0910 October 1st New Economic Management Reform
Measures
New Economic Policy to
Start October 1st
Daily NK. 9/10/12 By
Kim Kwang Jin
North Korea has
announced domestically that the so-called ‘June 28th Policy’ of economic
management measures are to go into force nationwide on October 1st.
Given that the new
measures will be implemented on October 1st, it is likely that the June 28th
Policy will come to be known as the ‘October
1st New Economic Management Reform Measures’ in the same way as
the July 1st Economic Management Reform Measures of 2002, which were
branded the ‘October 3rd Policy’ until their implementation because October 3rd
was the date upon which Kim Jong Il delivered his first statement on the issue
to the Party.
The ‘June 28th Policy’
is seen by many analysts as an extension of the 2002 measures. Among
its key tenets, agricultural
producers are to receive 30%
of production under the state plan plus any overproduction, while workers in small and medium-sized
enterprises are to no longer
receive state distribution, instead being paid entirely in cash.
However, the people of
North Korea are concerned, the source explained, saying, “The truth is that
they shut down the July 1st Measures after just 3 years, so people are feeling
pretty anxious now.” Therefore, he added, “They are backing it up with legal
measures to show that it will be applied consistently.”
The source explained
that he assumes the authorities are using both education targeting all levels
of the adult population and the application of legal and systemic modifications
to try and ensure that the tentatively titled ‘October 1st New Economic
Management Reform Measures’ succeed. However, if they are not followed by
significant opening to the outside world and/or massive levels of external
support, the source added that the chances of success will significantly
diminish.
North Korea Accepts
Flood Aid Offer
Daily NK. 9/10/12 By
Park Seong Guk
North Korea has
accepted a South Korean offer to provide flood relief aid, more than a week after it was made.
A Ministry of
Unification official explained this afternoon, “North Korea notified us this
morning via the Red Cross channel at Panmunjom that it will accept the aid.”
The original offer was
one of discussion of flood relief aid, and was made by the South Korean
government on September 3rd in the name of the Korea National Red Cross
North Korea Holds
Chinese Firm Responsible for Failed Venture
Bloomberg. 9/10/12
North Korea held a
Chinese mineral company responsible for the collapse of an iron-ore joint
venture, escalating a dispute
that risks undermining the isolated state’s relations with China, its biggest
investor.
Xiyang Group, based in Liaoning in northeast China,
fulfilled only 50 percent of what it had agreed to and was “chiefly to blame,”
the official Korean Central News Agency said yesterday. Xiyang said last
month that its contract was terminated at the plant after North Korea demanded
an increase in royalties and rent.
The row may undermine
North Korean leader Kim Jong Un’s effort to boost foreign investment in an
economy in which 16 million people, or two thirds of the population, suffer
from poverty and malnutrition. China accounts for 89 percent of North Korea’s
foreign trade and the two countries are negotiating the expansion of joint
economic zones with an eye on the reclusive state’s estimated $6 trillion of
mineral reserves.
“North Korea doesn’t
understand how capitalism works and believes that all companies operate under
the government’s orders,” said Lee Woo Young, a professor at the University of
North Korean Studies in Seoul. “The two countries are likely to turn this
dispute into a diplomatic one to exercise leverage in negotiating Chinese
investment in the joint economic zones.”
Mining exports are one
of the few legitimate ways for North Korea to earn foreign currency. Last year,
the regime exported $1.2 billion of minerals, 97 percent of which went to
China, according to a June 1 report by the Korea Trade-Investment Promotion
Agency in Seoul.
Signed Contract
Xiyang signed a
contract in 2007 to build a mine producing 500,000 tons of iron ore per year,
the company said on a weblog that was confirmed by Bloomberg News today. The
company dispatched more than 100 technical workers to North Korea to set up the
plant.
The North Korean side
raised 16 issues in September last year which “completely went against the
contract,” the company said, including raising royalties and equal pay for
North Korean workers and Chinese workers. North Korea then terminated the
contract on Feb. 7 and cancelled the joint venture company, cutting access to
water, electricity and communications, Xiyang said.
“They chased us out
after we invested,” Wu Xisheng, a deputy general manager in charge of Xiyang’s
North Korea investment, said by telephone today from Beijing. “There’s nothing
we can do. We can’t go back.”
North Korea agreed to
pay compensation of $31.24 million to resolve the dispute that the company
hasn’t received, forcing Xiyang to make a statement, Wu said.
Public Response
“North Koreans took
Xiyang’s complaint as the Chinese government finding reasons to limit
investment in the North,” said Lee, the professor in Seoul. “That is why they
responded so publicly.”
A Change in North
Korea’s U.S. Policy?
The Diplomat. 9/9/12
By Scott Snyder
The DPRK has signaled
several times over the course of the summer that it is reviewing its nuclear
policy and that a central feature of the review is connected with the “hostile
policy” of the United States. Against this backdrop, North Korea’s foreign ministry released a lengthy statement last
Friday. The statement did not contain any surprises.
Instead, it provided a
straightforward explanation of how North Korea sees the world, arguing that
despite a stream of U.S. assurances over the course of the past two decades, a
U.S. attitude of hostility toward the DPRK has prevented confrontation from
being resolved. (Of course, what stands behind the argument is the unwavering
decades long opposition that U.S. policymakers have held toward North Korea’s
nuclear development.)
One point the
memorandum makes well is that the nuclear issue was not the
origin of U.S.-DPRK confrontation and that “from the very beginning, the
U.S. defined the DPRK as an enemy and refused to recognize its sovereignty.”
The North Korean foreign ministry argues that the United States opposed the
DPRK from the very beginning and refused to establish diplomatic relations with
Pyongyang while establishing relations with the Soviet Union and other
Communist countries in Eastern Europe. The United States and the DPRK are still
technically at war. In other words, the North Korean nuclear problem is really
just one symptom of a deeper predicament that characterizes U.S.-DPRK
relations. This characterization signals the possibility of yet another North
Korean effort to engage with the United States on peace talks rather than on
nuclear talks.
The Foreign Ministry
Memorandum paints North Korea as the object of enduring U.S. military
aggression and economic sanctions despite its periodic floating of peace
proposals that have continuously been rejected by the United States. Even the
repeal of the Trading With the Enemy Act (TWEA) and removal of the DPRK from
the list of state sponsors of terrorism under the Bush administration as a
carrot to nudge North Korea toward denuclearization was thwarted, in the North
Korean view, by new U.S. sanctions, to which the Obama administration has
continued to add more sanctions.
The North’s preferred
solution, given America’s implacable policies of hostility toward North Korea,
is for the United States to make a “bold and fundamental change” in policy
toward North Korea: “The respected Marshal Kim Jong-un wants to open up a new
chapter for the development of relations with the countries friendly toward us,
unbound to the past.” Or, we can “continue down the U.S. hostile policy as of
today, resulting in further expanding and building up of the DPRK’s nuclear
arsenal.”
North Korea’s framing
suggests that the Kim Jong-un regime still wants a relationship with the United
States, but on its own terms. It rejects the idea that North Korea faces a
strategic choice over whether or not to give up its nuclear program, instead
arguing that the United States faces a strategic choice over whether or not to
pursue peace with North Korea. North
Korea continues to take actions designed to put the question of
denuclearization out of reach, both by continuing its uranium enrichment
program on the ground and by pursuing more active economic ties with China,
and, most probably with South Korea following the presidential election that
will be held in that country in December.
North Korean moves
toward limited economic reform without denuclearization, in combination with a
peace offensive toward the United States, pose a serious challenge for U.S.
policy coordination with both South Korea and China. A U.S. failure to persuade
China and South Korea to insist on denuclearization as a prerequisite for
economic engagement may lead to de facto acquiescence to a nuclear North Korea,
while U.S. insistence on a denuclearization only approach could fail to win
sufficient cooperation from new leaderships in China or South Korea early next
year.
China Opposed to
Extending S.Korea's Missile Range
The Chosun Ilbo.
9/6/12
China is apparently
opposed to extending the range and payload of South Korean missiles, as is
Japan. Opposition from the
two neighbors could prove the final stumbling block in negotiations with the
U.S about increasing the range and payload, which are restricted under a
bilateral agreement.
Concerned that
southwestern Japan could fall within the reach of South Korean missiles, Japan
has been stepping up opposition to extending their range since President Lee
Myung-bak's visit to Dokdo last month.
Since the negotiations
between South Korea and the U.S. began in January of 2011, Washington has
cited concerns from China and Japan as the main reason for maintaining the
current cap, which limits the range to 300 km and payload to 500 kg.
Seoul wants to extend
the range to 1,000 km and the payload to 1 ton.
But both China and
Japan have the capacity to build intercontinental ballistic missiles, so
critics say they are in no position to oppose increasing South Korea's capacity.
China's DF-21C missile
has a range of 2,500 km, while the DF-31A can travel more than 10,000 km.
Japan, meanwhile, has a three-stage, solid-fuel rocket that can be turned into
an ICBM. "China and Japan do not want South Korea's military status to rise,"
said one diplomatic source here.
But the U.S. is still
apparently opposed to South Korea using solid-fuel boosters. Such rockets are
stronger and require less time to prepare for launch.
Also, Washington
apparently does not want Seoul to transform civilian rockets for missile use or
vice versa. The two sides are hoping to wrap up the talks this month. "The
time has come for the U.S. to decide," said a high-ranking Defense
Ministry official here.
China, Japan, Korea: Will History and Politics Trump
Economics?
by Stephan Haggard | September 6th, 2012 |
While in Korea and
Japan several weeks ago, sparks flared not only over the
Senkakus/Diaoyu/Diaoyutai Islands and Dokdo/Takeshima but the highly
emotional issue of comfort women. As a result, we are about to have one of
those quasi-natural experiments that social scientists love. Will history and
politics trump economics? Or will growing interdependence pull the parties back
to their senses, as South Korea’s thoughtful finance minister, Bahk Jae-wan has recently argued they should?
