Gov’t seeks to allow N. Korean firms to engage in business in S. Korea

The South Korean government is moving to amend related laws to enable North Korean companies to engage in profit-making business in the South, it has been confirmed. The centerpiece of the amendment is not only to guarantee North Korean firms to conduct economic activities within the South but also to allow them to hire South Korean workers, measures that run counter the U.S.-led economic sanctions against the North. The amendment bill reflects South Korean President Moon Jae-in’s intention to push for inter-Korean cooperation, rather than blindly pursuing dialogue for the North’s denuclearization. Critics say that the measure could widen the discrepancy in policy with Washington, which has urged Seoul to “seek inter-Korean cooperation in parallel with Pyongyang’s denuclearization.”

The first draft of the amendment to the “Act on Inter-Korean Exchange and Cooperation” released by Seoul recently is found to contain new provisions on “economic cooperation businesses” that define inter-Korean economic cooperation activities, among others. The provision suggests that people from South and North Korea can seek profit in each other’s territory with the main purpose of making economic gains. The draft thus includes a new provision that is designed to not only guarantee South Korean firms to do business in the North, but also enable North Korean companies to engage in economic activities in the South.

Specifically, the draft bill is designed to allow businesses of the two Koreas to make joint investment in each other’s territory or a third party country and share profits, and engage in transaction of securities and bonds, land and buildings, intellectual profit rights including industrial property rights and copyrights, mining rights, fishing rights, and the right to develop and use energy including electricity, heat and water sources. Further, when North Korea engages in economic activities in the South, the bill is designed to allow for joint investment with a company from a third party country, and enable North Korean companies to directly hire South Korean workers in the South.

However, many of the provisions in the South Korean government’s draft amendment are incompatible with sanctions against the North, which are spearheaded by the international community. The UN Security Council Resolution 2375 bans member states from establishing, maintaining and operating an existing or new joint venture or cooperative body with North Korean companies or individuals within their territory. The UN Security Council Resolution 2397 requires UN member countries to repatriate all North Korean workers including loggers and restaurant waiters and waitresses engaged in income-earning activities in their countries to the North by December 22 last year.

Earlier when the South Korean government disclosed its intention to effectively lift the April 24 (2010) measure that bans inter-Korean exchange and to amend the Inter-Korean Exchange and Cooperation Act to promote contact with North Korean nationals, the U.S. State Department stressed that “We are coordinating with our ally South Korea to take such measures in tune with progress in the North’s denuclearization without fail.”

Meanwhile, Seoul has completed an online public hearing on the amendment to the Exchange and Cooperation Act that includes those provisions on Thursday, and will submit the amendment bill to the National Assembly through the government route within this year to seek enactment.


In-Chan Hwang hic@donga.com