SEOUL — There are few areas in the North Korean economy, outside its nuclear weapons program, that could be called booming. But the garment industry has been one of them.
Over the past few years, North Korea has been sending increasing numbers of seamstresses to China to sew clothes for international buyers, and it also has been encouraging the expansion of the garment industry at home.
There are factories around the country producing suits, dresses and children’s clothes — almost all of which are labeled “Made in China.”
That should all theoretically come to an end now, after the U.N. Security Council unanimously decided last week to prohibit North Korea from exporting labor and textiles, adding to existing sanctions on coal, iron ore and seafood.
“Today’s resolution bans all textile exports,” Nikki Haley, the United States’ ambassador to the United Nations, said Monday when the resolution passed. “That’s an almost $800 million hit to its revenue.”
North Korea exported about $725 million worth of clothing last year, according to South Korea’s trade-promotion agency, making it a significant source of income for the cash-strapped country.
Adding textiles to the sanctions list means that more than 90 percent of North Korea’s publicly reported exports last year are now banned, Haley said. Coal, iron ore and seafood exports were prohibited in a previous resolution.
While diplomats have been describing the ban as being on “textiles,” economists say it should more accurately be called a “garment” ban. North Korea does not export bolts of fabric but instead produces labor-intensive articles of clothing.
“When you make simple clothes like T-shirts, the machinery is important. The labor is not so important. So it makes no sense to do things like this in North Korea,” said Paul Tjia, a Dutch consultant who helps businesses operate in North Korea, especially in the garment industry.
“But for garments that require a lot of manual work, like bras or winter sports clothes, it makes a lot of sense to make those in North Korea, because the price-to-quality ratio is very attractive,” said Tjia, who most recently went to Pyongyang in May.
Tjia helps mainly European companies outsource sewing to North Korea and espouses the selling points of North Korean labor. At one conference in Seoul, he showed photos of intricately made dresses that he said North Korean workers had made for a major European fashion label — although he declined to say which one.
He also declined to say who his current clients are, for fear of attracting unwanted attention to the provenance of their clothes. The Australian surfing label Rip Curl found itself in hot water last year when it was revealed that some of its clothes had been made not in China, as the company thought, but in North Korea.
With almost all of the North Korean-made clothes leaving through China, the effectiveness of this crackdown will depend on Beijing’s willingness to enforce it.
“If a container coming from North Korea says it contains sweet potatoes, is the Chinese customs department going to crack it open to check that it does not contain underpants?” asked Andray Abrahamian, a visiting scholar at the Center for Korean Studies at the University of California at Berkeley.
Although China supported the new U.N. resolution, its implementation of previous sanctions has been spotty at best, analysts say.
But if Beijing is serious about stopping North Korea’s exports of apparel and workers to sew garments in Chinese factories, it would have a significant impact on the North’s economy, said Marcus Noland of the Peterson Institute for International Economics.
“The reason that this is important is not only because apparel exports are a significant number, but because it’s the one non-resource area that’s really growing,” Noland said, differentiating apparel exports from mineral exports such as coal and iron ore. “So it’s not just the static number that’s important. It’s the fact that this sector was emerging as an area of comparative advantage.”
There is another thing that makes the crackdown on clothing exports different from previous actions against North Korea.
Previously, governments had stressed that the sanctions were targeting the regime and were aimed at cutting off its access to the money or equipment it needed for its nuclear weapons program.
This effort to shut down North Korea’s garment industry is one that will have wide-reaching ramifications across North Korean society.
“Assuming that the ban is enforced, it will have a huge impact,” said Abrahamian, who visited North Korean garment factories several times while working for Choson Exchange, an NGO focused on business training for North Koreans.
“Tens of thousands, possibly even hundreds of thousands, of North Koreans are employed in this industry, and 98 percent of them are women. That’s the demographic that’s clearly going to suffer as a result of this,” he said.
Noland agreed with the assessment that the sanctions would hurt ordinary people and especially women, but he said this is a toll that the United Nations should be prepared to inflict to punish the regime.
It is not known how much the women working in garment factories are paid. In North Korea, wages paid by the state are paltry. But as joint ventures have developed, the regime has been allowing workers to keep a share of earnings — while taking the majority for itself.
While Tjia, the consultant, does not know how much the workers in these factories are paid, he said that workers in factories that export products and have contracts with foreign clients are much better off. He reported seeing an increasing number of seamstresses with cellphones.
For that reason, outsourcing to North Korea should be seen in a wider context, he said.
“If you want to see a change or an improvement in North Korea, the only way is to see economic development in the country, like we have seen in China over the last 40 years,” Tjia said. “Only when an economy grows and a middle class emerges — that’s when we will see change.”