Archive for the ‘Kaesong Industrial Complex (KIC)’ Category

Koreas agree on railway test runs, rice aid

Sunday, April 22nd, 2007

Yonhap
4/22/2007

South and North Korea on Sunday agreed to conduct test runs of cross-border railways next month and make efforts to ensure a military guarantee for their safe operations.

The South also agreed to provide 400,000 tons of rice to the impoverished North in late May, but the accord reached by the two sides did not include a commitment by North Korea to take steps toward dismantlement of its nuclear programs, said pool reports from Pyongyang, the venue of the talks.

The Koreas announced a 10-point agreement on test runs of cross-border railways, rice aid and expanded economic cooperation after they engaged in marathon talks. The four-day talks stretched into an extra day as the two sides failed to thrash out differences by the deadline.

“The two Koreas will hold working-level talks to discuss operations of cross-border railways in Kaesong on April 27-28,” the agreement said. They agreed to make efforts to secure a military security guarantee prior to conducting the test runs on May 17.

The security issue was a main sticking point as South Korean officials contended that the test runs will be “meaningless” if there is no safety guarantee on the part of the North Korean military.

In May 2006, North Korea abruptly called off the scheduled test runs under apparent pressure from its hard-line military.

The two sides were originally scheduled to issue a joint press statement at 2 p.m. on Saturday, but they held a series of overnight negotiations to settle remaining differences and work out the wording for a final draft of a joint statement.

On Thursday, the North Korean delegation stormed out of the conference room to protest the South’s call for the North’s quick implementation of a denuclearization agreement, but talks resumed later as scheduled.

“During the talks, we made clear that it will be difficult to provide rice unless North Korea acts to fulfill the Feb. 13 agreement,” Chin Dong-soo, chief of the South Korean delegation, said in a press briefing held in Pyongyang after the announcement of the agreement.

South Korea also agreed to provide raw materials to the North to help it produce clothing, footwear and soap in June in return for its natural resources. A South Korean delegation will visit envisioned development sites in the North that month. Working-level negotiations on this issue will be held in the North Korean border city of Kaesong on May 2-4.

Shortly after the North conducted missile tests in July, the South suspended food and fertilizer aid. But fertilizer aid was resumed in late March, a few weeks after the two sides agreed to repair their strained ties.

During the talks, the North called for receiving raw materials from the South in exchange for providing its natural resources “close to the time when railway test runs are conducted,” the pool reports said.

But the South made clear that it will provide the North with US$80 million worth of raw materials only after the two sides conduct the test runs.

The reconnection of severed train lines was one of the tangible inter-Korean rapprochement projects agreed upon following the historic summit between then South Korean President Kim Dae-jung and North Korean leader Kim Jong-il in 2000.

The tracks, one line cutting across the western section of the border and the other crossing the eastern side, were completed and set to undergo test runs. A set of parallel roads has been in use since 2005 for South Koreans traveling to the North.

In 2005, South Korea agreed to offer raw materials to the North to help it produce clothing, footwear and soap starting in 2006. In return, the North was to provide the South with minerals, such as zinc and magnesite, after mines were developed with South Korean investments guaranteed by Pyongyang.

But the economic accord was not implemented as North Korea cancelled the test runs of the railways last May.

The pool reports said the South pushed to include the use of overland transportation in a clause of the agreement, but the two sides failed to see eye-to-eye on the issue. They agreed to hold talks in Kaesong to discuss ways of advancing into third countries in the field of natural resource development.

The next economic cooperation meeting will be held in the South in July 2007, and the two Koreas agreed to reach an agreement on the prevention of flooding in shared areas near the Imjin River and implement it after exchanging a document in early May.

The latest inter-Korean agreement came just a week after the communist nation failed to meet the April 14 deadline to shut down and seal its nuclear facilities under a six-nation agreement signed in Beijing in February.

North Korea has said it would take the first steps toward nuclear dismantlement as soon as it confirms the release of its funds frozen in a Macau bank since September 2005.

Macau’s financial authorities unblocked the North’s US$25 million in Banco Delta Asia, but the deadline passed with no word from the North on whether it has confirmed the release of the funds or when it will start implementing the initial steps.

