Topics for S-N economic talks in Seoul

Talks between South and North Korean economic authorities will take place Sept. 25-26 in Seoul. The two sides will discuss the establishment of a systematic framework for South-North economic cooperation.

Talks between the South and North will focus on four main issues; safeguard on investment, a double taxation treaty, procedures for dispute resolution, and transaction settlement.

This will be the first time in 15 years for a comprehensive discussion on economic cooperation to be held, the last such occasion being talks in Panmunjeom in November 1985.

The South Korean delegation will be headed by Lee Keun-Kyoung, deputy minister of the Ministry of Finance and Economy (MOFE), and 3 consultative representatives from the Ministry of Unification and Ministry of Commerce, Industry and Energy. For the North Korean delegation, Jong Un-Op, chairman of the National Economic Cooperation Federation (NECF), will be the chief representative, along with three other delegates. The NECF is a corporate entity in North Korea but is being used as the economic cooperation agent between the two governments.

A group of 15, including the North Korean delegation and reporters, arrived at Kimpo Airport on Sunday on flight CA123 from Beijing.

Among the four issues, the settlement matter is an essential systematic assurance device in promoting the participation of the private sector. In particular, the South Korean private sector has strongly requested an agreement on devices relating to investment assurances.

In the investment assurance agreement, the details include the guarantee of investment principle recovery and business income remittances together with the assurance of no seizures of corporate assets. Most favored nation status, which ensures no differentiated treatment from other nations or treatment as residents, will be included in the agreement.

The double taxation avoidance treaty will stipulate that profits earned by businesses in North Korea will not be double taxed. If taxes are levied on both ends, investments will not be actively made.

For the dispute settlement agreement, procedures in settling disputes and the establishment of a dispute/arbitration organization will be mentioned. In the settlement agreement, a direct settlement method between the two Koreas without the participation of a third-nation financial institution will be stipulated. For each transaction, the actual proceeds will not be settled and instead, the difference in amounts for a certain period of time between South and North will be settled at a designated bank.

Completion of negotiations in relation to the four segments is highly unlikely in this round of discussions. According to a government official, after the details of each agreement are decided through a number of working level meetings, the matter will be raised at the ministerial-level meeting. How pro-actively North Korea will push for the set up of systematic assurance devices will be a crucial factor.