Will Inter-Korean Economic Cooperation Resume after April 27 Summit?

The Joint Committee for Inter-Korean Economic Cooperation is drawing attention after the inter-Korean summit on April 27 as it will become a control tower when inter-Korean economic cooperation is resumed.

There are still many hurdles, such as the ongoing international sanctions on North Korea, for economic cooperation to be resumed between the two Koreas. It may be too early to be optimistic about cross-border economic coopertion.

Still, some in the South Korean government are saying that it is necessary to make preparations for inter-Korean economic exchanges in view of North Korea's agreement on complete denuclearization of the Korean Peninsula.

“The committee was set up after the October 4 Joint Declaration in 2007 but was stopped after only one meeting due to a government change in South Korea,” a high-ranking government official said on April 29.

He noted, however, that the committee could be easily reopened based on the existing framework. “The two Koreas can maintain the current framework of the committee or set up a different form of organization. Nothing has been determined yet about this matter,” he said.

On April 27, the two Koreas promised to push ahead with what had been agreed in the Oct. 4 joint declaration in order to achieve balanced national economic growth and joint prosperity. The committee will be resumed in 11 years once it is activated this time.

Fiscal and financial support is required for inter-Korean economic cooperation projects to get back on track. The South Korean government’s budget for 2018 has set aside 248 billion won for inter-Korean economic cooperation, up 78.5% from a year ago.

Private-sector companies’ participation is also essential in that it can lead to substantial accomplishments and mitigate the impact of political factors. After the joint declaration in 2007, South Korean shipbuilders such as Daewoo Shipbuilding & Marine Engineering and Samsung Heavy Industries, and equipment suppliers like KangRim Heavy Industries and Oriental Precision & Engineering visited Nampo and Wonsan with South Korean government officials with regard to shipbuilding facility construction in North Korea.

When it comes to the reopening of the Kaesong Industrial Complex, which is expected to become the first inter-Korean economic cooperation project after the recent summit, experts are pointing out the need for measures that could reduce risks such as its the shutdown of the complex.

“Private-sector companies have a pivotal role to play in future economic cooperation projects,” the official explained, adding, “South Korean companies in the Kaesong Industrial Complex have a trauma about the shutdown of the facility and we need to work on some measures to address it.”
 

The South Korean government is likely to come up with specific action plans for inter-Korean economic cooperation in stages, taking into account the results of the upcoming summit between Washington and Pyongyang and the following move of the United Nations. Some are saying that the issue can be intensively discussed in the inter-Korean summit scheduled for the second half of this year if denuclearization shows progress.