Under the Feb. 13 agreement, North Korea pledged to shut down its main nuclear reactor and allow U.N. inspectors back into the country within 60 days. In return, North Korea would receive aid equal to 50,000 tons of heavy fuel oil from South Korea.

The U.S. promised to resolve the financial issue within 30 days, but failed to do so because of technical complications.

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Kaesong Bill Endorsed

Friday, April 20th, 2007

Korea Times
Jung Sung-ki
4/20/2007

A National Assembly panel Friday approved a bill to give full-fledged support to domestic firms operating in the inter-Korean industrial park in the North Korean border city of Kaesong under South Korean law.

The Assembly’s Unification, Foreign Affairs and Trade Committee endorsed the bill under which South Korean companies in the Kaesong complex are to receive financial support from the government.

Under the bill, companies concerned will get government funds for infrastructure in the industrial zone and be subject to tax reduction in case of investment in the North.

South Korean insurance acts and other labor-related laws will cover employees under the bills.

The complex is a symbol of the South’s engagement policy toward the North and cross-border reconciliation, along with the South-led tourism program at Mt. Kumgang in North Korea.

About 20 South Korean firms are operating in the joint complex employing more than 13,000 North Korean workers.

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N.Korean Demands Threaten Kaesong Complex

Wednesday, April 18th, 2007

Chosun Ilbo
4/18/2007
 
The inter-Korean Kaesong Industrial Complex in North Korea, now in its second year, is in trouble due to “unreasonable” demands from Pyongyang, South Korean companies there say.

North Korea late last year suggested that South Korea pay North Korean workers according to their academic background. “North Korea demanded that we pay four-year college graduates 30 percent more and two-year college graduates 10 percent more than high school graduates, depending on their type of work,” a businessman said. As of last year, North Korean workers in the industrial complex got an average monthly salary of US$67, including overtime.

But businesspeople in the complex said the demand ignores realities. “Most of the workers at the Kaesong Industrial Complex are doing menial jobs, so staff with a higher academic background are not necessarily more productive,” one said. “Moreover, if we should introduce the system, the North Korean authorities would inevitably intervene in the hiring process. Our autonomy in personnel management and governance structure could suffer.”

Some 13,000 North Koreans work at the Kaesong complex. Four-year college graduates and two-year college graduates account for about 10 percent of them. A South Korean government official said, “If we introduce this system, businesspeople say their spending on wages will rise by about 4-10 percent.” Seoul wants to continue negotiations with the North. Pyongyang, which takes most of the workers’ salaries, is already demanding considerable fees for issuing permits to South Korean businesspeople and officials who want to stay for extended periods.

Even if the fee and wage issues are resolved, nobody knows what requests North Korea will make next. Kim Kyu-chul, the chairman of civic group Citizen’s Solidarity for Inter-Korean Economic Cooperation, said Tuesday, “We’re not sure if the free trade agreement with the U.S. will recognize products made at the Kaesong Industrial Complex. And the productivity there is not high due to various regulations. If there are wage hikes, South Korean businesses there will suffer.”

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NK Demands Wage Hike in Kaesong

Tuesday, April 17th, 2007

Korea Times
Lee Jin-woo
4/17/2007

North Korea has urged South Korean manufacturers at the inter-Korean Kaesong Industrial Complex in the North to increase wages for some of the workers there, Unification Ministry officials said Tuesday.

The North demanded a 30 percent wage hike for university graduates working at the complex and a 10 percent salary increase for two-year college graduates, the officials said.

They said Pyongyang called for the different salaries to be dependant on a worker’s job and position.

As of Monday, a total of 13,032 North Koreans work at the complex. Some 10.6 percent and 11 percent of them graduated from universities and two-year colleges, respectively.

“Given the number of highly educated North Korean workers, approximately a four percent wage hike is expected this year,’’ an executive of a South Korean company at the Kaesong site said.

“Besides, we still face much difficulty in exporting goods especially to the United States due to the country of origin of the goods being the DPRK,’’ he said. DPRK stands for the North’s official name _ the Democratic People’s Republic of Korea.

