of a nuclear device and its missile launches in 2009; its actions in violation of United Nations Security Council Resolutions (UNSCRs) 1718 and 1874, including the procurement of luxury goods; and its illicit and deceptive activities in international markets through which it obtains financial and other support, including money laundering, the counterfeiting of goods and currency, bulk cash smuggling, and narcotics trafficking, which destabilize the Korean Peninsula and imperil U.S. Armed Forces, allies, and trading partners in the region.

On April 18, 2011, I signed Executive Order 13570 to take additional steps to address the national emergency declared in Executive Order 13466 and expanded in Executive Order 13551 that will ensure the implementation of the import restrictions contained in UNSCRs 1718 and 1874 and complement the import restrictions provided for in the Arms Export Control Act (22 U.S.C. 2751 et seq.).

Because the existence and risk of proliferation of weapons-usable fissile material on the Korean Peninsula and the actions and policies of the Government of North Korea continue to pose an unusual and extraordinary threat to the national security, foreign policy, and economy of the United States, the national emergency declared in Executive Order 13466, expanded in scope in Executive Order 13551, and addressed further in

Executive Order 13570, and the measures taken to deal with that national emergency, must continue in effect beyond June 26, 2012. Therefore, in accordance with section 202(d) of the National Emergencies Act (50 U.S.C. 1622(d)), I am continuing for 1 year the national emergency declared in Executive Order 13466.

This notice shall be published in the Federal Register and transmitted to the Congress.



DPRK tourism estimates

Tuesday, June 19th, 2012

Koryo Tours reports:

Last year, around 3,500 Western and 40,000 Chinese tourists traveled to North Korea, according to Beijing-based Koryo Tours, which accounts for about 50% of the Western tourists each year. That total includes American citizens.

“We would estimate that around 500 or 600 American citizens visit every year,” Nick Bonner, a Brit who founded Koryo in 1993, told Ad Age in an email interview. “There is a lot more to the country then you hear about from either North Korean or Western press.

Read the full story here:
Curious Westerners Making North Korea a Vacation Spot
Rupal Parekh


PRC approves international cooperative demonstration zone in Jilin

Monday, June 18th, 2012

UPDATE 1 (2012-6-18): According to Yonhap:

South Korean firms and China’s Jilin Province agreed to engage in joint venture projects worth 3.9 trillion won (US$3.4 billion), a local business organization said Monday.

Under the memorandum of understanding reached in Seoul, 48 South Korean companies and 48 Chinese regional government agencies and businesses will form partnerships to move forward on various business projects, the Korea Chamber of Commerce and Industry (KCCI) said.

The two sides will engage in such areas as agriculture, construction, energy, distribution and tourism, South Korea’s largest private economic organization said.

Lotte Group, the Korea Software Enterprise Association and HS Machinery Co. have expressed interest in business tie-ups with Jilin, which is located in northwestern China and includes Yanbian Korean Autonomous Prefecture. The province also borders North Korea to the south.

The KCCI said Jilin is one of China’ main heavy industrial hubs with average annual growth in the past three years reaching 13 percent. Such growth promises considerable business opportunities for South Korean companies wanting to diversify into emerging markets.

ORIGINAL POST (2012-5-3): According to China Daily:

The Chinese government announced Wednesday that it has approved the establishment of an international cooperative demonstration zone in Northeast China’s Jilin province to boost cross-border cooperation in the region.

In a document posted on the central government’s official website, the State Council said the zone is expected to expand investment cooperation in northeast Asian regions.

Located in the port city of Hunchun, the demonstration zone will cover 90 square km and include an international industrial cooperation zone, a border trade cooperation zone and economic cooperation zones — one between China and the Democratic People’s Republic of Korea (DPRK) and another between China and Russia, it said.

The demonstration zone will focus on the development of local manufacturing and processing industries, including those for auto parts, agricultural and animal products, seafood, new materials, medicines, textiles and garments, the document said.

The Tumen River in Hunchun straddles the borders of China, Russia and the DPRK. In 1992, China, Russia, the DPRK, the Republic of Korea (ROK) and Mongolia launched a joint development project in the Tumen River area, a move made to strengthen regional cooperation in the area.

