hankyoreh

respective heads of the South and North Korean sides of the Inter-Korean Joint Committee for the Kaesong Industrial Complex

By Kang Tae-ho, senior staff writer

At the second meeting of the Inter-Korean Joint Committee for the Kaesong Industrial Complex on Sep. 11, North and South Korea agreed to resume operations at the complex on Sep. 16. Through this breakthrough, it can be said that the administration of President Park Geun-hye has overcome the problems posed by the complex on the basis of her trust-building process for the Korean peninsula, creating an opportunity to advance inter-Korean relations.

As the South Korean government announced, the agreement to resume operations at the complex states that North Korea will take concrete measures, including offering tax exemptions, to help compensate South Korean tenant companies for the losses they incurred while operations were suspended. In addition, it includes various systemic improvements related to entrance restrictions, protection of investments, and workers’ safety. In this sense, it can be inferred that this agreement contains measures for normalizing the complex and for improving the system in constructive ways.

“This is meaningful in the sense that efforts have increased to improve several aspects of the system in order to make the complex internationally competitive,” said Kim Ki-woong, South Korean head representative on the joint committee, speaking about the joint statement containing the agreement reached at the second meeting on Sep. 11. Kim is head of the South Korean Ministry of Unification’s Inter-Korean Cooperation District Support Directorate.

The key issue at the second meeting of the joint committee was determining when operations at the complex would be resumed. The North had already satisfied the basic requirement of reopening the military communication lines in the West (Yellow) Sea, in consideration of workers that maintain the complex’s electricity, communication, water infrastructure 24 hours a day.

The remaining issue was whether both sides would manage to improve the system, including aspects such as communication, transportation, access, protection of investors’ assets, and concrete measures by the North to compensate Korean companies for their damages.

In regard to this, the North has agreed for now to waive taxes for 2013 for companies at the complex as a means of compensating them for the losses they experienced as a result of the complex’s temporary closure.

“Since most of the companies incurred losses, they probably wouldn’t have actually paid any taxes anyway, but it is still significant in the sense that it reinforces the principle that the North provides compensation for damages,” said an expert on the complex’s laws, who spoke on condition of anonymity.

North and South generally had no differences of opinion on methods to help the complex compete globally. As a result, they were easily able to agree to hold an investment briefing at Kaesong in mid-October for foreign companies and businessmen operating in South Korea.

Workers’ safety was the final issue where South and North needed to make progress. This issue includes details of communication, access, and the length of time that workers can stay at the complex. In this sense, it can be said that the meeting was productive in the decision to introduce an RFID-based entrance system that will allow regular access to the complex on a daily basis. That system is to be introduced sometime before the end of this year.

Of course, it is expected that there will be technological issues that may make it difficult to actually implement this plan. It is the same with the questions of providing internet and mobile telephone service. These were issues that had been discussed on several occasions, but the two sides were unable to reach an agreement.

In contrast with these issues, South and North agreed on a supplementary agreement to implement the accord of Inter-Korean Commercial Arbitration Committee. In Oct. 2003, South and North signed that accord, but it was never fully implemented. The new agreement stipulates that the arbitration committee will be actively used. It appears that the temporary shutdown of the complex helped both North and South come to a new awareness of the need for a regular arbitration committee.

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