Under the regulations on management of the Kaesong complex, which was agreed upon between the two Koreas in 2003, North Korean workers have been paid $57.50, a quite sizable amount by North Korean standards, per month, regardless of their position _ plus overtime pay.

The current regulations allow a five percent wage increase annually, but the North has not officially requested any wage hike until now.

Seoul and Washington have sought ways to pay North Korean workers directly not by paying North Korean authorities, which have a distinctive social and employment system.

Meanwhile, the North has demanded that South Korean visitors or residents at the Kaesong site, just north of the Demilitarized Zone (DMZ), pay registration fees.

The ministry has withheld the exact amount of money that Pyongyang has demanded, only saying there is a gap between the two sides.

But South Korean companies at the site are worried about the increasing financial burden due to such changes.

In the landmark free trade accord struck between the governments of South Korea and the U.S. on April 2, the two sides agreed to deal with the issue of recognizing Kaesong products as South Korean goods as part of OPZ (outward processing zone) talks in the future.

Unlike South Korean officials who have been positive about the future negotiations on the Kaesong goods, U.S. negotiators remain calm over the issue.

Of 39 South Korean companies at the joint complex, 22 have been operating under a pilot project.

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At Gaeseong, bonds form between Koreans from North and South

Monday, April 16th, 2007

Hankyoreh
Lee Yong-in
4/16/2007

The Gaeseong (Kaesong) Industrial Complex is a gauge of conditions on the Korean peninsula. Operations there were nearly stopped outright in the wake of the North Korean nuclear and missile tests. Yet now, thanks to the February 13 agreement on the North’s denuclearization forged at the six-party talks as well as the South Korea-U.S. free trade agreement (FTA), operations have picked up at the industrial park.

In particular, the FTA negotiations have brought the industrial complex new interest from around the world. The agreement reached opened up the possibility of products manufactured at Gaeseong being exported to the U.S ., albeit only after the North meets certain conditions. Whether or not Gaeseong goes beyond spurring North-South economic cooperation and becomes a pillar for peace in East Asia remains to be seen.

The Hankyoreh went on location from March 27 to 30 to take a closer look.

GAESEONG INDUSTRIAL COMPLEX – March 29, 6:45 a.m. Before the dawn clears, the rush to work begins. At the intersection that divides the factory buildings, three or four buses stop in front of a sign reading “Gaeseong Industrial Zone” and North Korean workers pour out. There are approximately 80-100 workers on each bus. Shown to the press for the first time since operations began two years ago, the scene resembles the crowded morning commute on Seoul subway line No. 2.

The clothes worn by the female workers are similar to those worn by the women in Pyongyang, as witnessed during a visit last October. Some even wear the long coats now fashionable in the South. Yellow, pink and checkered, the clothes they wear are of all colors and patterns. Wearing makeup and linking elbows as they walked, their smiling faces were as graceful as the flowers of fall. The streets and buildings were sparkling, as well. The chromatic coloring of the complex contrasts clearly with that of the achromatic Guro Digital Complex in the early 1990s in Seoul.

There are more than 1,200 North Korean laborers working in the 22 factories that have so far set up shop at Gaeseong during the complex’s preliminary and first stages. Ninety percent of them commute to work by bus. As the start of operations nears at 7:10 a.m., the workers flood the sidewalks and streets before entering their respective factories. Their paces were hurried and nimble.

“Welcome! I’m glad you’re here!” Four South Korean employees greet the North Korean workers at the gate to Shinwon’s factory. Regardless of rain and snow, they have been there to give their morning greetings to the workers. Among them stands director Hwang U-seung, who recalled “I was most happy when the North Korean workers expressed their gratitude to me for greeting them here every morning.”

As the time of dividing among interested companies the remaining 530,000 pyeong site of the first project draws near (one pyeong is 3.3 square meters), the commute to work promises to become only more complicated. The reason is that after the end of the first stage of development – around the first half of next year – some 7,000 to 10,000 North Korean workers will take up work at the site.

Currently, it is logistically impractical to transport over 10,000 workers every morning by the current 49 buses to meet the start of operations, which is between 7:10 and 8:10 a.m. In particular, in order to meet the 7:10 bell, the women workers must wake up between 4:30 and 5 a.m. so as to make breakfast, walk 20 minutes to the city bus stop, and ride the bus for 20-30 minutes to work.

