| bibo:abstract |
Economic Cooperation between the Two Koreas:
Sources of Investment in North Korea
저 자 명 : Cho Yong-kyun
날 짜 : 2000.06
Conclusion
The situation of the Korean peninsula is now at the crucial point, politically as well as
economically. The summit between the two top leaders provided an important
opportunity to upgrade the economic cooperation. To fully exploit this opportunity is
urgent main task. Several things should be remembered for effective and sustainable
cooperation.
First of all, the role of the Korean government should be clearly established. The
Korean government should inevitably play a leading role both in mobilizing investment
resources and in determining the direction of the economic cooperation. The role
should be that of a catalyzer which facilitates private investments. Such a leading role is
possible only under effective consultation and cooperation with the North. Specifically,
to discuss such issues, it is necessary to establish a permanent mechanism between the
South and the North. To activate the 'Joint South-North Economic Exchanges and
Cooperation Commission' which was agreed upon in the 1992 'Basic Agreement' is also
desirable. In this Commission, the two sides can discuss the issue of how we pursue
cooperation in a more systematic and mutually beneficial way, and how to conclude
agreements for investment guarantees, the avoidance of double taxation, dispute
settlement, settlement of accounts and so on. External conditions are very important variables which affect the situation on the
Korean peninsula. In this sense, constructing a favorable external environment for
economic cooperation is also an important task which the Korean government should
deal with. This is the reason why Korea has recently supported North Korean attempts
to improve their relations with many Western countries, particularly the U.S. and Japan.
For facilitating the mobilization of necessary investment resources, Korea needs to play
a more positive role of bridging North Korea to the international organizations such as
IMF, IBRD and ADB. This would also be helpful to shorten the time period until North
Korea gets assistance from them.
Economic cooperation between the two Koreas is expected to be accelerated further.
The volume of intra-Korean trade and investment will increase rapidly. The intraKorean
trade, in particular, has so far mostly been indirect trade and commission-based
processing trade. As economic cooperation is strengthened, direct trade will increase.
The two Koreas declared, in the Basic Agreement that intra-Korean trade is "basically
domestic trade" and have not imposed any tariff on the trade. In this situation, an issue
is likely to be raised in the international society on what the exact nature of intraKorean
trade is. This is a very important issue in the WTO-based multilateral trade
system. Every effort must be made, in a diplomatic context as well as in a logical
context, for the recognition of internal trade nature of intra-Korean trade.
Finally, the cooperation is expected to improve the national credit rating of South Korea
as well as that of the North through easing tension, building peace and stability on the
Peninsula and stabilizing the North Korean economy. However, if South Korea
inevitably bears an excessive burden of the financing, and fails to diversify the burden,
it may result in a worsening of the credit rating of the South. To prevent such a
situation, it would be helpful to establish a mechanism which effectively monitors the
financial flow of the economic cooperation.
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