The State Council has called for more efforts to boost the construction of Sino-DPRK and Sino-Russia international transit corridors and promote cross-border economic cooperation between China and the two countries.

More supporting policies, including fiscal and taxation support, will be implemented to encourage the development of new energy, new material equipment manufacturing and other projects in the demonstration zone, according to the State Council.

The construction of the demonstration zone will also make border regions more open to the outside and strengthen the social and economic development of local areas, the document said.

And according to the Daily NK:

The authorities in China’s Jilin Province are investing billions of Yuan in multiple projects along the Sino-North Korean border. The construction is concentrated in areas adjacent to major North Korean border towns in the mountainous region, giving it the hypothetical potential to provide massive opportunities for future Sino-North Korean economic growth.

According to Jilin Shinmun and other local media outlets, the high-speed train, which will allow travel from Hunchun to Changchun in two hours at speeds of up to 250kph, is under construction at a predicted cost of 37.7 billion Yuan.

Jilin Province is also planning a “five border region highway” in its 12th Five-Year Plan from 2011 to 2015. The Changchun to Hunchun leg is already open, while legs from Changchun to Huyinan, Songjangheo to Changbai, Changchun to Mt. Baekdu to Yanji, Changchun to Linjiang and Changchun to Jibian are under construction with the typical degree of Chinese speed. Among these locations, Changbai, Linjiang and Jibian all face major North Korean towns (Hyesan (Yangkang Province), Chungkang (Jagang Province) and Manpo (Jagang Province).

The province is also putting weight behind railway construction travelling towards North Korea; from Nanpin to nearby Musan (in North Hamkyung Province), Kayisan to Sambong (in North Hamkyung Province) and Changbai to Hyesan.

When all the construction is complete, there will be a bridgehead connecting the Tumen to the Yalu and linking all North Korea’s major cities with the Chinese economic miracle. If trade and cooperation between the two countries grows more active than it is now, the newly built highways and railways will form the core pathway for commercial distribution.

However, there are also major concerns with the plan. First and foremost, defection will become more difficult when the new developments are complete. The regions where highways and railways are now appearing have long been major defection routes or hiding places for new defectors.

In particular, a warning device installed by Jilin police in border villages, while an improvement in terms of public security, can also be used to report North Korean defectors to the authorities. The device, known as the ‘BF-01’, has been installed in 6,000 homes along the border at a cost of 5 million Yuan, connecting them with public security offices in an emergency. When pressed, names, addresses and the sound from the scene is transmitted to the local police station, border guards and neighbors.

“Regardless of whether North Korea conducts a nuclear test, it seems that North Korea and China are developing the northeastern region,” Shin Jong Ho, a research fellow with the Center for Northeastern Asian & Inter-Korean Affairs, part of the Gyeonggi Research Institute, commented. “In the future, if cooperation between North Korea and China gets better then these transportation routes will be very useful.”

Read the full stories here:
China approves int’l border cooperation zone
China Daily (Xinhua)

Border Region Getting Huge Boost
Daily NK
Park Seong Guk


Friday Fun: North Korean Hockey Jersey

Friday, June 15th, 2012

A reader named Justin pointed out to me a North Korea national team Tackla hockey jersey for sale on ebay:

The selling price is US$400, and for those of you who are cynical (like me) the seller “canucks109610” has a great reputation on ebay.

I was curious how the seller managed to come across the jersey so I searched around on the internet and found this story:

Out [sic] latest reader submission comes from international jersey collector and expert Anthony Ferra, who we know from being a fellow board member at the forums. He’s also personally responsible for several gems in the Third String Goalie collection, as his pursuits of rare and obscure jerseys has led to him having numerous contacts around the globe which sometimes make available to him some really hard to find and wonderful jerseys which don’t fit his personal collection, but are too hard to find to pass up.

His “Holy Grail” (or is it his “White Whale”?) remains the elusive North Korea Nike jersey. While he has obtained a couple of more recent vintage post-2002 North Korean jerseys from Tackla, the older Nike era style remains elusive no doubt due to the scarcity of the jerseys, the language barrier between him and any players who may have one, and the isolationist policies of the North Korean government, which limit it’s few hockey playing citizens from having access to the internet in order to even give Anthony a chance to even contact them.

So if any readers out there have a rare Nike North Korean hockey jersey, or they know how to get one, canucks109610 seems like a motivated buyer!


Exploring North Korean Arts

Friday, June 15th, 2012

Rüdiger Frank has edited a new book, Exploring North Korean Arts, which was published in April of this year. Other authors include: Aidan Foster-Carter, Koen De Ceuster, Frank Hoffmann, Keith Howard, Kate Hext, Jane Portal, Brian Myers , Dafna Zur, James E. Hoare.

You can read Frank’s article in the book, “The Political Economy of North Korean Arts”, here.

Michael Rank has written a review of the book in the Asia Times.

If you are interested in this topic, also check out Art Under Control in North Korea, Illusuve Utopia, Art of the DPRK (Koryo Tours), North Korean Posters: The David Heather Collection.

Here is my humble contribution to the topic: “Where do NK artists find inspiration

I have a list of the most relevant North Korean books and films here. Please let me know if there should be additions.


Statistics Without Borders in the DPRK

Wednesday, June 13th, 2012

UPDATE 1 (2013-1-18): The Wall Street Journal has published a couple of pieces on statistics education in the DPRK. The first piece is here.  The second piece is here.

Here is a blurb from the first piece:

The Pyongyang Summer Institute in Survey Science and Quantitative Methodology last year began teaching students at North Korea’s first private university about such topics as probability, correlation and survey methodology. More than 250 students, mostly in their 20s, learned from 13 instructors from the U.S. and Europe. This summer, the institute hopes to have 30 teachers instructing 250 students and 100 government workers.

Funded in part by the International Strategy and Reconciliation Foundation, a small Washington, D.C., nonprofit that focuses on North Korea, the institute has an annual budget of about half a million dollars, Dr. Chun said. The group sent an email this week to members of statistical organizations—including the American Statistical Association, which helps run the institute through its international outreach arm—soliciting instructors for the summer. The institute made clear it wouldn’t be able to fund most travel costs. Dr. Chun expects 60 to 70 applications for 30 spots.

Here is a blurb from the second piece:

The institute’s organizers steer well clear of politics. “PSI stays away from controversial courses,” said Yena Lee, co-founder of PSI. She added, “Through dialogue over these nonpolitical issues, we hope to pave the way to greater scholarly and professional engagement with DPRK and to long-term sustainable science diplomacy.”

“I had to change some of my ‘go-to’ examples about political polling, but discussion of politics and religion were off limits,” said Fisher, who in addition to — and unconnected to — his work in North Korea is a statistician at the U.S. Government Accountability Office. “Our purpose was one of science diplomacy and we all viewed it as an educational humanitarian mission.”

Governmental constraints extend to instructors while they’re in the program — for instance, barring them from leaving campus unaccompanied. Rules also kept students from PSI and PUST from being interviewed about the program. “That would not be allowed” by the North Korean government, said Norma H. Nichols, director of the International Academic Affairs Office at the institute’s host university, PUST. “If I were in Pyongyang and had the students nearby, it would still be a near impossibility to get permission even for one of them to participate with me in a Skype call.”

Instructors spoke positively about their students in the stats classes. The institute’s director, Asaph Young Chun, described how in one of his two classes last summer, students had to share textbooks because there weren’t enough to go around. “Most of the students now know by heart what survey is about, why pretest is essential and how data analysis should be planned in advance,” Chun said. And most, Chun said, “were so engaged, responsive, and interactive, I observed. They did not hesitate asking questions when in doubt or when I gave them opportunities to ask questions.”

ORIGINAL POST (2012-6-13): According to the group’s press release:

Statistics Without Borders Participates in Unprecedented Science Diplomacy Program between North Korea and the US/International Community
Alexandria, VA (PRWEB) June 13, 2012

Statistics Without Borders (SWB), an outreach group of the American Statistical Association (ASA), this summer will provide pro-bono instructors for the Pyongyang Summer Institute (PSI) in Survey Science and Quantitative Methodology in North Korea. The PSI is an intensive, international teaching program at the Pyongyang University of Science and Technology (PUST), the first and only private and international university, which was launched in North Korea in the fall of 2010.

PSI is the first program of its kind in North Korea, which has now approved visas for 15 visiting faculty. PSI students are expected to be upper level undergraduates and graduate students whose academic credentials are comparable to those students in Ivy plus schools.

The Summer Institute is jointly administered by the International Strategy and Reconciliation Foundation (ISRF), PUST and SWB. The ISRF is a 501(c)(3) organization recognized by the U.S. Departments of Treasury and Commerce for its humanitarian and educational programs in the Democratic People’s Republic of Korea (DPRK). The PSI will begin as a three-year pilot program that will take place from July 2012—July 2014.

SWB members make up the majority of the 15 instructors who will provide pro-bono instruction during July for seven four-week courses that will provide training in areas including sampling, statistics, survey methods, census methods, questionnaire design, computer-assisted data collection and analysis, both fundamental and advanced courses. The courses are modeled after those of the 65-year-old Michigan Summer Institute, a renowned international survey training program.

PSI instructors with expertise in survey research methods are: Sunny Bak, statistical consultant; Dr. Annelies Blom, Germany; Dr. Woody Carter, University of Chicago; Dr. Young Chun, an alumnus of Michigan Summer Institute and PSI Director; Bob Colosi, an alumnus of the Joint Program in Survey Methodoloy of the University of Maryland; Michael Costello, RTI International; Justin Fisher, George Washington University; Dr. Mark Griffin, Australian Development Agency for Statistics and Information Systems; Professor Patricia Gwartney, University of Oregon; Professor Ryung Kim, Einstein College of Medicine; Adam Molnar, University of Georgia; Dr. Rene Paulson and Dr. Jacquelyn Pennings, Elite Research in Texas; Pinar Ucar, Qatar Statistics Authority; and Elena Zafarana, Swiss Federal Office of Communications.

The DPRK Working Group of SWB, all ASA members, was formed for planning and implementing the PSI. Co-chairs of the working group are Dr. Gary Shapiro, chair of Statistics without Borders and former mathematical statistician, U.S. Census Bureau; Justin Fisher; and Dr. Young Chun. Other members of the group are: Professor Duncan Thomas, Director of the Biostatistics Division, and Verna R. Richter Chair in Cancer Research, University of Southern California; Dr. Griffin; Dr. James Cochran, professor, Louisiana Tech University; Michael Costello; Professor Sunghee Lee, University of Michigan Joint Program in Survey Methodology; Professor Dominique Haughton, Bentley University; and Professor Mary Gray, American University, Washington, D.C.

About Statistics Without Borders
Statistics without Borders is an apolitical group that was formed in late 2008 to provide pro-bono statistical support to organizations involved in not-for-profit international efforts, mostly involving survey planning and/or analysis of survey data. The goal of the group is to achieve better statistical practice, including statistical analysis and design of experiments and surveys. SWB has more than 500 members from some 30 countries.

About the American Statistical Association
Headquartered in Alexandria, Virginia, the American Statistical Association is the world’s largest community of statisticians and the second oldest continuously operating professional society in the United States. For more than 170 years, the ASA has supported excellence in the development, application, and dissemination of statistical science through meetings, publications, membership services, education, accreditation, and advocacy. Its members serve in industry, government, and academia in more than 90 countries, advancing research and promoting sound statistical practice to inform public policy and improve human welfare. For additional information about the American Statistical Association, please visit the ASA web site at or call 703.684.1221.

For more information:
Rosanne Desmone
703.302.1861 (direct)
703.946.3820 (mobile)
Rosanne (at) amstat (dot) org


Ari Sports Factory

Monday, June 11th, 2012

The Hankyoreh has published an interesting about a inter-Korean economic project in Dandong, China.

