Archive for the ‘International trade’ Category

Rok aids businesses formerly engaged with DPRK

Monday, August 2nd, 2010

According to Yonhap:

South Korea began examining applications for low-interest loans Monday for companies troubled by a government ban on trade with North Korea, an official said.

The measure is part of the South Korean government’s efforts to alleviate the financial troubles of private enterprises that had to stop trading with North Korea after Seoul announced in May that Pyongyang was responsible for the March 26 sinking of its warship.

North Korean firms are moving business to China.

Read the full story here:
S. Korea launches support for companies banned from trading with N. Korea
Yonhap
8/2/2010

Share

DPRK firms find Chinese partners to replace ROK revenues

Sunday, August 1st, 2010

According to the AFP:

North Korea has found Chinese partners to make up for losses in trade with South Korean firms, weakening the impact of Seoul’s measures to punish the communist country, a report said Sunday.

South Korea banned most cross-border trade in May after a multinational investigation concluded that a North Korean torpedo sank one of Seoul’s warships with the loss of 46 lives.

Before the ban was announced, the North had produced goods after receiving raw materials from more than 500 South Korean firms, Yonhap news agency said.

“After the South Korean companies became unable to send the raw materials, North Korean factories have been manufacturing products ordered by China,” a source familiar with North Korean affairs told Yonhap.

Seoul partially lifted the ban to allow South Korean firms to proceed on deals which had been signed earlier.

“North Koreans said they already signed contracts with Chinese firms and told us they will manufacture the orders from the Chinese side first,” the source was quoted as saying.

Most of the goods made on consignment trade with China are for export to Europe, Yonhap said.

The ban would cost the impoverished North hundreds of millions of dollars a year, a state think-tank here said last month.

Washington announced further sanctions last month to stop the North from selling nuclear weapons or related material as well as blocking money laundering and other illicit activities.

Read the full story:
Trade ban prompts N.Korea to find Chinese partners: report
AFP
8/1/2010

Share

Why DPRK won’t close Kaesong

Saturday, July 31st, 2010

According to the Choson Ilbo:

Despite increasing tensions between the two Koreas since the North sank the South Korean Navy corvette Cheonan in March, Pyongyang looks unlikely to close the joint Kaesong Industrial Complex, chiefly because it is a source of much-needed hard currency.

The salaries of some 40,000 North Korean workers there are not paid to them but to the regime, which keeps most of the money, making the industrial park a lifeline amid crippling international sanctions.

There have been fears that the North could take the South Koreans who work in Kaesong hostage, as it has already done once. “North Korea built the Kaesong Industrial Complex because it can earn cash and take a large number of people hostage if it wants,” said a former intelligence officer who defected to the South.

Kaesong has no other industry and is unsuited for farming because of military facilities, so if the industrial park is shut down, the 40,000 workers face starvation.

The monthly income of some US$4 million is no small sum. When the State Security Department picked the industrial park’s core manpower, it simply relocated Kaesong residents and brought in workers screened under strict standards from Pyongyang and other cities. Now they have got used to their positions, closure of the industrial estate could make them a headache for the North’s security forces.

A senior North Korean defector said the State Security Department “is now in trouble because the workers are now kindly disposed to the South Korean firms operating there.” Most of them are aware that they get only $2 or $3 out of every $60 their employers pay for each of them. Despite that, many North Korean workers are eager to go to the Kaesong complex, since most North Korean firms have stopped paying wages amid the economic malaise, but at Kaesong workers are at least still paid and they get perks that are worth even more.

Any North Korean workers who contact South Korean businesspeople or meet with them privately, however briefly, can be subject to security investigations or labeled political dissents. Hundreds are said to have already suffered this fate. “If the North shuts the industrial park first, the workers will get very restive,” said a defector from Pyongyang. Nor would it help the regime to take South Korean staff hostage as that would only expose its immorality and thus provoke even severer criticism, he added.

