[Seri column]What summit could accomplishThe upcoming inter-Korean summit scheduled from Oct. 2 to 3 is another milestone in nearly 20 years of South-North economic cooperation.
While expectations are high that the summit will yield some breakthroughs, including political ones, mutually beneficial economic projects between the two leaders will remain prerequisites for any tangible progress toward the unification of the two Koreas.
Before the upcoming summit, North-South economic relations were defined by two main events.
The first was former President Roh Tae-woo’s “Nordpolitik July 7 Declaration” that attempted to realign existing Cold War alliances and initiate direct economic cooperation with Pyongyang. However, Pyongyang rejected Seoul’s overtures, choosing instead to continue down its individual economic path.
The second event was the June 15 Joint Declaration of the 2000 summit, when the North officially agreed to engage in economic cooperation with the South. Indeed, the declaration paved the way for both official and private exchanges between the two Koreas in a number of areas, including tourism on Mount Kumgang, the reopening of inter-Korean railways and the establishment of the Kaesong Industrial Complex.
The upcoming inter-Korean summit may turn into a third crucial turning point. Almost surely, the summit will push forward cross-border economic cooperation even further in a manner to benefit both sides. In order for this to happen, however, a prerequisite must be met.
Stable political and security relations are a necessary prerequisite to economic cooperation beneficial to both sides. While a wide range of economic projects will likely be considered, they will ultimately accomplish little with continued tensions on the Korean Peninsula. Most of all, South and North Korea should leverage the Feb. 13 agreement to resolve existing nuclear uncertainties and to reduce military tensions.
With this prerequisite in mind, both Koreas may delve into deeper economic cooperation in three directions. First, both leaders should center discussions on creating a robust institutional framework that will unify all existing activities related to inter-Korean economic cooperation. Most notably, both sides may consider a collective move toward making a free trade agreement, much like the Mainland [China] and Hong Kong Closer Economic Partnership Arrangement (CEPA).
Second, inter-Korean economic cooperation should also focus on improving the North’s ability to deal with its basic problems, such as severe drought or floods. Cooperating on reforestation in the North is such a project. This project could address numerous key issues over the next 10 to 20 years, including alleviating water shortages or flooding. Water resources have noticeably fallen and floods have been common during the rainy season due to severe deforestation.
Another potential example is energy cooperation, such as biogas development, that would entail helping rural farmers produce electricity using animal waste.
Third, additional special economic zones should be built while expanding the existing one. To be more specific, the two Koreas will be able to establish a “second Kaesong Industrial Complex” while pursuing the second phase expansion of the current complex. Candidates for such a “second Kaesong” project include Sinuiju, Pyongyang-Nampo, Wonsan and Chongjin.
Fourth, South Korean companies can be encouraged to play a role in helping develop the North’s export industry. To this end, South Korean companies may be given some incentives when they buy North Korean-made goods instead of products currently bought from China. That way, South Korea could cut down its reliance on Chinese products while helping the North Korean economy develop.
Finally, linking railways and roads between the two Koreas is also essential. In this case, when the North asks for a loan for that purpose from the South, the loan should be tied to how it is used. That will enable South Korean companies to join large-scale projects in the North.
Above all, it is imperative that inter-Korean economic cooperation will progress further through the upcoming summit and also earn the trust and approval of the international community.
This will help North and South Korea achieve their common goal: peace and economic prosperity on the Korean Peninsula and ultimately, unification.
*The writer is a research fellow at the Global Studies Department, Samsung Economic Research Institute. Inquiries on this article should be addressed to email@example.com.
by Dong Yong-seung
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