The Gaeseong Industrial District Management Committee is rushing to find a solution to the commuting problem. There is a plan to build housing within the complex so that 20,000-40,000 workers can commute by foot. Furthermore, if the two Koreas restore the railway line between Seoul and Pyongyang, a project currently being discussed, there is also talk of adding a special commuter train between the workers’ lodgings and Gaesong on the line. In addition, negotiations are underway with the industries present over purchasing more buses or increasing bicycle use.

March 28, 10:00 a.m. The Gaeseong management committee grew hectic. Word came that former Minister of Unification Jeong Dong-yeong’s entourage would arrive in one to two minutes. This reporter jumped into a car so that he would not disturb Minister Jeong’s visit, and drove over to a factory built by the South Korean shoemaker Racere, where he took turns experiencing the work of a typical Gaeseong laborer.

At the factory, seven North Korean workers, their work clothing on and their sleeves rolled up, were gluing the soles of shoes. This reporter also changed into the work clothes and rolled his sleeves up.

After a glance of encouragement from the North Korean laborers, I started to apply glue to the shoes, as well. I was nervous and embarrassed due to my misapplication of the glue. Smiling, the North Korean forewoman Kim Gyeong-sun (45) said, “It looks easy, but it’s really difficult. That’s why newcomers have to be strictly trained.” Kim then taught me in detail the method of holding the brush, the amount of glue to use, and the way of coating the bottoms of the shoes. As if taking on the role of teacher, an animated expression danced across her face.

But after about 30 minutes, the brushes began to harden. Noticing this, a laborer brought me a new brush. “It is a bad brush that is hindering you work,” the North Korean teased, smiling. Asked whether two of the workers had boyfriends, one worker responded, “you think I’d want to marry so soon?” At this, coworkers Jo Jeong-hui and Kim Eun-gyeong, both 19, grinned widely.

As the atmosphere became lighter, Kim Gyeong-sun began bragging about her children. Her 20-year-old eldest son was in the military, and her second son, 18, was studying hard at a mining college, she reported. Aware that their mother was working at Gaeseong, they expressed their support for her “good work.” Asked whether her salary was sufficient to get by, she responded, “More than the money, I feel pride at the fact that North and South are working together.” A model answer, to be sure.

At 12, the lunch bell rang. As she was leaving, a worker offered to make me into “an honorary worker” there, urging me to come back to visit often.

March 28, noon. I joined for lunch the workers of a factory built by South Korean shoe maker Racere. After finishing the meal, I peeked at the North Korean cafeteria. The North Korean workers seem to bring their own rice to supplement the soup provided. When Gaeseong first opened, the North Korean workers were reluctant to visits by the Southerners in their cafeteria during lunchtime. But as the months passed, the atmosphere changed. Now, the South Koreans who sometimes pay a visit to the North Korean cafeteria are now met with warm greetings by the workers.

March 28, 5:00 p.m. The Shinwon workers head home after a day of work. At one corner of the factory, there is a “general meeting” where production totals are compared with goals. The North Koreans are used to performing such checks two to three times a day. The workers change into their regular clothes and sign out using their personal ID cards. As they scan their cards, a picture of them as well as their personal information flashes on the monitor. Those working into the evening gather for a simple supper of ramen and rice in the cafeteria.

At seven in the evening, twilight comes to Gaeseong Industrial Complex, which glows beneath the stars. Nearly all of the factories keep their lights bright, and the streetlamps gently light up the surroundings. Those working into the night that day numbered over 6,000, just about half of the entire Gaeseong workforce.

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Kaeseong’s N.K. workers have warmed up to S.K. bosses

Friday, April 6th, 2007

Hankyoreh
4/6/2007

At first reclusive, North’s workers are smiling, eating together with Southern counterparts

Two years after the Gaeseong (Kaesong) Industrial Complex began operations, the attitude of North Korean workers toward their South Korean employers has significantly changed for the better, according to heads of South Korean plants located in the joint Korean industrial park.

