'Comprehensive economic partnership needed to boost North Korean economy'

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'Comprehensive economic partnership needed to boost North Korean economy'

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By Lee Kyung-min

Signing an inter-Korean trade agreement could be the first step towards helping North Korea's economy grow, according to a state-run think tank's study released Tuesday.

Given two precedents whereby North Korea comprehensively revised its laws following a spike in trade, an export-oriented policy with the aim to increase foreign direct investment (FDI) will be the most helpful way to grow the moribund economy of the isolationist regime, it said.

"North Korea revised the law in 1999 amid fast thawing inter-Korean relations and later in 2011 when its trade with China increased," Choi Jang-ho, head of international cooperation for the Korean unification team at the Korea Institute for International Economic Policy (KIEP), told The Korea Times.

Choi was the lead author of the study.

Of 27 trade-related laws, the North revised 13 in 1999 to help facilitate foreign investment in the regime. North Korea has about 120 laws, he said.

"The revision was defined by efforts to help attract more foreign investment. Examples include establishing mediation proceedings if trade disputes occur, which was the first-ever stipulation in the North Korean law," he said.

This is a major indication that the North can be incentivized to conduct broad reform to grow its economy, the biggest yet elusive goal without foreign investment.

"North Korea has no capital to invest, let alone viable means to sustain its own system, its people. This is why they are increasingly opening up to the idea of revising laws to help draw foreign investment."

This is in line with North Korean leader Kim Jong-un's announcement in April 2018, when he made it official that the regime would pursue economic growth.

"Signs are abundantly clear that the North wants to grow its economy. And the regime's leadership is well aware that the current legal framework is far from helping the initiative move forward. Kim may want the Chinese or the Vietnamese economic models, but these are simply unattainable now."

The inter-Korean trade agreement, in that sense, can be the groundwork and stepping stone to signing broader trade agreements with neighboring countries, which in turn will help the North join the World Trade Organization (WTO), Choi said.

"Rapid and radical economic change will throw the regime into confusion, so it is desirable to have some buffer by taking gradual steps in joining the international community via trade agreements," he added.

A successful example is Vietnam, whose bid to join the WTO was approved in 2007. Up to 15 years are needed for a country to join the WTO.

"Samsung began investing in Vietnam in 2008, only a year after the country joined the international body. If North Korea is able to follow in its footsteps, it can become another success story of a once economically challenged nation," he said.


gettyimagesbank

By Lee Kyung-min

Signing an inter-Korean trade agreement could be the first step towards helping North Korea's economy grow, according to a state-run think tank's study released Tuesday.

Given two precedents whereby North Korea comprehensively revised its laws following a spike in trade, an export-oriented policy with the aim to increase foreign direct investment (FDI) will be the most helpful way to grow the moribund economy of the isolationist regime, it said.

"North Korea revised the law in 1999 amid fast thawing inter-Korean relations and later in 2011 when its trade with China increased," Choi Jang-ho, head of international cooperation for the Korean unification team at the Korea Institute for International Economic Policy (KIEP), told The Korea Times.

Choi was the lead author of the study.

Of 27 trade-related laws, the North revised 13 in 1999 to help facilitate foreign investment in the regime. North Korea has about 120 laws, he said.

"The revision was defined by efforts to help attract more foreign investment. Examples include establishing mediation proceedings if trade disputes occur, which was the first-ever stipulation in the North Korean law," he said.

This is a major indication that the North can be incentivized to conduct broad reform to grow its economy, the biggest yet elusive goal without foreign investment.

"North Korea has no capital to invest, let alone viable means to sustain its own system, its people. This is why they are increasingly opening up to the idea of revising laws to help draw foreign investment."

This is in line with North Korean leader Kim Jong-un's announcement in April 2018, when he made it official that the regime would pursue economic growth.

"Signs are abundantly clear that the North wants to grow its economy. And the regime's leadership is well aware that the current legal framework is far from helping the initiative move forward. Kim may want the Chinese or the Vietnamese economic models, but these are simply unattainable now."

The inter-Korean trade agreement, in that sense, can be the groundwork and stepping stone to signing broader trade agreements with neighboring countries, which in turn will help the North join the World Trade Organization (WTO), