Story on NK Industrial Zone in the NY Times

Heads up to NoCHR for alerting us to this story. For more analysis see our post, Zonal Strategies, below.

For managers, a Korean paradise
By James Brooke The New York Times

MONDAY, FEBRUARY 27, 2006
KAESONG, North Korea In a cavernous factory floor here, where hundreds of North Korean women diligently cut and sewed women's jackets Monday, a South Korean businessman seemed to have found Korea's answer to China: wages at 26 cents an hour.

"Kaesong has more advantages that Vietnam, China or Guatemala," Hwang Woo Seung, president of Shinwon Ebenezer Company, said, citing other countries where his company produces clothes. "We opened here last March and we are already starting to build another factory here twice the size of this one."

If the leaders of the two Koreas have their way, Hwang's factory, with its 326 North Korean workers and seven South Korean managers, will represent the economic future of the peninsula.

"Kaesong Industrial Park, a place where the South's capital and technology and the North's land and labor are being combined to a make a new prosperity," an American-accented voice announced on a peppy information video shown to the first group of foreign reporters to tour the site, only several hundred meters north of the demilitarized zone.

Almost four years after the initial agreement for the park, the legal and infrastructure building blocks finally seem to be in place for explosive growth. Over the next year, the number of South Korean factories and North Korean workers is to nearly quadruple, to 39 factories and 15,000 employees.

By 2012, the industrial park is to spread over 67 square kilometers, or 26 square miles, and to employ 730,000 North Koreans, almost 8 percent of the work force in this impoverished nation, which has a total population of 23 million.

Last month, a South Korean telephone company opened the first 340 of 10,000 planned lines to here. Next month, work is to start on a tenfold increase in the power supplied by South Korea, to 154,000 kilowatts. Last fall, to iron out bureaucratic difficulties for South Korean and other foreign investors, South Korea opened its first government office in the North here.

When 50-year leases for building lots were auctioned off last summer, there were, on average, four South Korean companies vying for each plot. With labor costs rising in South Korea, many owners of small and medium-sized factories, say they face two options: closing and moving to China, or closing and moving to Kaesong.

"We have plans to build a factory here four times the size of this complex," Oh Sung Chang, senior managing director of Taesung Hata Company, a manufacturer of packaging for cosmetics, said after walking reporters past plastic molding and cutting machines manned by North Korean workers. Noting that he plans to start construction this summer, he added: "The Northern side has been very cooperative."

The North, after initial reluctance, has thrown its weight behind the isolated nation's largest center of foreign investment.

"We will bring peace and prosperity to the Korean Peninsula through the Kaesong Industrial Complex," Kim Hyo Jeong, a North Korean official serving on the Kaesong Industrial District Management Committee, told reporters Monday.

According to North Korean propaganda, the North is a worker's paradise. But after 60 years of communism and Kim family dynastic rule, the North looks like a manager's paradise.

Not only are the wages the lowest in Northeast Asia, but independent labor unions are banned.

"Strikes?" Hwang replied dismissively in response to a reporter's question. Raising crossed arms, he said with a slight smile: "Absolutely not."

"North Korean workers are very skilled, and that is why we decided to move here," Moon Chang Seop, president of Sam Duk Starfield, a Pusan- based shoe manufacturer. Noting that shoe manufacturing "is getting small" in South Korea, he said he hoped to one day move his entire line to Kaesong.

For now, Kaesong's 11 factories are producing almost entirely for the South Korean market.

To grow as planned, the park will have to win access to world markets. With North Korea's nuclear weapons program provoking opposition in Japan, Europe and the United States, the threat of commercial sanctions against North Korean products hangs over any investment. At the same time, South Korea hopes that products made here will be eligible to enter the United States under any free-trade pact that may be negotiated with the United States. (read more...)

After free-trade talks were announced last month, U.S. officials discouraged the idea of duty access for products made in this part of North Korea.

"In our view, the agreement applies to goods produced only in South Korea and the United States," an U.S. Embassy official in Seoul told reporters. "We hope that the Kaesong issue won't be a major hurdle in reaching the comprehensive goal of signing the free-trade agreement."