However, the North is building a huge industrial estate in the Rajin-Sonbong economic zone that could replace the Kaesong industrial park. A Korean Chinese businessman who recently visited Rajin said, “Hotels and industrial lots are under construction and roads are being widened, and the locals have either been driven out of the city or housed in temporary quarters.” But it is rare to meet foreigners there, he added. The North Korean authorities are wooing foreign investments through their overseas missions, but even Chinese businesspeople say it would be crazy to invest in North Korea now.

Attempts to attract Chinese tourists to make up for revenue lost from suspended South Korean group tourism to the Mt. Kumgang resort are also failing. The North is now inviting the Chinese veterans of the Korean War. But one Chinese tourist said visitors “are treated like criminals and not even allowed to take pictures.” A Chinese businessman commented, “North Korea is proposing to do something with China that it can’t even accomplish with South Koreans, but no one here believes it.”

Read the full story here:
Why N.Korea Won’t Shut the Kaesong Industrial Complex
Choson Ilbo
7/31/2010

Share

DPRK-PRC sign cooperation treaty

Thursday, July 29th, 2010

According to Bloomberg:

North Korea signed an economic and technical cooperation agreement with China today, a week after U.S. Secretary of State Hillary Clinton announced further trade sanctions to halt the regime’s nuclear-weapons program.

Liu Hongcai, the Chinese ambassador to North Korea, and Ri Ryong Nam, the nation’s Minister of Foreign Trade, signed the agreement during a ceremony held in Pyongyang, according to the state-run Korean Central News Agency. It didn’t elaborate.

Clinton announced sanctions that target government officials and the foreign banks that help sustain the North’s weapons industry during a visit to Seoul last week. The U.S. has backed South Korean claims that the North torpedoed one of its ships and has been pressing for an international effort to put more pressure on Kim Jong Il’s regime.

China has so far refused to condemn North Korea for the attack on the Cheonan, which killed 46 South Korean sailors. China accounted for 79 percent of the North’s 2009 international trade, according to the Seoul-based Korea Trade-Investment Promotion Agency. China provides almost 90 percent of energy imports and 45 percent of the country’s food, according to a July 2009 report by the New York-based Council on Foreign Relations.

China’s Foreign Ministry had no knowledge of the agreement and the Commerce Ministry didn’t immediately respond to a fax seeking comments.

Read the full story here:
North Korea, China Sign Agreement for Economic, Technological Cooperation
Bloomberg
7/29/2010

Share

ROK raises barriers to trade with DPRK

Wednesday, July 28th, 2010

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

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

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

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

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

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

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

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

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

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

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

Read the full stories here:
S. Korea to offer loans to companies banned from trading with N. Korea
Yonhap
7/26/2010

S. Korea to re-impose ban on materials shipments to N. Korea after temporary lift
Yonhap
7/28/2010

Share

DPRK seeks to repay debt in ginseng

Wednesday, July 28th, 2010

UPDATE: This story was picked up by the Financial Times (8/11/2010):

North Korea has offered the Czech Republic 20 tonnes of ginseng in lieu of payment for some of its debts.

However, Prague has turned down the deal, instead suggesting that Pyongyang pays in the valuable mineral zinc, which can be resold on international markets.

North Korea owes the Czech Republic $10m from the days when the Czech Republic was under communist rule and the two countries traded with each other regularly. Communist Czechoslovakia was a leading supplier of trucks, trams and machinery to North Korea, creating a large pile of debt.

Pyongyang reportedly offered $500,000 worth of ginseng, a root which is reputed to boost memory, stamina and libido, as a down payment.

However, consumption of ginseng in the European country is low, with just 1.4 tonnes used each year.

North Korea’s economy is struggling as international sanctions tighten and it hopes to be able to barter its way out of handing over valuable cash.

Non-cash transactions between socialist countries is common, with Cuba sending Venezuela doctors in exchange for discounted oil.

A Czech government spokesman has said that the countries were in negotiation over how the debt would be paid.

“We have been trying to convince them to send, for instance, a shipment of zinc,” the deputy finance minister told the MF Dnes newspaper.

ORIGINAL POST: According to the Korea Times:

North Korea has offered to pay its debt to the Czech government with ginseng, according to a local Czech daily newspaper.

MF DNES, a daily newspaper based in Prague, reported last Saturday that North Korea has recently suggested to the Czech Finance Ministry that it would pay 5 percent of its debt — approximately $500,000 — with ginseng.

“We are trying to persuade them (North Korea) to give us, for example a bulk of Zinc instead, so that we could sell it to someone else,” Tomas Zidek, deputy finance minister, told the newspaper in Czech.

North Korea is believed to have a significant amount of zinc in deposits.

The paper went on to say the consumption of ginseng in the Czech Republic is very small, and it only imported 1.4 tons last year. The amount of ginseng worth $500,000 will be roughly 400 tons, securing the supply for more than 200 years.

But, to Czech’s disappointment, North Korea seemed to have made up its mind, as it sent a delegation with samples of ginseng.

North Korea is known to be Czech’s 10th biggest debtor, which goes back to the communist governments. The North bought many trams and vehicles from former Czechoslovakia.

Read the full story here:
North Korea wants to pay back debt in ginseng
Korea Times
Kim Se-jeong
7/26/2010

Share

India-DPRK trade expanding

Sunday, July 25th, 2010

According to Forbes:

Last year India exported roughly $1 billion to North Korea, up from an average of barely $100 million in the middle of the past decade, reports the Confederation of Indian Industry, a trade organization–most of that in refined petroleum products. The trade group says that North Korea’s exports to India were a minuscule $57 million, including silver and auto parts. (South Korean trade figures suggest India’s exports are much lower.)

The commercial tie has no deep historical roots and is curious, to say the least, given Pyongyang’s closeness with China, India’s commercial rival, and its connection to the A.Q. Khan nuclear network in Pakistan, India’s enemy.

North Korea needs oil to maintain power plants and to keep its outsize military on the move. It apparently has enough hard- currency reserve from its murky export trade to buy on the spot market. India, for its part, has ramped up refining but gotten ahead of domestic demand. Further, by keeping an artificial lid on pump prices until recently, Indian policy encouraged these oil sector producers to look for clients overseas. “India is the largest exporter of refined products east of the Suez [meaning the Middle East and Asia],” says Fereidun Fesharaki, chairman of Facts Global Energy in Singapore. A lot of enhanced supply came online in 2009, mostly from Reliance Industries, which has the world’s largest refinery, and the Essar Group, the Mumbai steel and energy giant. At current usage and demand “India needs 15 years of demand to absorb this current supply,” he adds.

Until June the New Delhi government kept a cap on domestic gasoline prices, running up a $10 billion subsidy bill, or roughly 7% of its budget. While state-owned companies were compensated for their losses, those in the private sector were on their own, causing them to look for other markets, especially since the price for crude has doubled, to $78 per barrel since 2004. “Their incentive is [to find] who in the world is desperate enough to take the products, and it’s usually Iran or North Korea,” says Fesharaki.

Some North Korea watchers are caught off guard. “I was flabbergasted by the increase in trade,” says Stephan Haggard, director of the Korea-Pacific Program at UC, San Diego. “North Korea is basically engaged in close to barter trade.” No one seems more surprised than Pratap Singh, India’s ambassador to Pyongyang, who says he has no idea of trade volume because the North Koreans won’t supply credible data, much less working phone lines. “How did you manage to get through?” he asks a reporter.

Like other oil refiners, neither Reliance nor Essar exports fuel to North Korea directly. That’s too much of a risk politically (even though this trade isn’t barred under current UN sanctions) and economically, as Pyongyang has been known to slip on its payments. Instead, the fuel is sold through a network of traders and banks in Dubai and elsewhere. Trade data nevertheless record the origin of the refined petro goods.

