Archive for the ‘International trade’ Category

Lankov on DPRK sanctions

Tuesday, March 27th, 2012

Andrei Lankov writes in The Asian:

However, the decades-long experience of dealing with North Korea leaves little doubt: international sanctions do not work. When the sanctions were first introduced after the October 2006 nuclear test and tightened after the second 2009 nuclear test, many a hardliner believed that this was the way to press the North Korean government into a corner and make them consider denuclearization. In academic articles, newspaper pieces and blog entries, many a hawk was ready to interpret pretty much every piece of news that emanated from the North as a sign of ‘sanctioning beginning to bite’.

But what has happened to the North Korean economy over the past five to six years? Contrary to expectations, the era of sanctions has been, rather, a time of mild economic recovery and growth. The expectations of hardliners therefore have as yet, come to nothing.

(more…)

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Inter-Korean trade up 36% in 2012

Thursday, March 22nd, 2012

According to Yonhap:

Despite rising cross-border tension, the trade between South and North Korea surged 36 percent from a year ago to US$320 million in the first two months of this year, government data showed on March 16.

The data provided by the Korea Customs Service indicated that the trade via the inter-Korean industrial complex has not been affected by tensions on the Korean Peninsula.

South Korea slapped sanctions on the North in May 2010 in retaliation for the deadly sinking of a South Korean warship earlier that year, though it keeps intact the complex in the North’s western border city of Kaesong.

The complex, a key outcome of the inter-Korean summit in 2000, marries South Korean capital and technology with cheap labor from the North. It is now home to more than 120 South Korean small and medium-sized companies.

Tensions have flared anew in recent weeks as the two Koreas traded militaristic rhetoric against each other over Seoul’s defamation of the dignity of North Korea’s new leader Kim Jong-un and his late father, former leader Kim Jong-il.

Read the full story here:
Inter-Korean Trade Surges 36 Percent This Year
North Korea Newsletter No. 202 (March 22, 2012)
Yonhap

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On the Kaesong Industrial Zone and international tariffs

Thursday, March 22nd, 2012

According to Business Week:

Gaeseong, which is within sight of South Korean and U.S. guard posts along the Demilitarized Zone, was developed as a joint special economic zone in 2005 and now employs about 50,000 North Koreans, according to the Unification Ministry in Seoul.

More than 120 South Korean companies, including Daewha Fuel, underwear maker Good People Co. and watchmaker Romanson Co. (026040) paid the North Korean government about $60 million to $70 million last year to cover labor costs for workers, said Park Soo Jin, the deputy spokeswoman at the Unification Ministry. Authorities in Pyongyang then paid the employees in local currency and vouchers, she said.

Trade Minister Bark Tae Ho said on March 14 that he will try to persuade the U.S. and European Union to recognize products made in Gaeseong as South Korean.

Singapore Tariffs
The EU and South Korea have agreed to establish a committee this year to examine the issue, Tomasz Kozlowski, ambassador for the EU delegation in Seoul, said in an e-mailed statement. Aaron Tarver, a spokesman at the U.S. Embassy, said in an e-mail that the trade pact does not include any products from North Korea, including those from Gaeseong, without commenting further.

Singapore has reduced tariffs covering more than 4,000 products from Gaeseong under its bilateral trade pact with South Korea, said Lee Sang Mok, Deputy Director at Korea Customs Service. Some products are also covered by agreements with the 10-member Association of Southeast Asian Nations, India, Peru and the European Free Trade Association consisting of Switzerland, Iceland, Liechtenstein and Norway, Lee said via e- mail and telephone.

The value of output from Gaeseong jumped from $14.9 million in its first year to $402 million in 2011, according to the Unification Ministry. During the past seven years, its production totaled $1.5 billion. That compares with $40 billion for North Korea’s annual gross domestic product, according to the CIA World Factbook.

“The U.S. seems to want more progress in North Korean nuclear and human rights issues before including Gaeseong in FTA,” IBK’s Cho said.

Yoo of Daewha Fuel Pump said he plans to spend 1 billion won ($885,000) this year to boost capacity in Gaeseong by 50 percent and forecasts sales to jump to 65 billion won this year from 45 billion won in 2011. His company, which also makes parts in plants in South Korea, supplies automakers including Hyundai Motor Co., Honda Motor Co. and Nissan Motor Co., he said.

The minimum monthly base salary paid by companies at Gaeseong is about $64, according to the Unification Ministry’s Park. Yoo, who was speaking at Incheon near Seoul, estimated labor costs would be 20 times higher in South Korea and three times higher in China.

“The security issue is of course a big risk but every business has a risk,” Yoo said. “Gaeseong has survived all the clashes and threats, including the sinking of a warship and the shelling of a South Korean island”.

