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Explanation on the 8th Round Meeting of Inter-Korean Economic Cooperation Promotion Committee

ROK Ministry of Unificatin
2004-03-06

1. Overview

o The 8th round of Inter-Korean Economic Cooperation Promotion Committee was held in Seoul on March 25, 2004 (4 days).

- Reached an agreement on 7 items including construction schedule for Gaesong Industrial Complex.

- Engaged in actual consultation : plenary conference (2 times), contact with the chairman of the committee and committee members.

2. Significance

Provided the timeline for major economic cooperation projects such as the construction of Gaesong Industrial Complex, the connection of inter-Korean railroads and roads, and the development of Mt. Kumgang Tourist District and laid foundation for visible outcome this year

o Accommodate South Korean enterprises to move in and work on production as soon as the preparation for the pilot project site of Gaesong Industrial Complex is completed.

o Test-run the Gyeongui Line and Donghae Line within this year and complete the pavement work of the Gyeongui and Donghae roads at an early date.

o Cooperate to finalize the development plan of Mt. Kumgang Tourist District at an early stage.

o Finalize the schedule for Working-level Consultative Meeting on Economic Cooperation Projects.

Agreed upon concrete and substantial economic cooperation projects visible to the public

o The Prevention Project of Flood in the Imjin River Basin, after years of discussion, will begin in earnest with an on-site survey in April.

o Agreed on establishing the Office of Inter-Korean Economic Cooperation in Gaesong Industrial Complex, and thereby contribute to reducing inconveniences and cost for the South Korean enterprises to implement projects in North Korea.

Urged creation of an environment for stable economic cooperation such as resolving nuclear issues and reducing military tensions

o Emphasized that alleviating military tensions would contribute to peace and tability of the Korean Peninsula and create an environment in which companies can invest in the North without concern so as to promote inter-Korean economic cooperation in a stable manner.

o Contributed to stabilizing situations on the Korea Peninsula through the growth of inter-Korean economic cooperation while maintaining the keynote of dialogue for resolving nuclear issues through the second round of six-party talks.

3. Explanation on Major Issues of Agreement

Construction of Gaesong Industrial Complex

o Agreed on a detailed schedule regarding the construction of the Industrial Complex

Pilot Project

- Undertake the pilot project of 33,000 square meters complex and establish a management body Complete the pilot project Enterprises move in and work on production in the second half of the year.

Phase I : 3.3 million square meters

- Undertake Phase I of building infrastructure for 3.3 million square meters site this year Accomodate private enterprises in phases, starting next year, as the preparation for the construction site progresses.

- Provide electricity and telecommunications on a commercial
basis and in a timely manner for smooth production
activities of enterprises.

o Secured cooperation from the North

- Enact and promulgate the sub-regulations of the Law on Gaesong Industrial Zone, and take cooperative measures such as convenience guarantee necessary for supplying infrastructure including telecommunications and electricity.

Connection of Inter-Korean Railroads and Roads

Railroads

o Test-run some sections of the railroads this year, entering the opening stage of the re-linked railways.

- Proceed the test-run in a way to check the railways in advance and complement the imperfect parts for opening of the railroads.

- Cross-check technical issues for opening of the railroads through the test-run to guarantee the safe operation.

o Agreed to discuss designing and providing equipments and materials for constructing railway stations at the border of Gyeongui Line and Donghae Line to the extent necessary for opening of the railroads.

- Formed cooperative relationship to enhance safety and provide conveniences for the operation around the Northern Limit Line.

- Plan to discuss details including methods, ranges and levels of provision at the 4th Working-level Consultative Meeting on the Connection of Inter-Korean Railroads and Roads in late March.

Roads

o Agreed on early completion of Gyeongui and Donghae Roads.

- Promote the convenience and safety in undertaking economic cooperation businesses such as the pilot project of Gaesong Industrial Complex, and Mt. Kumgang Tourism by land as the pavement work of the roads is completed.

Mt. Kumgang Tourism Project

o Realization of developing Mt. Kumgang Tourist District

- Agreed on early development of the Tourist District so as to improve the environment for enhancing profitability along with regularized tourism by land that began last year.

- South Korean enterprises are working on a development plan for Tourist District by outsourcing to WTO(World Tourism Organization) and Kumho Engineering -> This plan will be presented to the North sooner or later

o Related sub-regulations are expected to be enacted soon.

- Two sub-regulations governing 'Development' and 'Business Creation' promulgated at present.

The Prevention of Flood in the Imjin River Basin

o Agreed on having on-site survey first and taking measures on the prevention of flood.

- Independent survey by South and North Korea (for 3 months from April) -> Joint Survey -> Enforce the prevention measures such as building a flood forecast facility and providing seedlings.

o A team of joint survey(comprised of 15 members or so) will visit the South and the North sites arranged in advance, starting the North sites first, for 7 days respectively.

- The South may set up plans for rainy season by receiving data on weather and floodgate from the North, 10 days prior to the independent survey.

o Expected to expand the scope of cooperation into the fields such as the bilateral utilization of water resources in the rivers shared by the South and the North.

Establishment of the Office of Inter-Korean Economic Cooperation within the first half of this year

o Establish an office of consultation and negotiations for inter-Korean direct trade and economic cooperation in Gaesong.

- Open at the same time as the construction of the Development Office of Korea Land Corporation, which started in December, 2003, is completed.

- Enable to solve high cost and inconveniences incurred by indirect trade through intermediaries of a third country.

o Issues regarding the make-up and operation of the office will be consulted and promoted through exchanges of documents.

- Function as a channel for liaison and consultation, and play a material role as a centripetal support center for enterprises involved in investment and trade in North Korea.


Bilateral visits of the Missions for Economic Observation

o Expected to pave the way for upgrading the inter-Korean economic cooperation as the bilateral visits of Missions for Economic Observation are realized.

- Expected to help the North understand market economy and manage its economy by the visit of North Korean working-level economic mission to the South, which follows the visit of high-level mission from October 26 to November 3 in 2002.

4. North-South Talks Schedule

o The 3rd Working-level Consultative Meeting on Clearing Settlement : Mid march (Paju)

o The 4th Working-level Consultative Meeting on Railroads and Roads : Late March (Gaesong)

o The 3rd Working-level Consultative Meeting on Prevention of Flood in the Imjin River Basin : Late March (Gaesong)

o The 14th Ministerial Talks : May 4 ~ 7 (Pyongyang)

o The 9th Inter-Korean Economic Cooperation Promotion Committee : June 2 ~ 5 (Pyongyang)



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