Canadian Manufacturing

Dormant since April, North Korea lifts ban on jointly run factory park

by Foster Klug And Youkyung Lee, The Associated Press   

Canadian Manufacturing
Operations justice Korea Manufacturing politics

North Korean workers to be sent back when South Korean businesses ready to resume operations

SEOUL, South Korea—North Korea said it is lifting a ban on operations at a jointly run factory park shuttered since Pyongyang pulled its 53,000 workers in April amid high tensions between the two Koreas, proposing a new round of talks meant to restart the complex.

The now-suspended Kaesong complex is the last remaining symbol of inter-Korean co-operation from an earlier period of detente.

It combined South Korean initiative, capital and technology with cheap North Korean labour.

A statement by the North’s Committee for the Peaceful Reunification of Korea, which is responsible for dealings with Seoul, appeared to provide a guarantee that South Korean negotiators had demanded in six past deadlocked meetings on the park’s fate: That Pyongyang won’t unilaterally close the industrial complex just over the heavily armed border in the North Korean town of Kaesong should tensions between the rivals rise again.


Despite the statement, however, which North Korea described as “bold and magnanimous,” it wasn’t immediately clear whether the proposal would ease the deep mistrust of Pyongyang among businesses and government officials in the South.

Seoul offered no immediate word on whether the talks North Korea proposed for Aug. 14 would go forward.

South Korea’s Unification Ministry, which handles relations with Pyongyang, said it was reviewing the proposal.

Both countries should ensure that operations at the industrial complex continue normally regardless of external matters, the North’s statement said.

Kaesong is seen in the South as an important source of foreign currency for the impoverished North—a point North Korea denies.

Pyongyang’s moves to ban South Korean managers from crossing the border to their jobs in Kaesong and withdrawing its workers from the park came as it issued a torrent of warlike threats in March and April, including vows of nuclear strikes on Washington and Seoul.

Pyongyang said it was angry over annual United States-South Korean military drills and United Nations sanctions over Pyongyang’s February nuclear test.

There have been recent attempts at tentative diplomacy, but tensions could rise again this month as South Korea and the U.S. are scheduled to begin a joint military exercise on Aug. 19.

The announcement came about an hour after South Korea’s government said it would start giving insurance payments to 109 South Korean businesses shut out of Kaesong.

Some South Korean media described the move as a step toward closing the park.

Starting Aug. 8, those companies that had signed up for the insurance would receive payments to help cover investments in constructing production lines and buildings at Kaesong.

Pyongyang also said in the statement that it will make sure its workers show up at the complex and guarantee the safety of the South Korean managers.

Pyongyang said it will start sending North Korean workers to Kaesong once South Korean businesses are ready to resume operations.

After breaking ground in 2003, earlier South Korean governments paved roads and erected buildings at Kaesong, which lies in a guarded, gated complex on the outskirts of North Korea’s third-largest city.

By the end of 2012, 123 South Korean companies had produced a total $2-billion worth of goods during the previous eight years.

The factory park is considered by Seoul to be a rare source of foreign cash for impoverished North Korea, which faces strong international sanctions over its pursuit of nuclear weapons.

North Korea is estimated to have received $80-million in workers’ salary in 2012, an average of $127 a month per person, paid in U.S. dollars, according to Unification Ministry.

But for South Korea, Asia’s fourth-largest economy, the complex was more than a business opportunity and a source of cheap labour.

Before April, Kaesong industrial complex survived previous periods of high tension and the closures of other inter-Korean projects.

It was the only place for South Korean entrepreneurs to collaborate with North Korean workers.


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