Read the full story here:
North Korea’s Gaeseong Pushed for Inclusion in FTA
Business Week
Eunkyung Seo and Sangwon Yoon
2012-3-22

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Noland on DPRK statistics

Wednesday, March 7th, 2012

Marcus Noland wrote a fantastic primer in Foreign Policy on North Korean statistics. Most of the article can be found below:

Last month, the South Korean news agency Yonhap ran a story about a report from a major South Korean think tank stating that North Korea’s GDP grew 4.7 percent in 2011. That think tank, the Hyundai Research Institute, used a combination of United Nations infant mortality data for 198 countries over the 2000-2008 period and North Korean crop data to estimate annual North Korean per capita income. While infant mortality and food availability correlate with income, one cannot meaningfully estimate year-to-year income changes with these two pieces of information alone.

(more…)

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DPRK – PRC trade up 18% in January

Friday, March 2nd, 2012

According to Yonhap:

North Korea’s trade volume with China jumped nearly 20 percent in January, compared to the same period last year [January 2011], a report said Friday, indicating sustained bilateral economic relations.

Citing data released by China’s Ministry of Commerce, U.S. broadcaster Voice of America said trade between China and North Korea reached US$418 million in the cited month, up 18 percent from a year ago.

The North’s January exports to China reached $139 million, an on-year increase of 7 percent, while imports expanded 24 percent to $278 million, according to the report.

Coal was the North’s biggest export item for the Chinese market, totaling $70 million, it added.

Here is a link to the original VOA article.  Hat tip to a friend.

Read the full story here:
N. Korea-China trade jumps 18 pct in Jan.: report
Yonhap
2012-3-2

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DPRK issuing exit permits for food importers

Tuesday, February 28th, 2012

According to the Daily NK:

The North Korean authorities are expediting the issuance of exit permits for people wishing to visit relatives in China but who agree to return to the country with one ton of food within 40 days. A considerable number of people have obtained permits on this basis in the last week, according to a source who spoke with Daily NK yesterday.

The source, from North Hamkyung Province, told Daily NK, “At the start of last week, my people’s unit head advised us, ‘Anyone able to return to the country with a ton of rice before April 5th should apply for a short-term exit permit to the National Security Agency now.’”

The source added, “More than 20 people per day are crossing over into China via Namyang Customs House after getting prior approval this way in Chongjin, Myongchon and Kilju. Others are finding lodgings in Onsung to wait their turn.”

The permit issuance policy is being implemented nationwide, according to information received by Daily NK. Many people are said to be departing via customs facilities both in Hyesan and further west in Shinuiju under the same deal.

Provincial branches of the Party are keen to issue the permits because they are under pressure to provide special food distribution for the 100th anniversary of Kim Il Sung’s birthday on April 15th, a responsibility Pyongyang is said to have passed on to the provinces in its entirety.

According to the source, the NSA’s provincial anti-espionage head has been telling travelers attending a briefing at the border control office there that their trips “have been made possible by the compassion of Kim Jong Eun,” and threatening that anybody minded to overstay their permit or who is unable to meet their food quota upon their return will be barred from leaving the country indefinitely.

Usually, exit permits are granted on the following basis: ▲ a maximum of 5 degrees of separation between inviter and applicant; ▲ a maximum stay of 3 months; ▲ a minimum of one year between permits. However, this time the authorities are reportedly allowing travelers who have already visited China within the last year to reapply.

Though rare, the policy shift is not unprecedented. For example, a similar pact with would-be permit recipients was offered by the authorities immediately after Kim Jong Il’s trip to China in May, 2011.

Such a loosening of border controls comes with a number of side-effects, not least that it brings down prices in the jangmadang, offering a valuable boost to individual purchasing power.

As such, kilo of decent rice was selling for 3,200 North Korean won early last week in Chongjin, a source from the city told Daily NK yesterday, but as of Monday this had fallen to 3,000 won, with 1 Chinese Yuan dropping from 605 to 600 North Korean Won.

“Given the situation, ordinary people are happy that the price of rice has fallen,” the source commented. However, he added, there is a high degree of skepticism in the market about how many of the travelers will actually return when the time comes.

Read the full story here:
NK Trading Exit Permits for Rice
Daily NK
Lee Seok Young
2012-2-28

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Japanese police bust computer smuggling operation

Sunday, February 19th, 2012

UPDATE 1 (2012-2-28): The Japanese police have raided the heaquarters of Chongryun (Chosen Soren), the Pro-DPRK General Association of Korean Residents in Japan, over its alleged ties to the computer smuggling ring. According to the BBC:

Japanese police have raided the offices of a pro-North Korean organisation suspected of a role in the illegal shipment of computers to North Korea.