According to the article:

Taking its name from the traditional song “Arirang,” Ari Sports was established in Nov. 2011 with a 500 million won investment from the city of Incheon and 23 workers from North Korea. It is managed not by a North or South Korean organization, but by China’s Yunnan Xiguang Trade.

The football sneaker and sports clothing production plant was originally planned for Pyongyang’s Sadong District. Efforts began in 2008, and the building was nearly complete when the May 24 measures were passed in 2010 and it had to be abandoned. The factory in Dandong is a temporary structure erected in its stead.

Inter-Korean Athletic Exchange Association standing committee chair Kim Gyeong-seong said, “It’s frustrating not to be able to use the good land and facilities we had in Pyongyang.”

“I hope we are soon able to produce and sell soccer shoes and clothes in Pyongyang,” Kim added.

Song said, “Things are difficult right now between North and South Korea, but if we all work together we can overcome it.”

He added that the company was a “small but meaningful project taking place at a time when economic cooperation has been shut off.”

The company has received orders for three thousand pairs of soccer shoes as of May. It currently plans to produce and sell two to three thousand pairs a month. To achieve this, it is organizing a football contest for working people nationwide at the first Incheon Peace Cup event to commemorate the June 15 Summit on June 16 and 17.

I have never heard of this project and I have been unable locate any other articles on the factory. Despite its relative obscurity, however, the North Korean workers know how to deal with the foreign press (they stay on message):

On June 9, the company was visited by around fifty participants in the Incheon-Dandong-Hankyoreh West Sea Cooperation Forum, including Incheon Mayor Song Young-gil and Hankyoreh Foundation for Reunification and Culture chairperson and former Unification Minister Im Dong-won. Located in a farming village on the outskirts of Dandong in China’s Liaoning Province, Ari Sports has 1,600 square meters of floor space on a plot of land also measuring 1,600 square meters.

North Korean workers expressed their frustration with the inability of economic cooperation projects to move forward due to the state of inter-Korean relations. Workers Kwon Ok-kyong, Kim Kum-ju, and Kim Myong-hwa said they wished production and sales could proceed smoothly.

When asked about working at the company, Cho Sang-yon said, “Well, it’s not as good as working in my home country.”

Pak Hyok-nam said, “I’d like to see bigger economic cooperation projects between North and South.”

I have been unable to learn anything else at all about this project.  If you are able to find company logos, web page, photos, or even factory locations on Google Earth, please let me know.

Read the full story here:
Factory in China continues producing soccer shoes in spite of frosty relations
Kim Kyu-won


ROK investigates firms doing business with DPRK

Thursday, June 7th, 2012

According to the Hankyoreh:

Prosecutors carried out a large-scale investigation of companies involved in inter-Korean trade over the past year. They were seeking evidence of violations of the Inter-Korean Exchange and Cooperation Act (IKEC Act) in their remittances to North Korea. Around 200 such companies were found to have been fined.

The fined companies argue that their penalties are attributable to differing interpretations and application of the law by the Lee Myung-bak administration. The same actions were not deemed problematic under the administrations of Kim Dae-jung and Roh Moo-hyun (1998-2008). Those governments took a softer line on North Korea; things changed significantly when the conservative Lee Myung-bak government took office in 2008.

The Inter-Korean Economic Cooperation Promotion Committee, under chairman Jeong Yang-geun, estimated that as many as 200 companies involved in inter-Korean trade had been fined as of late May. A biggest change was the Lee government’s May 24 measures, put in place after the March 2010 sinking of the Cheonan warship. The measures suspended almost all transactions with North Korea.

Companies that were already on the brink of bankruptcy were stuck with fines ranging from one million to eight million won. Companies with high transaction volumes were fined the legal limit of 10 million won (about US$8500).

They were accused of violating Article 13, Item 1 of the Exchange and Cooperation Act, citing Article 4 of a Jan. 2008 Unification Ministry notice stating that anyone sending a third-party remittance to North Korea through a Chinese bank account must receive separate permission from the Unification Minister.

