Koreas Agree to Reopen Kaesong Industrial Complex
by Daniel Schearf September 11, 2013
North and South Korea have agreed to reopen their joint industrial complex at Kaesong after Pyongyang agreed to meet Seoul's key demands. North Korea unilaterally shut down the factory zone in April but under a deal reached Wednesday will allow joint management and, for the first time, invite foreign investors.
After marathon overnight negotiations, negotiators early Wednesday agreed to a trial re-opening of the symbolically important Kaesong Industrial Complex.
The deal, reached after months of talks, will see production start up Monday for the first time since April when the jointly run factory zone was unilaterally suspended.
Pyongyang pulled its 55,000 workers from the Kaesong factories citing tensions over U.S.-South Korea military exercises.
Pyongyang and Seoul agreed in August to reopen the factory park but needed weeks of negotiations to hammer out the details.
South Korea's chief delegate to the talks, Kim Ki-woong, said the two sides agreed to address any future problems through a joint committee.
Kim said the North side has agreed, for all the issues related to Kaesong Industrial Complex, when any issue occurs, they will discuss it through the joint committee. Therefore, he said, they have a framework for if the two sides think there is a problem, then they will suggest the issue and solve the problem based on the results of the discussion. He said they think this framework will help to prevent any incidents similar to last time.
The joint venture, just across the border in North Korea's second largest city, pairs South Korean manufacturing know-how with cheap North Korean labor.
The Kaesong complex was started in 2004 as part of former South Korean President Kim Dae-jung's engagement with North Korea, known as the "Sunshine Policy."
North Korea's threats and pursuit of nuclear weapons made most of that policy a failure. But the joint factory park managed to continue producing, even through periods of high tension, until earlier this year.
Kim Jin-hyang, head of the Research Center of Peace and Unification on the Korean Peninsula, optimistically believes North Korea always intended to normalize Kaesong but notes the deal cannot prevent another work stoppage.
He said if a possibility of political or military danger is suggested, then a promise can be broken. This occurs frequently in international politics as well. He said it is important for the two Koreas to have willingness to normalize the entire inter-Korean relation based on the normalization of the Kaesong Industrial Complex.
South Korean delegate Kim said Pyongyang also agreed to a key demand of, for the first time, inviting foreign investment to the complex to better ensure uninterrupted production. He said the two sides will hold an event in October at Kaesong targeting foreign companies based in South Korea.
As our president said in Italy, Kim said, as we invite foreign companies and businessmen, we think that the possibility of recurrence of a similar incident will decrease. He added that the system and companies of Kaesong Industrial Complex will develop as a famous, international, industrial complex like China's Suzhou Industrial Park.
The Suzhou complex is a multi-billion dollar joint venture between China and Singapore and has ranked among China's top industrial zones for foreign investment.
But analyst Kim said it is too early to attract large foreign companies to Kaesong as the risks are still high.
He said businesses which require high-tech computers or systems would be difficult to get into the complex because of measures related to the U.S. economic sanctions against North Korea. Even one computer would be checked before it enters the complex, he said, so he is not sure if foreign companies could easily enter the complex.
The two Koreas agreed the South Korean companies that suffered from the months-long closure will be exempt this year from paying taxes. The two Koreas are still discussing what, if any, compensation should be given to the 55,000 North Korean workers.
VOA Seoul bureau producer Youmi Kim contributed to this report
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