N. and S. Korea agree to reopen industrial park


Suh Ho (L), head of the South Korean working-level delegation, shakes hands with his North Korean counterpart Park Chol-Su (R) after their talks on July 7. North and South Korea have agreed in principle to reopen a joint industrial complex shut down amid high military tensions. (KOREA POOL/AFP/GETTY IMAGES)

North and South Korea agreed Sunday to try to revive their touchstone economic cooperation project, one that the North suspended three months ago during a period of back-and-forth military threats, South Korea said after the conclusion of lengthy cross-border talks.

The agreement to reopen the jointly-operated Kaesong Industrial Complex appeared preliminary, but it offers the first clear sign of progress as the two Koreas try to repair badly frayed relations.

The Kaesong complex — where 53,000 North Koreans provide cheap labor for South Korean companies — has been shuttered for the past three months, a period in which the governments in Seoul and Pyongyang first cut all ties, then showed guarded interest in dialogue and reconciliation.

After 16 hours of negotiations Saturday and Sunday, the North and South signed an agreement pledging to revive operations “as soon as both Koreas are ready.” Follow-up discussions are planned for Wednesday, where Seoul will press the North for a guarantee that the facility won’t again be shut down as a political bargaining tactic. The South has said Kaesong can resume operations only if the North gives such a commitment.

“Seoul is determined to touch on this issue in the next meeting,” Suh Ho, an official from the South’s Ministry of Unification, said, according to the Yonhap news agency.

In protest of new international sanctions and South ­Korea-U.S. joint military exercises, the North banned South Koreans from the Kaesong complex in April and withdrew its own 53,000 workers. Those workers were employed by 123 small- and medium-size South Korean companies, mostly producing textiles and electronics parts.

The facility has since sat idle, a worry to South Korean business owners, who say their machinery could be ruined during the rainy, humid summer months. This week, a group of those owners requested a visit to Kaesong to check on their equipment. More than one-third of the owners say they want to leave Kaesong and restart operations elsewhere, either in the South or somewhere else in Asia. To date, the companies have claimed losses upwards of $900 million, according to Yonhap.

As part of the agreement reached Sunday, those factory owners will be able to visit Kaesong on Wednesday to check the site and remove any equipment or raw materials they wish. The North agreed to allow those South Koreans safe passage.

The concerns of those business owners helped spur this round of talks. Kaesong, which began operations in 2004, generates an estimated $80 million to $90 million for the North Korean government, which siphons off the bulk of its employees’ wages. For the South, Kaesong represents a way for new President Park Geun-hye to carry out her North Korean “trustpolitik” policy, which calls for small shared economic projects, with more ambitious forms of cooperation if all goes well.

During the last few weeks, though, the Koreas have struggled to find common ground. Planned high-level meetings in June were canceled at the last minute when the sides couldn’t agree on their representatives. Those talks were supposed to address a broader range of issues — not just Kaesong, but other inter-Korean cooperation projects.

Kaesong is a vestige from an era of warmer inter-Korean relations, shepherded by liberal presidents, who’d hoped that pet capitalism projects would spur the North’s economic opening. That hasn’t proven the case, but the South still views Kaesong as a key barometer of inter-Korean relations. Until this year, Kaesong was known as the most enduring symbol of cooperation, and it continued running during high points of tension, such as a pair of fatal attacks launched by the North on the South in 2010.

Chico Harlan covers personal economics as part of The Post's financial team.
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