The president of Company “H,” identified by the initial “K,” has been called and visited several times since late last year by police public security officers and detectives from in and around Seoul and elsewhere investigating items brought in from North Korea. In April, he was summoned to a police station in South Gyeongsang province.

K had been involved in transactions since before the Kim and Roh administrations. He said there were no problems because the items in question were subject to blanket approval by the Unification Minister and had already passed through normal procedures.

The president of Company T, identified as Lim, was investigated on the same charge between January and April of this year. He confessed being cowed by the demand to travel from Seoul to a police station in Incheon and report to the security division there. He said he wasted time and suffered hardship submitting three rounds of documentation at the police’s request. Five companies had already been investigated by that same police station, Lim said.

“The police asked for an authoritative interpretation, and the officials at the Unification Ministry couldn’t make a proper judgment about whether there had been a violation. It was as though they had no idea such a rule existed,” he added.

The president of Company C, who goes by the initial “G,” paid a visit to Korea Exchange Bank in late 2007 to send a remittance to pay for sand, and was told that a third-party remittance was not possible. G went to the Bank of Korea. There, he was told they wouldn’t be able to do a remittance either. So he put one of the employees there in touch with the Unification Ministry. After that, he was able to notify the Bank of Korea and send remittances within their limit without a problem.

Some time around March of 2011, police launched an investigation and began calling him in. He asked them just what kind of permission he was supposed to receive. There was no information in the Jan. 2008 ministry notice about the procedure or documents for remittances. He also asked what kind of law for exchange and cooperation the IKEC Act was. G was fined according to another law after lawfully sending the remittance according to the Foreign Exchange Transactions Act.

Experts and attorneys countered that the transactions in question were already approved according to Article 13, Item 4 of the IKEC Act, which empowers the Unification Minister to issue blanket approvals to “items involved in transactions with North Korea, forms of transactions, and methods of payment.” And since North Korea does not have an international financial system, nearly all the companies’ remittances took the form of third-party transactions through Chinese banks.

Experts and attorneys said the fines could only be interpreted as prosecutors taking issue with the very notion of money being sent to North Korea. The businesspeople in question had also agreed with the ministry to follow a normal procedure of reporting third-party remittances to the Bank of Korea in accordance with the Foreign Exchange Transactions Act, they said.

An attorney for Corporation “T” said, “Not only is there ample room for debate about judicial authorities punishing activities deemed lawful by Article 13, Item 4 of the IKEC Act on the basis of the Unification Minister’s notice, but it also shows a disregard for what the ministry has recognized over the past years.”

Indeed, a trade company sent a question to the ministry asking whether any of the 500 firms it knew to be involved in inter-Korean economic cooperation had requested approval from the minister for third-party remittances to North Korea. None, the ministry replied.

The ministry was also found not to have taken any follow-up measures on documentation or procedures in its presiding offices after specifying in its notice that the minister’s approval was required for third-party remittances.

University of North Korean Studies professor Yang Mu-jin, a onetime secretary to the Unification Minister, said, “After the May 24 measures, now they’re killing these businessmen twice.”

But a senior ministry official said there was no problem with application of the law in the prosecutors’ investigation, although it was done without prior discussion with the ministry.

Another senior official said the notice was issued “in the interest of ensuring transparency in remittances to North Korea.”

Those on the receiving end of the fines said the measures were tantamount to using the Exchange and Cooperation Act to kill off the companies involved in exchange and cooperation.

“They’re about to keel over anyway because of the state inter-Korean relations are in,” one said. “What good is the law once all the companies are gone?”

Unification Ministry figures show a steady increase in the amount of North Korean items brought in through inter-Korean trade (including consignment processing), rising from US$258 million win 2004 to a peak of US$645 million in 2007. The level stayed above US$600 million as recently as 2008, the first year of the Lee administration.

But as relations with North Korean headed downhill, the numbers plummeted below US$500 million starting in 2009, finally bottoming out at US$4 million in 2011 after relations were severed with the May 24 measures.

Read the full story here:
When it comes to trading with North Korea, it’s no longer business as usual
Kang Tae-ho