In the United States, American labor and human rights activists may object to employment conditions here.
At Kaesong, the minimum wage for the 48-hour week is $57.50. But $7.50 is deducted for "social charges" paid to the North Korean government. The remaining $50 is paid to a North Korean government labor broker. None of the South Korean factory managers interviewed would guess how much of the $50 salary ends up in the pockets of workers.

"The exact amount is determined by North Korean authorities," said Kim Dong Keun, a South Korean who chairs the Kaesong Industrial District Management Committee.

Under labor contracting arrangements in Russia and Eastern Europe, North Korea's government often withholds half of their workers' salaries.

Attempts to interview seamstresses at the Shinwon, factory elicited evasive responses and intervention by South Korean guides.

"No interviews with North Korean officials or employees are allowed," Mira Sun, the foreign press aide to South Korea's president, Roh Moo Hyun, lectured reporters by loudspeaker in one bus after reporters tried to interview seamstresses.

Alternatives for North Korean workers appears to be bleak.

Although the two Koreas speak the same language and share the same history up until 1945, 60 decades of communism has created, in economic terms, a Bangladesh living alongside a Belgium.

Beyond the shiny new factories and busy construction sites of the industrial park, visitors peering beyond a 5-mile long green wire perimeter fence could glimpse a tableaux reminiscent of Breughel paintings of pre-Industrial Europe. In one field, about 20 people were bent over their hoes. An ox cart creaked down a lane carrying winter feed, while a man with a load of brush on his back trudged down a path.

Zonal strategies

I'm going to reprint a short article on some efforts to expand the joint industrial zone between north and south Korea. Seems there is a lot of bipartisan unity on this issue. As Kotaji remarked in a comment to an earlier post, the prospect of economically integrating North Korea could be a boom for South Korean capital. In a climate where they no longer benefit from strategic finance they recieved during the past, the Chaebol are definitely pushing to have their obligations to workers restructured so as to save more on labour. However, Korean social movements have resisted this tendancy for the last 7 years, after witnessing what concessions on labour restructuring can bring in the wake of the 1997 crisis. Hence, over the last year we've seen several serious struggles not simply over the attempt to introduce national legislation expanding irregular work, but also policies like rice liberalisation which promise to expand the supply of workers migrating to the cities. Why not bypass these problems by creating special zones to harness the power of, potentially, a considerably more docile and politically repressed supply? I'm still not sure what the future may bring. It will depend on a number of factors such as the 6-party talks, NK's own strategy, the SK labour and student movement among others. At any rate, it seems for the moment SK wants to expand these zones (to 600,000 workers), the US aren't keen on the subject, and labour has so far been quiet (from what I can gander from the English press).

From the Korea Times:

Bill on Inter-Korean SEZ Pushed
By Lee Jin-wooStaff Reporter
Feb 13 2006

A group of 100 ruling and opposition party lawmakers Monday submitted a bill aimed at setting up an inter-Korean special economic zone near the heavily fortified border bisecting the two Koreas.

``The bill is based on a long-term strategy to construct a joint economic community which will mutually benefit both South and North Korea,’’ said Rep. Yim Tae-hee of the largest opposition Grand National Party (GNP).
Yim said, ``Invaluable lessons we learned from trials and errors of the Kaesong industrial complex in the North will surely help us carry out the plan successfully and further promote inter-Korean relations.’’

The lawmakers who signed the bill include 16 legislators from the ruling Uri Party, 76 from the GNP and 4 from the minor opposition Democratic Party (DP).

As an initial, short-term step, the bill aims to establish the envisioned industrial zone, which is similar to the Kaesong complex, in Paju, Kyonggi Province, located near the Demilitarized Zone (DMZ), Yim said in a press release.

In the bill, the lawmakers also proposed to jointly expand the boundary of the economic cooperative area from the port city of Haeju in South Hwanghae Province, North Korea, to Inchon, west of Seoul.

They called for the establishment of a government agency to encourage certain industries, including tourism and information-technology, and environmentally friendly businesses with various benefits in the designated area.
The lawmakers said they target to complete the legislation of the bill in the first half of this year.

The bill said the establishment of the economic zone will help ease tensions on the Korean Peninsula and provide a chance for North Korea to learn about the market economy.