Ra Sang-jin, 66, the plant chief of Daehwa Fuel Pump, which started operations at Gaeseong in June 2005, said North Korean workers’ attitude toward their South Korean employers has changed. When Ra came to Gaeseong, North Koreans disliked South Korean employees coming to restaurants for the Northern workers, for at Gaeseong, the restaurants are divided along the lines of ’North’ and ’South,’ as the North Korean workers were at first reluctant to dine with Southerners. Currently, however, Ra frequently visits North Korean restaurants and is asked by North Korean workers to join in a a meal.

“It seemed to take seven to eight months to remove the wall,” Ra said. North Korean workers are also adapting to the lifestyle at Gaeseong at a faster pace than before. “Recently, some North Korean workers are smiling after only three or four months,” Ra said.

North Korean workers’ reclusive habits – having not met any South Koreans before – have changed, as well. Hwang U-seung, 46, the plant chief of Shinwon, said, “When I meet a North Korean worker on the street and ask which company she is working for, she answers me. That was impossible in the early days [of the Gaeseong complex],” Hwang said. Baek Yeong-ho, 59, the plant chief of Pyeonghwa Shoes, “In early days, the North Korean workers didn’t go to the bathroom alone,” like some sort of old-fashioned social habit. “But they do now. They also don’t step aside when South Koreans are passing.”

Some Korean cowerkers are picking and choosing from the language of the other country, as the language in the North and South has been rendered different after more than 50 years of separation. For example, some South Korean workers call a toilet ‘wisaengsil,’ the North Korean term, and Some North Korean workers call the toilet ‘hwajangsil,’ the South Korean term.

Meanwhile, at first only North Koreans used their common phrase, “Ileopseupnida,” which to them means “no problem” but has a slightly rude meaning in South Korea, akin to “I don’t care.” Now, Northerners and Southerners alike use the phrase. A South Korean who has been working alongside North Koreans at Gaeseong said that “my family in South Korea sometimes tells me my accent has become a little strange.”

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Inter-Korean commercial trade rises 40 percent in first quarter

Thursday, April 5th, 2007

Yonhap
4/5/2007

Commercial trade between South and North Korea rose 40 percent to US$187.08 million year-on-year in the first quarter, a top unification official said Thursday.

The increase was mainly attributed to an influx of zinc bullion, sand, fishery items, shoes, clothing and watches into a joint industrial complex in the North Korean border city of Kaesong.

“But noncommercial trade between the two sides rose a mere 6.7 percent to $278.11 million in the first quarter because of the halt in government and civic aid to the North,” Vice Unification Minister Shin Un-sang said in a press briefing.

Last week, South Korea sent the first batch of its promised 300,000 tons of fertilizer aid as well as flood relief supplies to the North.

Shortly after the North conducted missile tests in July, the South suspended food and fertilizer aid along with its emergency aid to the impoverished North. In retaliation, the communist nation suspended inter-Korean talks, family reunions and the construction of a family reunion center.

In March, the two Koreas agreed to resume humanitarian aid and family reunion events just days after North Korea promised to take steps to shut down its main nuclear reactor and eventually disable it in return for energy aid from South Korea, the United States, China, Russia and Japan.

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New prime minister says Kaesong Industrial Complex to benefit from FTA with U.S.

Tuesday, April 3rd, 2007

Yonhap
4/3/2007

Incoming Prime Minister Han Duck-soo said Tuesday that goods produced in a joint industrial complex in North Korea will benefit from a free trade pact agreed upon with the United States the previous day.

Denying reports that the free trade agreement put aside the country-of-origin issue for future negotiations, Han said that the two countries cleared the way for treating goods produced in the Kaesong Industrial Complex as made in South Korea.

“The media reports that the Kaesong Industrial Complex was put on as a ‘built-in’ agenda are not true,” Han, who took office early in the day, told reporters in his inaugural press conference at the government building.

A “built-in” agenda refers to a negotiating scheme for sensitive issues in which the countries involved agree to put them on hold and discuss them in the future. Local reports have called the Kaesong issue “built-in,” as Seoul has been pushing for its inclusion in the trade deal despite Washington’s objection.

