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North Korea Suffering from Decreasing Trade, State's Hill Says

15 June 2005

China remains Pyongyang's main economic partner

By Todd Bullock
Washington File Staff Writer

Washington - Despite a recent increase in trade with China, North Korea's economy is suffering from decreased trade with other nations as well as severe agricultural problems and a lack of viable industrial infrastructure, say senior U.S. officials.

Appearing before the Senate Foreign Relations Committee June 14, Assistant Secretary for East Asia and Pacific Affairs Christopher Hill said China's trade with North Korea has increased in recent years largely because of decreases in trade with other countries such as Japan.

Hill said North Korea's lack of industrial output is causing North Koreans to cross the border to sell and exchange items with the Chinese.

"I think it's more a process of the general weakness of the state economy that there is more and more privatization," Hill said, adding that black market commerce is bringing more Chinese imports to North Korea.

Ambassador Joseph DeTrani, special envoy for the Six-Party Talks to end North Korea's nuclear program, also testified, saying a number of investors from Western Europe are seriously re-evaluating their investments in North Korea to determine their viability.

He acknowledged North Korea is under pressure due to its overall loss of trade and investment.

Hill said North Korea's agricultural sector is collapsing.  The United States, he said, has been the largest food aid provider to North Korea ever since its serious agricultural problems began in the 1990s.

"South Korea has made it very clear to North Korea that what they are going to do in terms of economic assistance is going to be minimal until the North Koreans come to the Six-Party Talks and agree to give up their nuclear program," Hill said.  Pyongyang has declined to return to the Six-Party Talks (which, in addition to North Korea, include South Korea, Japan, China, Russia and the United States) since the last round of negotiations in June 2004.

DeTrani cited information from bilateral meetings with Chinese officials that indicated that there is "possibly" an element within North Korea's military that "speaks to retaining a nuclear weapons capability."

DeTrani said that even though elements in the military might be "clamoring for nuclear capability," Kim Jong Il is the ultimate decision-maker, and his efforts would be better spent focusing on economic reforms and the well-being of the people.

Hill told the committee:  "I think North Korea needs to come to the table, get rid of these (nuclear) weapons and get on with joining the world, because as long as they remain isolated like this … they are not going to succeed. And frankly, if they worry about their survival, they should take another course."

Regarding public diplomacy efforts toward North Korea, DeTrani cited radio broadcasts from the Voice of America, Radio Free Asia and a number of other foreign broadcasts that reach North Korean citizens.  North Koreans also receive news from the outside world via the black market trade with China, he said.

When asked about the effects of this information on the population, DeTrani cited anecdotal stories from some North Korean refugees that said Western broadcasts "confuse them a bit" about what to believe.

(The Washington File is a product of the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)