Curiously, both New Delhi and the U.S. State Department, which have bumped along in relations complicated by India’s own nuclear development, show no alarm. A spokesman for India’s Ministry of Foreign Affairs says all international strictures are observed and nothing sinister is at hand. Washington won’t comment without verifying the data.

Perhaps a little more attention is in order since India is selling more than mere oil to North Korea. Last year, according to Indian trade data, India also exported $2 million in goods in a category called “nuclear reactors, boilers, machinery and mechanical appliances”–most likely water pumps, computer data storage units, ball bearings and machine tools. Could they be used to maintain a nuke plant in some way? Maybe.

“North Korea, over the years, has attained skills to disguise their trade activities and also to utilize materials they have for other purposes,” says Jennifer Lee, a research analyst at the Peterson Institute for International Economics in Washington. “Countries need to be especially careful in what they export to North Korea.”

Read the full story here:
Look Who’s Helping North Korea
Forbes
Megha Bahree
7/22/2010
(Magazine date: 8/9/2010)

Share

Noko Jeans sales to expand beyond Sweden

Sunday, July 25th, 2010

According to the Choson Ilbo:

According to RFA, the company announced a plan to open outlets selling its jeans in many locations outside of Sweden.

Encouraged by growing sales, the company has been carrying out aggressive marketing activities since the beginning of this year, including promoting products, expanding outlets, and seeking overseas markets.

The Swedish firm signed a contract with North Korea to produce the jeans in 2008. Available from both online and offline stores since last December, they come in one style for men and one for women with a price tag of US$210.

Read the full story here:
Market for N.Korea-Made Jeans to Expand
Choson Ilbo
7/22/2010

Share

Kaesong exports to ROK remain constant

Tuesday, July 20th, 2010

According to Yonhap:

The volume of goods brought into South Korea from a joint factory park in North Korea has remained unchanged despite Seoul’s trade ban slapped on Pyongyang in May in retaliation for its deadly attack on a South Korean warship, the government here said Tuesday.

The volume of products transported from the Kaesong industrial park stood at 6,953 tons in June, compared to 7,004 tons a month earlier when South Korea banned trade with North Korea and cut the number of South Korean workers staying in the North Korean border town, the Unification Ministry said in a release.

“There has been little difference in the amount of manufactured products brought in since the May 24 measures,” which the South imposed after a multinational investigation found the North responsible for the March sinking of the Cheonan, it said.

Ministry spokesman Chun Hae-sung said currency conversions for the data were not immediately available.

North Korea has denied any responsibility for the attack in the Yellow Sea that left 46 sailors dead. About 121 South Korean firms operate in Kaesong, employing 44,000 North Korean workers — the last remaining major symbol of detente between the divided countries.

According to the ministry that handles cross-border affairs, the amount of goods brought into South Korea for the first half of this year nearly doubled compared to the same period last year. The figures signaled the Kaesong factory park continued to grow even though the relations between the Koreas have soured since 2008.

But many of the Kaesong companies have complained of falling orders and are seeking rescue funds, arguing the deteriorating political relations are increasingly becoming a liability for their businesses.

Read the full story here:
Influx of goods from inter-Korean factory park stays consistent: gov’t
Yonhap
Sam Kim
7/20/2010

Share

China launches anti-drug smuggling boats on Yalu river

Sunday, July 18th, 2010

By Michael Rank

China has launched a fleet of patrol boats to combat drug trafficking on the North Korean border, a Chinese website reports.

The report shows pictures of the four boats, which are being deployed on a stretch of the Yalu river known as Badaojiang八道江, but gives few details.

The only drug named in the report is opium, which North Korea is reported to produce in large quantities. It says officers warn local people not to become engaged in drug smuggling by showing them pictures of opium and other banned substances.