Under the deal, the two sides agreed to establish a “committee on outward processing zones on the Korean Peninsula” to discuss the Kaesong issue as part of their trade liberalization. But they also stipulated that such a step will be made under specific circumstances, such as the progress in denuclearizing North Korea, according to a statement by the Ministry of Foreign Affairs and Trade.

Han said the agreement is in line with South Korea’s constitution that its territory is the entire Korean Peninsula, and it does not recognize North Korea as a state.

Han also said the government will make public all of the contents of the agreement in mid-May when it is expected to be completed, and all the documents related to the agreement will be released three years later.

The Kaesong complex, just north of the inter-Korean border, is one of two flagship projects the South operates in the spirit of reconciliation with the North following the historic inter-Korean summit in 2000. Over 11,000 North Korean workers are employed by dozens of South Korean companies there, where they produce garments, utensils and other labor-intensive goods. Another reconciliation project is the operation of tours to the North’s scenic Mount Geumgang.

South Korean companies operating in Kaesong say the inclusion of the goods in the FTA is crucial, as this will allow them to export goods to the world’s largest market, as well as provide a template for future trade deals with other countries. 

U.S. Accepts Kaesung Industrial Complex as an “Outward Processing Zones”
Daily NK
Kim Song
4/3/2007

A press conference was held following the conclusion of the Korea-U.S. Free Trade Agreement (FTA) on the 2nd where Korea’s Trade Minister Kim Hyun Chong announced, “The U.S. agreed to recognize the Kaesung Industrial Complex as a remote location.” By this he meant that goods manufactured in Kaesung complex would be accepted as goods made in Korea.

As annexes to the agreement, Committee on Outward Processing Zones on the Korean Peninsula must be established. Undeniably, the article also states that the contents would have to be approved by the U.S.

It seems that both sides agreed that this approach would be the U.S.’s minimal request and compromise on the Kaesung issue and a built-in tactic to keep the negotiating flame burning rather than a deal-breaker.

Previously, the U.S. made concessions regarding Outward Processing Zones with Singapore and Israel’s FTA. As for Korea, these preferential tariffs, not only acknowledges goods manufactured from Kaesung by the FTA, but sets a standard to other sectors in the world such as the European Free Trade Association and ASEAN.

It appears that the recognition of Kaesung as an Outward Processing Zone was based on an agreement that the Korean Peninsula would advance towards denuclearization.

The denuclearization of the Korean Peninsula will eventually lead to the removal of laws that will further eliminate hostile diplomacy and trade between the U.S. and North Korea. It is possible that denuclearization will establish the normalization of U.S.-North Korea relations and solve the issue of Kaesung naturally, in due time.

However, the denuclearization of the Korean Peninsula is not something to be solved within a short time. As a U.S. official once revealed, amity between the U.S.-North Korea can only be possible when North Korea decides to comply with the rules of the international community. In the bigger picture of the Korean Peninsula and economic conglomerate, Kaesung in relation to denuclearization is only a long-term sketch.

Furthermore, there is one minor glitch. Kaesung complex does not match the international standards accepted by the U.S. in relation to labor requirements and such. At any opportunity given, Jay Lefkowitz, U.S. Special Envoy on Human Rights in North Korea, has continuously targeted wage issues at Kaesung complex. Additionally, there have been many criticisms on pay issues regarding North Korean laborers working even within the nation, as well as violations to contracts of employment.

Throughout the FTA, President Roh Moo Hyun has been striving to protect rice while trying to negotiate the Kaesung Industrial Complex. Though President Roh argues that political calculations were omitted from the negotiations, these two issues contradict his words.

Some argue that the future will depend on South Korea’s attitude to the U.S. It is even possible that this is a political attempt by the U.S. to lure North Korea into denuclearization.

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N. Korea welcomes S. Korea-U.S. FTA for leaving room for Kaesong complex

Monday, April 2nd, 2007

Yonhap
4/2/2007

North Korea has welcomed the just-signed free trade agreement between the South and the United States on Monday, seeing its possible role of promoting an inter-Korean industrial complex in its territory, Pyongyang’s management body of the complex said.

In the trade pact, the two sides agreed to hold further negotiations on goods produced in the Kaesong industrial complex, which Seoul wants to be treated as made in South Korea.