To date, the political
ups and downs have operated on a separate track from a quite significant—but
largely unremarked–trilateral economic diplomacy. The parties have signed a trilateral investment treaty and
are now talking seriously about a
free trade agreement. Can it last?
The Trilateral Summit
was set in train by the first “CJK” joint leaders meeting on the sidelines of
the ASEAN + 3 meeting in November 1999. But it soon became apparent that the
three major Northeast Asian powers were not going to be bound by the
lowest-common-denominator politics of the ASEAN political structures.
The CJK leaders
started by endorsing a joint investment framework. The first set of
consultations around the Trilateral Investment Agreement took place in May
2005; formal negotiations were launched in January 2007. In December 2008, the
CJK held their first leaders’ summit in Fukuoka in the wake of the financial
crisis. Further summits followed in October 2009 (Beijing) and May 2010 (Jeju),
where an MOU was signed on the establishment of a Trilateral Cooperation
Secretariat as well as the launch of a study group on a CJK FTA. At the fourth
summit in September 2011, the three countries actually launched the Secretariat
in Seoul.
To be sure, some commentators have made a mockery of the diplomatic
jockeying at the May summit. And the risk of the politics undercutting
the economics is real; according
to the Wall Street Journal, the Noda government was at least
thinking about pulling back on a bilateral central bank swap agreement with
South Korea in the wake of the Dokdo flare-up. But if you have a serious
interest in the political economy of Northeast Asia, the
28-page Trilateral Investment Agreement is worth scanning. The
agreement is not the TPP, but that is the point; the US is not the only game in
town. The agreement is a serious effort, and the fact that it took a while to
negotiate reflects that fact.
Some highlights:
Articles 1-4 and 22.
The agreement does not conform with Ippei Yamazawa’s “Open Regionalism,” under
which concessions are extended to outsiders. The only investments in the region
that receive the protections of the agreement are those emanating from one of
the three parties; an American firm with an operation in Japan is not covered,
nor is that subsidiary’s investment in a branch in Korea or China. Article 22
(Denial of Benefits) goes so far as to specifically underscore the point. For
these investments, the treaty aspires to national treatment (Article 3) and
also MFN status (Article 4): investments from the three parties shall not
receive explicit preference but neither shall they receive treatment any less
favorable than those extended to either a contracting party or a
non-contracting party.
Article 6. Investors
will have access to the courts on standing no different than that accorded to
domestic investors, a commitment that is far from uniform among the parties.
Article 7 prohibits
performance requirements; this could affect Chinese policy in particular.
Article 9.
Intellectual property rights commitments are limited; the agreement simply
calls on each party to protect intellectual property in line with its own laws.
Good luck with that.
Article 10. The
transparency provision could matter; it calls on the parties to “promptly
publish, or otherwise make publicly available, its laws, regulations,
administrative procedures and administrative rulings and judicial decisions of
general application.”
Article 11. The
expropriation provisions appear weak to a Western eye but they do make
reference to due process; again, good luck with that, but the normative
commitment to principle is nonetheless of interest.
Article 12. The
agreement appears to liberalize the capital account on all investment-related
transactions, but with a major loophole with respect to “issuing, trading or
dealing in securities, futures, options or other derivatives.” Article 19 also
outlines the conditions under which countries can undertake “temporary
safeguard measures” with respect to the capital account.
Article 15 outlines a
complicated dispute-settlement process that begins with consultations but then
allows the disputing party to choose from a menu of legal options that
includes:
- a competent court of the
disputing Contracting Party;
- arbitration in accordance
with the ICSID Convention, if the ICSID Convention is available;
- arbitration under the
ICSID Additional Facility Rules, if the ICSID Additional Facility Rules
are available;
- arbitration under the
UNCITRAL Arbitration Rules or;
- if agreed with the disputing
Contracting Party, any arbitration in accordance with other arbitration
rules.
The agreement does not
create a unique CJK dispute settlement mechanism, but that is not necessarily
bad if these organizational outsourcing options are available. Article 17
creates a similar arbitration process for disputes among the states parties.
It is wrong-headed to
pooh-pooh the agreement as “shallow”; the point is that not everyone buys the
US definition of a “high-quality agreement” and something far short of the TPP
might still encourage investment and provide assurances. If CJK can reach
agreement on an investment framework, is there any reason to think that they
cannot produce their own kind of FTA? Or will history and politics get in the
way?
North Korea, Russia
helped Syria to develop chemical weapons
All Voices. 9/6/12 BY
StephenManual
As the prolonged
crisis in Syria refuses to go away, focus of the world powers, including the
United States, is on chemical weapons arsenal of the violence-wracked country. The
world powers, especially Israel, fear that the chemical weapons and other
lethal material may land in the hands of terrorists and militants if
Bashar al-Assad regime falls down. Fresh reports emerging from the volatile
country suggest that North Korea and Russia helped Syria build chemical weapons
arsenal to be used against Israel in case of war or any major conflict between
both the countries.