It's our birthday (sort of)

On February 23rd this blog turned one year old. I was too busy to post anything that day so this is really a belated birthday post. It's been a good year, and I'd say that we've been relatively successful in that we've managed to post, on average, more than once a week for the last year. Besides putting up many smaller posts on current events involving Korean social movements, we also managed to contribute a number of unique commentaries of our own that have either been prepared for print or were original posts that recieved wider circulation. Often, the events that we have covered in these stories have been ongoing and you can see their development through other stories in the archives.

Here's a sample of some of the stories that I think are our best work. If you are a new reader to this blog than these stories will give you a sense of some of the issues that we've covered, and if you are a returning reader, we'll here's a reminder of where we've been and, hopefully, where we'll continue to go in the future.

Our story on the struggle over the expansion of irregular work, Against Flexibilization, was our most thorough exploration of the proliferation of non-regular work in South Korea and the fight against it -- a fight that continues to this day as the National Assembly is still trying to introduce the legislation. This story has definitely gotten the most attention on this blog as it continues to unfold. Likewise, an overview on the migrant workers struggle, the new minjung, also dealt with this topic in the sense that the expanding use of foreign migrant labour is a form of labour restructuring in itself and migrants groups, such as the MTU, continue to struggle for rights and equality in South Korea.

Matt, our other contributor, has put up some great posts as well. His posts on conscientious objectors in South Korea got a lot of attention and he is planning some important updates on this story in the future. His story North Korea's attempts to control the spread of information is also indicative of his good work. In the aftermath of the APEC and rice liberalization protests (two interrelated issues), Matt was quick to write about the public reaction to the death of Jeon Yong Cheol during a scuffle with police. Kotaji and I also tried to weigh in on the topic with a story in Japan Focus about some of the points of focus of the APEC protests and the protests that were about to follow in Hong Kong.

Well, those are my picks for some birthday reading. Hopefully we'll have lots more for you next year. Thanks for reading!

Here we go again

I really haven't been posting much lately. There are some pros and some cons to this. The con is that I haven't been keeping our loyal readers up to date on some recent developments, the pro is that I've been working hard planning my own research (yes I do have a life beyond this blog) which will, in the long run, supply you with more analysis of Korean labour and social movements than the more news oriented posts I put up lately.

In case you haven't noticed, however, the KCTU has called for another general strike against the bill on temporary workers. In fact I think every story on our labourstart newsire at the moment is on this topic. We've covered this issue perhaps more than any other on this blog -- just pick an archive and you'll see this for yourself so I'm not going to link to our previous posts. However, here's a short article from the Korea Herald with some general info on the strike and why the KCTU thinks the legislation is unfair. Ironically, some employers are also against the law they think it is too pro labour and have proposed a strike of their own. Strange bedfellows, it seems.

Also, thursday will be this blog's one year anniversary so I'll try to put up a birthday post in the future. Also look forward to an upcoming post on conscientious objectors from Matt (yes there is more to this blog than labour issues).

Chinese Unions, Protesting Stars, and New Writing on North Korea

A bit of a miscellaneous posting today.

First, here's an interesting article in yesterday's Choson Ilbo about pressure from the All China Federation of Trade Unions for a collective bargaining agreement at Hyundai's China operation. Very interesting indeed. I'm really not sure what this spells out for the future of working class organization in China, but it is very signficant because it seems that something is indeed going on in regards to skilled labour there. There is indeed a level of repression against popular protest in China, but if it is to deserve the developmental state label which it has lately been garnering, the existence of collective bargaining structure would run against our conventional understanding of labour as demobilized within that model. Could the ACFTU be heading down a social corporatist path? It's too early to tell. I'm also curious what this means for workers in India, where Hyundai motors is expected to roll out its millionth car this month. The threat of more docile labour to be found in China may be running out.

Today's second item is a story from Labourstart Korea's newsire and is on Korean movie stars and filmakers protesting South Korea's plans to abolish its screen quota as part of their bilateral free trade agreement with the United States. On Monday, South Korea's top movie star, Jang Dong-gun, held a one-man protest at the Gwanghwamun intersection in downtown Seoul. Choi Min-shik, another well-known film star and my personal favorite, held his own protest there on Tuesday, returning a government medal he had recieved for his work.



Finally, Kotaji has a link to an article in this month's ISJ about some recent writing on NK by the Korean internationalist left, and written by Kotaji himself. Should be a good read, I can't wait to get to it myself.

