Inter-Korean Economic Cooperation Consultation Office Opens in 2005
On September 14, South and North Korea opened a joint liaison office in the North Korean border town of Gaeseong. The establishment of the liaison office was part of the Panmunjom Declaration adopted at the inter-Korean summit in April this year.
As South Korean Unification Minister Cho Myoung-gyon said in a commemorative speech, officials of the two Koreas can work together in this same office and directly consult each other at all hours of the day, 365 days a year.
In fact, the joint office for round-the-clock communication is a restored and expanded version of the Inter-Korean Economic Cooperation Consultation Office that first opened back in 2005. Let’s hear from Park Heung-ryol, former senior representative for inter-Korean dialogue at the Unification Ministry, who served as the South Korean spokesman for the tenth meeting of the inter-Korean economic cooperation promotion committee in 2005.
The tenth meeting of the inter-Korean economic cooperation promotion committee dealt with various important issues, including the prompt entrance of 15 South Korean companies in the Gaeseong Industrial Complex, the completion of connecting railways and roads, and food aid for North Korea.
For the South Korean side, another important task was to elicit an agreement from North Korea on the establishment and operation of an inter-Korean consultation office for economic cooperation. The promotion committee had actually been discussing this matter since its seventh meeting, but there was no progress. The Seoul government was firmly determined to resolve this problem at the tenth talks.
South and North Korea held the promotion committee’s tenth meeting session in Seoul from July 9 to 12, 2005. During the talks, South Korea proposed launching a joint office for economic cooperation, while the North requested food aid of 500-thousand tons of rice in the form of a loan as well as cooperation in fisheries operations. The South made the proposal in the hopes of pushing for economic projects with the North in a more efficient way.
For cross-border economic exchanges, one of the most important things is to allow the two sides to communicate and consult each other conveniently. Unfortunately, there was no communication channel whatsoever between economic officials or businesspeople from the two Koreas. For business consultation, they mostly met in China. On some rare occasions, they connected in Japan. The best way to reduce the time and cost of holding meetings would be to create a new channel, through which they could directly engage in talks anytime they want. This issue was brought up whenever the two sides carried out economic programs.
Inter-Korean trade, which began in 1988, expanded considerably during the years of two former liberal presidents in South Korea, Kim Dae-jung and Roh Moo-hyun. After late Hyundai Group honorary chairman Chung Ju-yung led a herd of cattle to North Korea in 1998, a number of inter-Korean projects and activities began, including South Korean tours to Mt. Geumgang and a joint industrial park in Gaeseong. By 2002, bilateral trade reached 640 million US dollars, with the two sides approving 19 joint projects. But officials and businesspeople from the South and the North continued to liaise in third countries.
To alleviate the inconvenience, Seoul and Pyongyang agreed to open a joint office for economic cooperation inside the Gaeseong Industrial Complex. After five rounds of working-level contact, the inter-Korean Economic Cooperation Consultation Office started operation on October 25, 2005. Mr. Park, who contributed to drawing out the agreement from the North on the creation of the office, attaches great significance to this particular venue.
The best part of the office was that the authorities of the two Koreas were allowed to discuss economic issues on a permanent basis. Meeting face-to-face is essential for in-depth dialogue. At the new office, the two sides would be able to talk about their reality and difficulty freely, while working together all the time. South Korean firms hoping to do business jointly with the North could also discuss new plans and ideas at the office through the government’s mediation. In this respect, the office was a very important place to vitalize inter-Korean economic exchanges.
Designed to promote direct inter-Korean trade and investment, the office was the first permanent organization where officials from the South and the North worked together. They worked in the same building, face-to-face, and provided private businesses with information about trade with North Korea and relevant investment data. Some South Korean companies actually started their North Korea-related business through this office.
As a result, the office emerged as an outpost for cross-border economic cooperation. The number of visitors to the office surpassed one-thousand, just seven months after its opening, and discussions for economic programs were held a whopping 775 times through August 2007. South and North Korea came to build mutual trust in the process.
While working together and meeting frequently, the two sides were able to build confidence. Economic experts from a number of South Korean government and economic agencies, including the Unification Ministry, the Korea International Trade Association, and the Korea Trade-Investment Promotion Agency, visited the office to talk with North Korean officials there and answer their questions. It turned out that North Koreans were totally ignorant of market economy mechanisms in South Korea. After extensive discussions, however, at least some North Korean economic officials were able to gain understanding of how it works.
The office was also the first example of a South Korean government agency located within the Gaeseong Industrial Complex in North Korea. Around 10 officials each from South and North Korea were stationed on the second and fourth floor, respectively, and liaison officers from the two sides held a meeting twice a day—one in the morning and the other in the afternoon—in the conference room on the third floor. In addition to official contact, they naturally mingled together in the same building on many other occasions. They would come to each other’s office for a cup of coffee or to borrow some paper.
On February 29, 2008, the facility was renamed the “Inter-Korean Exchange and Cooperation Consultation Office” to support bilateral exchanges in other areas as well, including society and culture, in a systematic way. However, the office hit an unexpected setback in 2008.
…If the North Korean nuclear issue remains unresolved, it’s difficult for South Korea to expand the Gaeseong Industrial Complex.
This is what then-South Korean Unification Minister Kim Ha-joong said. Taking issue with the remarks, North Korea demanded on March 24, 2008, that all South Korean officials withdraw from the office in 72 hours. On December 1 that year, Pyongyang reduced the number of daily border crossings and stopped South Korean tours to Gaeseong, citing the South Korean government’s decision to suspend the Mt. Geumgang tour program and cross-border proliferation of anti-Pyongyang leaflets by South Korean civic groups. The consultation office was also shuttered.
It resumed operation on September 7, 2009, but it was shut down again less than a year later when North Korea criticized the Seoul government for imposing economic sanctions against Pyongyang in response to the North’s torpedo attack on the South Korean warship Cheonan in March that year. Afterwards, the office was empty. Fortunately, however, it has come alive once again as a venue for inter-Korean discussions. Mr. Park says he feels Seoul and Pyongyang are taking a step closer to unification.
At the joint liaison office, the two sides will hopefully discuss various ways to advance inter-Korean relations overall, in addition to economic, social and cultural exchanges. I believe Seoul and Pyongyang will revive their experiences and expertise based on prior experience at the consultation office, thus leading to effective management and great contribution towards advancing unification.