Japan maintains a total ban on exports to North Korea.

It is part of a range of sanctions over North Korea’s nuclear programme and its abduction of Japanese nationals in the 1970s and 80s.

Earlier this month police arrested a businessman accused of exporting PCs to North Korea through China.

On Tuesday, about 100 riot police entered the Tokyo offices of an organisation connected to the Pyongyang-affiliated General Association of Korean Residents in Japan, officials say.

Because there are no diplomatic relations between the two countries, the association has functioned as North Korea’s de facto embassy in Japan.[

The raid came after prosecutors last week indicted Lee Soon-Gi, 49, who is accused of illegally exporting 100 second-hand personal computers to North Korea through China, officials said.

The affiliate organisation may be involved in the shipments, police say.

But the association has strongly criticised the raid which it described as an “unjustified and illegal investigation”.

ORIGINAL POST (2012-2-19): According to the Yomuri Shimbun:

The president of a Tokyo-based dealer in secondhand personal computers exported more than 4,000 items to North Korea, according to investigation sources.

Many of the items are believed to have been sold on the black market to senior members of the ruling Workers’ Party of Korea, the sources said.

Lee Sungi, president of Popura-Tec, was arrested earlier this month by the Metropolitan Police Department’s Public Safety Department on suspicion of violating the Foreign Exchange and Foreign Trade Law.

The 49-year-old has been arrested on suspicion of exporting 100 notebook computers to North Korea. In addition, Lee has told police that he shipped more than 4,000 personal computers and liquid-crystal displays to that country on four occasions from 2008 to 2009.

A North Korean trading company based in Dalian, China, brokered the deals, selling the products to a computer shop in Pyongyang, the sources said.

The shop was run by a North Korean computer engineer who once worked at a Chinese company as a software developer. He reportedly contacted Lee in March 2007, saying: “There’s demand for about 1,000 personal computers a month [in North Korea]. I’m interested in buying Japanese products,” according to the sources.

E-mails he sent to Lee suggested there were hundreds of computer shops throughout North Korea, of which 20 were in the capital. However, most of the country’s computer users do not use these shops because they cannot afford to buy their products.

Instead, they usually buy their computers through the black market, the sources said.

Most of the personal computers Lee exported from Japan were secondhand products, including some that had been leased to central and local government offices, according to the sources.

The North Korean computer engineer reportedly sold about 500 products per month to the black market, setting prices at 200 dollars or less for a desktop computer, and a maximum of 300 dollars for a notebook computer, the sources said.

This was still expensive for North Korea, which meant only senior members of North Korea’s ruling party and other wealthy individuals could purchase them, according to the sources.

It is reportedly common for North Korean computer users to buy new products when their items break down because there are almost no after-sales services in the country, according to the sources.

On February 2, 2012 we learned about a separate PC smuggling ring which moved computers from Japan to the DPRK.

Read the full story here:
4,000 PCs, displays said exported to North Korea
Yomuri Shimbun
2012-2-19

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New DPRK restaurant opens in Dandong

Friday, February 17th, 2012

According to the Daily NK:

The largest of a collection of overseas restaurants run by the North Korean authorities,‘Pyongyang Koryogwan’ opened for business in Dandong, China on Thursday. An opening ceremony was held in front of the restaurant, which is located at the entrance to Dandong’s development zone.

The ribbon-cutting, which lasted for 30 minutes beginning at 9:30AM, included North Korean and local Chinese government officials, the restaurant management team and more than 50 female staff members, over 100 people in total. Staff must have been freezing after spending the whole time in Korean traditional dress despite sub-zero temperatures.

The restaurant is staffed by more than 200 workers from North Korea, 120 of whom are general staff, with the remainder working in the kitchens or on administrative tasks. The menu is mostly a collection of different sets, with the cheapest item being cold noodles at around USD$4.75.

Read the full story here:
Dandong Opening for New NK Restaurant
Daily NK
Choi Cheong Ho
2012-02-17

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Nampho port frozen (again)

Friday, February 10th, 2012

In February 2011 I posted reports that the DPRK’s west coast was experiencing record-low temperatures and the ports were frozen. Unfortunately for the North Korean people, history is repeating itself.

 

Pictured above (Yonhap): two satellite images of the DPRK’s west coast

According to the Donga Ilbo:

North Korea`s fisheries and shipping industries, two key earners of foreign currency for Pyongyang, have effectively been shackled due to a prolonged cold wave that has frozen waters in the Yellow Sea.
With the temperature reaching minus 10 degrees Celsius for more than a month, more than 40 kilometers of sea water in the Yellow Sea off the North`s coast have been frozen. This is the first time in decades that about 200 kilometers of the North`s coastline from the mouth of the Yalu River to the North`s Hwanghae provinces have been frozen.