Reunification: maybe?

Below I'm reprinting some recent testimony to the US congress from Christine Ahn, of the US based Oakland Institute, on Korean reunification. I'm not exactly sure which committee she was testifying to or its significance, but it think it provides a nice general overview as well as personal and anecdotal account of some of the changing moods in South Korea toward the North, though it might perhaps read a bit rosier than others might have put it, glossing over some of the current complexities of political power on both ends the pennisula. Click 'view full posting' to read the article.

Good Morning America, Korea is Reunifying
by Christine Ahn
January 31, 2006

On my recent trip to South Korea last November, I was struck by how much reunification was in the air. I first got this impression as I waited at customs at Incheon International Airport. Looming above me were large flat screen TVs beaming a Samsung cell phone commercial with two of Korea’s most popular female stars, South Korea’s pop icon Lee Hyo-Ri and North Korean dancer Jo Myung-Ae. In the commercial, the two superstars sing a song about parted lovers, and the lyrics go something like, “Someday we will meet again, although no one knows where we’re going, someday we will meet again, in this very image of us separated.” As they hold hands during the concert, the new blue One Korea peninsula flag rolls down behind them. As they turn to watch the flag, Lee Hyo-Ri’s voice says in the background, “That day I was so nervous…because the story wasn’t just about the two of us.”

Here was Samsung, one of Korea’s most powerful corporations, popularizing reunification. But the South Korean government was also sending a clear message to all foreigners landing on Korean soil: reunification is happening, slowly, but surely.

When I told my young South Korean friend how emotional I felt as a Korean-American watching that commercial, he said that even before it was broadcast, Koreans were talking about it all over the internet. He also told me that nearly all blockbuster films in South Korea are about the Korean War, North Korea or reunification, and that North Korean characters are now humanized, compared with a few years ago when they only appeared as villains. One such film, Taegukki, a revisionist historical film about the war, still holds the number one spot in ticket sales. Eleven out of 50 million South Koreans, or 1 in 5, have seen Taeguki. Reunification is happening, my friend said, and no one—not even the election of a conservative South Korean president—will be able to turn the tide.

Another major cultural icon, Cho Yong Pil, considered the most popular singer for the past 25 years has also helped influence popular perceptions about North Korea. Several years ago, I asked him what he thought about reunification, and he told me it could not be achieved until the elders passed due to the deep pain they still harbored from the Korean War. To my surprise, last August, he performed a concert in Pyongyang. Many South Koreans told me this was huge, more than a South Korean president visiting North Korea, because he is so beloved by every Korean irrespective of age, class, religion, or ideology.

Public Opinion Polls

Although these may seem like random examples, they actually correspond with recent public opinion polls taken in South Korea. The Korea Institute for National Unification, or KINU, a national research policy institute, recently conducted a public opinion poll of 1000 South Koreans citizens and 300 leaders from political, media and civil organizations. It found that 84 percent of the public and 96 percent of opinion leaders believed that unification was an urgent task for the nation, and 85 percent of the general public and 95 percent of opinion leaders approved of North-South economic cooperation.

Political, Cultural, Economic Exchanges

Although complete reunification may still be a distant dream, Koreans from the North and South are taking measured steps towards realizing it. On June 17, the South Korean Minister of Unification met North Korean leader Kim Jong Il and urged North Korea to return to the six-way talks. In return, South Korea promised to give North Korea two million kilowatts of electricity, the amount that would have been generated by the two light water reactors promised by the United States under the 1994 Agreed Framework.

For the five-year anniversary of the June 15 declaration, hundreds of Koreans from around the world convened in North Korea to celebrate the achievements made towards reunification. And on August 15th, on the 60th anniversary of liberation from Japan, dozens of Koreans gathered in the north to commemorate this important date.

Tourism has also been booming in North Korea. In 2005, over 275,000 South Korean tourists visited Mt. Kumgang resort in North Korea, bringing the total to over 1.1 million. That year, over 10,000 Koreans, not counting tourists, had social and cultural exchanges in the north, a doubling from 2002 to 2004, when an average of 5,000 Koreans met per year. Together, they reconstructed Buddhist temples and Christian churches, and held meetings to discuss intellectual property rights of literature and a common dictionary. Last year, North Koreans watched a South Korean opera, and this year, South Koreans will watch “Sa-yuk-shin,” a North Korean drama on TV.