Pyongyang sounded upbeat that the pact has left room for the inclusion of Kaesong goods in the trade deal.

“We welcome sincerely (the fact) that the South Korea-U.S. FTA agreement has prepared the foundation for the goods from the Kaesong industrial complex to be treated as made in South Korea,” the Kaesong Industrial District Management Committee, which oversees the joint project between South and North Korea.

The Kaesong complex, just a few kilometers north of the inter-Korean border, is one of two flagship projects the South operates in the spirit of reconciliation with the North following their historic summit in 2000. Over 11,000 North Korean workers are employed by dozens of South Korean companies producing garments, utensils and other labor-intensive goods. Another reconciliation project is the operation of tours to the North’s scenic Mount Geumgang.

South Korean companies operating in Kaesong say the inclusion of the goods in the FTA is crucial, as this will open the doors for their exports to the world’s largest market and will also provide a template for future trade deals with other countries.

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Rival parties differ on Kaesong in Korea-U.S. FTA

Wednesday, March 28th, 2007

Yonhap
Kim Hyun
3/28/2007

South Korea’s major opposition Grand National Party showed flexibility Wednesday in dealing with the United States over an inter-Korean industrial park in North Korea as negotiations for a free trade agreement (FTA) go down to the wire.

The Kaesong industrial complex is one of the sensitive issues dividing Seoul and Washington in their final negotiations, which end Friday. Seoul wants to have goods produced in the joint industrial complex treated as South Korean-made products, but Washington is against it.

The pro-government Uri Party has been prioritizing the country of origin issue in the talks, while its conservative rival, the Grand National Party (GNP) says the dispute over the Kaesong project “is not a big problem.”

The made-in-Kaesong label will make its way abroad when North Korea earns its international credit, and should not be treated as crucially as the issues of rice or beef in the negotiations, the GNP said.

“When inter-Korean relations get on a normal track, it will naturally become much easier (for the South) to operate the Kaesong industrial complex,” Rep. Yun Kun-young, the leader of the party’s special committee on the free trade talks, told reporters.

In a tougher stance, the pro-government Uri Party has put the inter-Korean project as the No. 1 item on its must-have list. In a letter to the main U.S. representative in the talks, Susan Schwab, on Tuesday, the liberal party asked Washington to accept the Kaesong complex in the deal, along with other key demands, such as the exclusion of rice.

“We stress that ratification of the Korea-U.S. FTA in the National Assembly will be determined by the manner that the above demands are integrated into the agreement,” the party said in the letter.

The Kaesong complex, just a few kilometers north of the inter-Korean border, is one of two flagship projects the South operates in the spirit of reconciliation with the North following their historic summit in 2000. Over 11,000 North Korean workers are employed by dozens of South Korean companies producing garments, utensils and other labor-intensive goods. Another reconciliation project is the operation of tours to the North’s scenic Mount Geumgang.

South Korean companies operating in Kaesong say the inclusion of the goods in the FTA is crucial, as this will open the doors for their exports to the world’s largest market and will also affect future trade deals with other countries.

The Assembly is expected to vote on ratifying the deal in August or September if it is signed as scheduled this week. Currently, a majority of lawmakers support the proposed deal.

Sources say the South Korean government has agreed with the U.S. to include the Kaesong complex in a “built-in agenda” in the deal, allowing both sides to hold further negotiations on the issue after reaching a deal.

The issues that the two biggest parties agree are not open to negotiation in the FTA deal are the exclusion of rice, the immediate and complete lifting of tariffs on South Korea’s key exports, such as cars, and the assurance of customers’ rights in medicine and sanitary areas.

Aside from the main parties, however, dissenters and members of minor parties are protesting the FTA. A group of liberal lawmakers, including some presidential hopefuls, have gone on a hunger strike against the deal.

“I cannot possibly sit by idly watching the government unilaterally push for the negotiations and ignore the national interest,” said Rep. Kim Geun-tae, a former health minister and a presidential contender from the pro-government Uri Party, launching his hunger strike at the parliament on Tuesday.

Moon Sung-hyun, chairman of the progressive Democratic Labor Party, continued a hunger strike Wednesday in front of the presidential office that has entered its 21st day.

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