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Agreed to Reopen, but Fell Short of Agreeing When
Kaesong Industrial Complex
Agreed to Reopen, but Fell Short of Agreeing When
  • By matthew
  • August 15, 2013, 07:44
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Model Industrial Complex factories in Kaesong (Gaesong) Industrial Area. (photo courtesy of Mimura/Wikimedia Commons)
Model Industrial Complex factories in Kaesong (Gaesong) Industrial Area. (photo courtesy of Mimura/Wikimedia Commons)

 

On August 14, South and North Korea adopted a five-point agreement to resume operations of the Kaesong Industrial Complex (KIC) in the seventh round of working-level talks.

The two sides agreed to prevent another shutdown of the factory park and to jointly implement safeguards for its normal operations. 

The five-point statement said, "The South and the North will take preventive measures to avert another suspension of the joint industrial park caused by the North's Kaesong entry ban and the withdrawal of the workforce. Both parties also guarantee that KIC will be always fully functional by allowing for safe passage of South Koreans,enabling North Koreans to work, and protecting corporate assets,with the inter-Korean industrial park not to be affected by inter-Korean situations in any circumstances.”

The statement reflects Seoul's compromise. It abandoned its insistence that it was Pyongyang's sole responsibility to prevent another KIC suspension and guarantee its smooth operations. Instead, S. Korea agreed that both sides ought to work hand in hand to not close the industrial zone again. 

The South and North decided to set up an Inter-Korean Joint Committee on the Kaesong Complex to discuss compensation for S. Korean companies' economic losses arising from the closure of the complex and other related issues. 

Both sides also reached the conclusion that they will ensure the safety of South Koreans, protect businesses' investment properties and resolve issues, such as the South's passage, communications, and clearance. 

Regarding those issues, they agreed to ensure S. Koreans' free passage, their use of the Internet and mobile phones, the simplified customs clearance procedures, and shorted clearance time. The practical matters will be addressed at the joint committee.

As for the issue of KIC's internationalization, both parties reached an agreement to guarantee business conditions on an international level for companies operating in the KIC, and develop its international competitiveness. 

To accomplish those goals, they agreed to promote foreign investment, develop systems related to labor, taxes, wages, and insurance on an international level, and push forward with a plan to hold joint foreign investment briefings. 

The two sides also promised to establish an institutional framework for the safe passage and stay of workers, as well as the protection of invested assets, and make a concerted effort to make sure that companies maintain equipment and restart their facilities. But the timing of the restart was not specified in the agreement.

The Ministry of Unification pointed out, "This agreement is significant in that it can prevent future business interruption of the KIC and pledge stable operations in many ways," adding that diverse measures were created for written promises, structural guarantees from a permanent consultation body, and practical assurances through participation in international society. 

In the meantime, South Korean firms in the complex could not contain their joy, clapping their hands as news came that Seoul and Pyongyang reached an agreement to normalize the operations of the Kaesong industrial park. On August 14, representatives from S. Korean companies welcomed the news with tears in their eyes, while waiting for the result of the working-level talks in the building of the Korea Federation of Small and Medium Business (Kbiz) in Seoul. 

Ok Sung-suk, the vice-president of the Business Association for the KIC, said, "The saddest event in my life was the temporary closure of the industrial park. The most cheerful one is, of course, its normalization. So, I'd like to run my business with renewed vigor and determination."

Han Jae-kwon, the chairman of the Emergency Measure Committee for KIC's normalization, said, "I sincerely welcome the conclusion of talks," adding, "I think that it takes one to two months to normalize business operations. Considering the time needed for obtaining orders, its actual normalization is expected to be done in the second half of 2014."

South Korean companies in the KIC issued the following statement on the same day: "We will try hard to further develop the Kaesong industrial park as a place for South and North economic cooperation activities to achieve harmony and co-prosperity of the KIC, aiming for the eventual unification of the two Koreas. We will also do our best to improve its international competitiveness so that it becomes a favorable place for overseas investment."