|
North Korea Inter-Korean Economic Cooperation
The first inter-Korean exchange of goods occurred in 1988.
This development had the potential to significantly alter both
North Korea's future economic development and its foreign
economic relations. Trade began modestly with the November 21,
1988 arrival of forty kilograms of North Korean clams at the
South Korean port of Pusan. A second transaction, in January
1989, involved South Korean imports of North Korean art such as
paintings, pottery, woodwork, and industrial artworks. In July
1990, North Korea swallowed its pride and accepted delivery of
some 800 tons of South Korean rice collected by Christians
through a "Rice of Love" campaign for the poor.
In December 1990, the first contract between a South Korean
company and a North Korean company was signed. Doosung Company, a
small, little-known trading company in Seoul, signed a direct
barter trade contract with Kmgang-san International Trade and
Development Company. The contract called for exchanging US$1.3
million worth of goods by the end of February 1992. Doosung was
to ship 500 refrigerators and 240 color television sets and to
receive North Korean cement, artifacts, and paintings of equal
value. A total of 11,243 North Korean works of art worth
US$650,000 arrived in Pusan on February 15, 1991, followed
shortly thereafter by a shipment of electronic products to North
Korea. Before this deal, some 200 North-South transactions--
involving no fewer than 150 South Korean firms and nine North
Korean firms--had taken place, but all these transactions had
been indirect and had been conducted through brokers in Hong Kong
or Japan.
On March 29, 1991, Cheongji Trading Company became the second
South Korean trading company to sign a formal barter agreement
with Kmgang-san International Trade and Development Company. The
two companies agreed to exchange 100,000 tons of rice for 11,000
tons of cement and 30,000 tons of coal. The initial rice shipment
of 5,000 tons left Mokp'o in July 1991. Seoul was ready to
compensate fully any losses to Cheongji through an inter-Korean
cooperation fund established in August 1990. The fund was to
provide loans and financial assistance for expenses related to
promoting inter-Korean trade and other forms of economic
cooperation.
In addition to direct agreements with smaller South Korean
firms, North Korea also began to trade with South Korea's
conglomerates, or
chaebl (see Glossary).
Lucky-Goldstar
signed a contract in February 1991 with a Chinese broker to ship
30,000 barrels of high sulfur diesel oil to North Korea for
US$1.4 million payable in cash. The diesel oil was to be shipped
from Yosu, South Korea, to Namp'o, North Korea. Two
chaebl, Samsung and Lucky-Goldstar, bought almost 135
kilograms of North Korean gold bullion in 1991 from brokers in
Hong Kong. This transaction was South Korea's first purchase of
gold from North Korea.
Immediately after the two Koreas were admitted to the United
Nations in 1991, South Korean traders, including Samsung and
Hyundai, began to increase imports of products from North Korea.
Samsung signed a contract to import steel sheets, zinc ingots,
farm crops, and yarn; the company planned to pay for the steel
sheets by exporting color television sets, sugar, and
refrigerators. Another South Korean conglomerate, Ssangyong,
imported iron ingots in September 1991 and planned to import
more. Hyundai planned to import 1,500 tons of iron ingots in
October 1991. Based on South Korean figures, the value of the
two-way trade increased from US$23.34 million in 1989, to
US$25.61 million in 1990, and to US$190 million in 1991.
One indication of North Korea's readiness to trade with South
Korea was the early 1992 report that North Korea had ordered
US$800 million to US$1 billion of consumer goods from South Korea
to be known as "April 15 goods" in honor of Kim Il Sung's
eightieth birthday. These goods, ranging from toothbrushes and
clothing to refrigerators and washing machines, were to be sold
or handed out to North Koreans as gifts during the birthday
celebrations. The South Korean firms were asked not to attach
brand names to the goods.
At the beginning of inter-Korean trade, North Korea exported
hot-rolled coil, iron and zinc ingots, coal, steel sheets,
cement, potatoes, electrolyte copper, Alaskan pollack, dried
squid, raw silk, and other products. Textiles, sock looms,
electrical appliances, and other goods were imported. A turning
point was reached in 1991, when inter-Korean economic cooperation
moved beyond commodity trade.
South Korean chaebl, concerned about rising wages in
South Korea, are inclined toward joint ventures in laborintensive manufactures such as petroleum and the assembly of
electronic products, and appear to be competing with each other
in their march toward North Korea. Hyundai's Chung Ju Yung
returned from his first visit to North Korea in 1989 with a
promise to develop Kmgang-san (Diamond Mountain) as a resort.
Although North Korea later reneged on the project, Chung planned
to lead a delegation of Hyundai executives to North Korea in
1992. Samsung sent a senior executive in 1991 to discuss opening
a branch office in P'yongyang and wanted to explore the
feasibility of a US$20-million joint venture with Japanese and
Hong Kong partners for a textile and garment plant in Ch'ngjin.
A pilot project by the Kolon textiles group is said to be fully
operational--socks are produced on machines imported from Seoul
under a South Korean supervisor.
In January 1992, Daewoo chairman Kim Woo Choong visited North
Korea as the first officially invited South Korean business
leader. While in P'yongyang, Kim concluded a joint venture
agreement with the North Korean government to establish an
industrial park in Namp'o for the exclusive use of Daewoo and
other South Korean firms. Daewoo will spend between US$10 million
and US$20 million to build the complex; North Korea will provide
the labor and land. Consumer goods such as clothes, leather
goods, footware, toys, and kitchen utensils will be produced for
export to third countries. Daewoo is expected to make a separate
agreement involving investment guarantees, shipping arrangements,
sales methods, and technology transfer. As the goods are not to
be used for internal consumption, it is likely that some kind of
compensation trade arrangement was reached whereby Daewoo's
payment for its investment will come from selling the finished
products in third countries. On February 10, 1992, Seoul
announced its approval of Daewoo's joint venture projects in
North Korea.
Data as of June 1993
|