Perhaps the most emotional aspect of this historic process is the meeting of families, many who have not seen their relatives in over 50 years. Last year, 660 separated family members were reunited in person, and 800 family members were able to see and speak to each other through webcast, a new technology that has helped the elderly who can no longer travel far distances.

And if there is any indication of how the South Korean business community feels about reunification, let’s just say that South Koreans are putting money where their mouths are. Economic exchange between North and South Korea grew almost 60 percent in one year, exceeding $875 million in 2005. And just from the Kaesong joint-industrial zone, over $11 million of manufactured goods were exported to South Korea in 2005, including steel pots and pans, which sold out in 19 minutes once they hit Seoul’s department stores. This trade will only increase once the Trans-Korean railway project is complete. But it won’t be only transporting goods. Koreans from Seoul will be able to travel through Pyongyang to Beijing for the 2008 Olympics, where Koreans will play as a unified team. Personally, I wouldn’t want to coach that team, but I can tell you that I will for sure be on that train!

Others engaging North Korea

In addition to normalizing relations with South Korea in 2000, North Korea also signed a treaty with Russia, and in 2004 established diplomatic relations with the EU. A New York Times article, “North Korea is Reaching Out to the World, and the World is Reaching Back,” documents how North Korea now has embassies in 41 countries and diplomatic ties with 155 nations.

And it’s not just governments that are engaging North Korea. Last fall, the Swiss pharmaceutical giant Novartis announced plans to build a plant in North Korea to manufacture 50 medical products and train North Korean medical staff overseas.

Foreigners investing in North Korea may seem like news to most of the world, but this was the sense I got when I visited North Korea in the summer of 2004. Our peace and humanitarian aid delegation stayed at the Koryo Hotel, Pyongyang’s finest, and in the lobby and dining room, and on the elevator, I was surprised to see so many foreigners from Europe, China, Japan, and South Korea. Clearly, the 2002 economic reforms North Korea implemented are finally attracting the foreign investment they need.

Conclusion

In the summer of 2004, Korean soldiers on both sides of the DMZ began to dismantle loudspeakers used for decades to broadcast government propaganda against the other side. South Koreans flashed “peace and reunification” before they went off for good.

Despite meaningful progress between the two Koreas, the Korean peninsula as understood by the international order is caught between the past and present. Sour relations between Pyongyang and Washington are in a stalemate, and are causing a rift between South-U.S. relations. Koreans, seeing the significant gains in peace and reunification, are no longer willing to accept America’s Cold War mentality. On January 18th, the Journalist Association of Korea, the largest journalist group with 6,000 members, asked U.S. ambassador Alexander Vershbow to “stop making anti-North Korean remarks that do more harm than good,” and to apologize for his remarks, which they viewed as “an intrusion in domestic affairs.” South Korean President Roh Moo Hyun also recently made clear that he did not endorse U.S. sanctions against North Korea. If the Bush administration continues hostile regime change policies, Roh said, “there will be friction and disagreements between Seoul and Washington.”

If the United States genuinely wants peace and human rights for the Korean people, then U.S.-Korea policy should reflect this aspiration. Concretely, the United States should sign a non-aggression pact with North Korea, lift economic sanctions, minimize hostile rhetoric towards the north, and support the Korean people’s efforts towards reunification.

It was just my parents’ generation when the Korean War happened. Although it might be called the “Forgotten War” in the U.S., Koreans are still divided as a legacy of that war. As a Korean American, I feel especially responsible because I live in the United States, and as an American citizen, I want America to be part of the solution, not part of the problem. Nobody could have imagined Korea’s phenomenal progress just a few years ago. Just like Germany in the 1980s, nobody dreamed that East and West Germany would reunite, but it happened overnight. Strong popular desire for reunification was key, as were cultural ties that helped build trust between the two societies. Those who doubt Korean reunification should now be reminded that there were doubters back then too. Let’s bring America along with the rest of the world and chart a new Korea policy that finally ends the Korean War and secures permanent peace for Koreans.

This is an abridged version of Christine Ahn's Congressional testimony on January 25, 2005. Ahn is a member of Korean-Americans United for Peace and an Oakland Institute Fellow.