Experts say the frozen water will not only affect the North’s fisheries and shipping industries, both of which are major earners of U.S. dollars, but also the Stalinist country`s economy and newly launched Kim Jong Un administration.

Massive ice blocks cover 200 kilometers of N. Korean coastline

In Seoul, the Korea Center for Atmospheric Environment Research and the Korea Meteorological Administration said Thursday that based on analysis of satellite images, massive ice 40 kilometers wide was detected in North Korean coastlines spanning 40 kilometers from the mouth of the Yalu River to coastal waters off Pyongyang.

According to the analysis, Korea Bay located in between the North’s Cholsan and Changyon peninsulas has remained frozen since Jan. 10 due to the cold wave. Coastal waters of Unryul County in South Hwanghae Province, the Chongchon River flowing into Korea Bay, and the port of Nampo at the mouth of the Daedong River running through Pyongyang are also covered with ice.

Chung Yong-seung, director of the environmental think tank, said, “In the past, waters off the North Korean coast used to be frozen. But the formation of such large-scale ice is unprecedented.”

Experts blame arctic ice moving south due to global warming for the ice formation.

North Korea has been hit by a severe cold snap this winter. According to the South Korean weather agency, the North’s average temperature last month was minus 8.4 degrees, 0.7 degrees lower than in an average year.

The Chosun Shinbo, the official newspaper of the pro-Pyongyang Federation of Korean Residents in Japan, recently said, “Temperatures in Pyongyang remained below zero from Dec. 23 last year through Jan. 31, the most extreme cold since 1945,” adding, “North Koreans can even walk on the Daedong River.”

Temperatures in the North fell further this month to minus 11.1 degrees on average, down 4.6 degrees from an average year.

Big burden on N. Korean gov

The ice formation in North Korean waters is pressuring the Kim Jong Un administration economically, experts said. The combined share of fisheries and agriculture in the North`s GDP is 20.8 percent, eight times higher than for South Korea (2.6 percent). Fisheries also play a key role in sustaining the North`s economy with catch volume reaching 630,000 tons a year.

Pyongyang`s dollar earnings have also been hit hard due to the frozen sea that has prevented fishing boats from leaving ports. Goh Yoo-hwan, head of the (South)Korean Association of North Korean Studies, said, “The North should export primary products such as fisheries goods, but no fishing operations due to the frozen water will take a huge toll on the North`s dollar earrings.”

Waters near China’s Liaodong Bay and Russia’s Vladivostok have also been frozen, causing the North’s maritime transportation to go awry. Due to soured inter-Korean relations, the North`s trade with the South and Japan has declined and raised the Stalinist country’s dependence on China to 56.9 percent.

Kim Yong-hyeong, a professor of North Korean studies at Dongguk University in Seoul, said, “If the ice formation in waters wreaks havoc on the North’s maritime transportation, this will destabilize the North Korean economy.”

The problem is that ice at sea is growing thicker. The National Meteorological Satellite Center in Seoul said the boundaries between ice blocks and waters in the North’s section of the Yellow Sea were vague last month, but grew clear this month with ice getting thicker.

Director Chung of the environmental think tank said, “Given North Korea’s weather conditions, the ice in the sea will grow thicker through early next month,” adding, “North Korean society will be hit hard if its fisheries and shipping industries are grounded for more than two months.”

And just how productive is the DPRK’s fishing sector?  According to Yonhap:

Chung Yong-seung, head of the research institute, said it is rare for the port to freeze two winters in a row, a development he said could have a negative impact on the North’s fishing industry.

North Korea’s catch reached 663,000 metric tons in 2009, the latest year for which statistics are available, according to the South Korean government data.

Read the full reports here:
N. Korea’s largest port frozen for 2 straight winters
Yonhap
2012-2-10

Extended cold wave freezes key NK sectors of fisheries, shipping
Donga Ilbo
2012-2-10

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DPRK – PRC economic integration

Thursday, February 9th, 2012

According to the Choson Ilbo, China-N.Korea trade has reached a historically high level (as it does nearly every quarter).

China’s trade with North Korea has tripled since 2005. According to the Korea Trade-Investment Promotion Agency (KOTRA), Chinese customs statistics show that China has been bumping up its trade with the North by US$1 billion every three years since the middle of the last decade.

After first breaking past the $1-billion trade barrier in 2005, China posted $2 billion in 2008 and over $3 billion last year. Minerals, machinery and cars topped the list of exports, and two-way trade last year reached its all-time peak of $5 billion.

Additional Information:
Read the full story here:
China-N.Korea Trade Reaches All-time High
Choson Ilbo
2012-2-9

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