Two days of talks to upgrade Kaesong held

North and South Korea restarted stalled talks over the development of the Kaesong Industrial Complex into a more international factory park 48 days after Pyongyang unilaterally canceled meetings.

Negotiators from the South met with their Northern counterparts at the complex for meetings over two days, yesterday and Wednesday, to discuss protection of South Korean citizens in case of legal disputes, investor protection and management of the complex.

The two Koreas sent five negotiators each for the meetings of the Joint North-South Committee for the Kaesong Industrial Complex.

At the meeting on Wednesday, both sides agreed to exchange lists of members of a newly-launched arbitration committee for the Kaesong park within six months.

But the two sides sparred over priorities to be resolved. The Southern negotiators wanted North Korea to increase the number of workers and improve tax regulations, while the Northern side called for resolving the matter of unpaid wages for North Korean workers and “transparency” in accounting by South Korean companies based in the complex.

The matter of transparency in accounting was also raised by Pyongyang last year. In September 2012, North Korea said that some Southern companies were suspected of manipulating their accounts to pay less tax to North Korea.

North Korea warned that if irregularities were uncovered it would levy a fine of 200 percent of the tax due.

“Frankly, there is no way for us to supervise the transparency of accounting by private companies,” a Ministry of Unification official told reporters yesterday. “Although a 200 percent fine is too much, we think it would be right for North Korea to penalize companies cheating on their taxes.”

North Korea withdrew its workers from the eight-year-old industrial park in April in a fit of pique with South Korea. After negotiations, both Koreas eventually agreed to reopen it after the North promised not to unilaterally close it again when relations soured.

Both sides formed so-called subcommittees to negotiate changes to the park, with negotiators meeting nearly every day at the complex.

On Sept. 25, North Korea abruptly canceled a subcommittee meeting to discuss the communications infrastructure, apparently angry over a botched plan for reunions of war-separated families.

On Oct. 14, Seoul canceled a seminar for potential investors in the complex from outside Korea.

South Korea wants some foreign companies to invest in Kaesong to make it harder for Pyongyang to close the park when relations deteriorate. But foreign companies are unlikely to be interested unless the park’s infrastructure is upgraded and regulations simplified.

BY KIM HEE-JIN [heejin@joongang.co.kr]