“The creation of the anti-drugs speedboat force is not just a foundation in the people’s war against drugs, it also increases our strength in banning drugs on the river border and will be a force for us in building a harmonious border and in contributing to a drugs-free border,” an official from the new force is quoted as saying.

A separate Chinese newspaper report names a methamphetamine (known as magu 麻古) as another of the main drugs smuggled between North Korea and China, and says a haul of 13,775 magu pills, seized in winter 2004, was the largest amount of drugs ever confiscated by Dandong border guards. It says smuggling reached a peak in the years 2000-2006 and gives little information about the current situation, probably because this is politically too sensitive.

But it does mention the killing of three Chinese smugglers by North Korean border guards in June, and says the dead men were members of a gang led by a man known as Sun Laoer who controls much of the smuggling on one particular stretch of the Yalu. One man was injured in the incident, for which China demanded an apology. North Korea said it was “an accident”, while according to a Chinese television report the North Koreans suspected the smugglers of being South Korean spies.

The Chinese newspaper report says the main goods smuggled between China and North Korea are drugs, scrap metal, cigarettes, DVDs, chemicals and secondhand cars.

The most notorious gang was led by an individual called Jiang Weijia, who specialised in smuggling cigarettes and oil products from North Korea into China. Between June and December 1999 Jiang smuggled 45.8 million yuan worth of cigarettes. The gang was finally smashed in 2003.

The article in Southern Weekend, one of China’s more adventurous newspapers, also mentions human trafficking across the border. It says that “in 1996 you could exchange 50 jin [25 kg] of rice for a Korean daughter-in-law” and adds that the women had to pretend to be deaf and dumb since if they opened their mouths and were found to be from North Korea they would be sent straight back.

It notes that “world opinion suspects that North Korean government departments are covertly involved in smuggling on the Chinese-North Korean border, the reason being that in a country where power is highly concentrated, it would otherwise be almost impossible for large-scale smuggling to take place on the Yalu river border. But despite such suspicions, there is no complete proof.”

The report recalls how in the 1990s North Koreans, in the wake of the famine, would exchange scrap copper for rice at a rate of one kg of metal for one kg of rice and that many North Korean factories were stripped bare of all their metal fittings.

It also recalls how in the 1960s North Korea was richer than China, which suffered through years of Mao-induced famine, and people from Dandong would cross the Yalu at night in search of food.

“This shouldn’t be called smuggling, should it. People were bartering for food in order to survive,” it quotes one man as saying. It quotes another man as saying the border was largely unguarded until recently and when he was a boy (in the 1990s apparently) he would cross the frozen river in winter and North Korean guards would give him sweets.

The report says border trade with North Korea stopped during the Korean war, was revived in 1958 and faded during the Cultural Revolution of the late 1960s and 70s. It was officially revived in September 1981 with an agreement between China’s Liaoning province and North Korea’s Pyeong’an Bakdo. Most of the trade from the early 1980s consisted of China bartering oil for fish.

The article says China-Korean smuggling goes back centuries, and in the 1930s an area of Dandong near the river called Shahezi 沙河子 was a famous smuggling centre under the Japanese. It also says a Qing dynasty customs office has been restored in Jiuliancheng 九连城, some 20 km from Dandong, and the area remains a smuggling centre.

North Korea has been widely reported to be a significant producer of illicit drugs. The CIA World Factbook notes  that for years, from the 1970s into the 2000s, citizens of North Korea, many of them diplomats, were apprehended abroad while trafficking in narcotics and police investigations in Taiwan and Japan in recent years have linked North Korea to large illicit shipments of heroin and methamphetamine, including an attempt by the North Korean merchant ship Pong Su to deliver 150 kg of heroin to Australia in April 2003.

In 2004 the Jamestown Foundation published a report by a North Korean defector who says he “learned of and witnessed first-hand the drug trafficking activities of the North Korean regime” when he worked for the North Korean National Security Agency from 1983 until 1998.

Share

An affiliate of 38 North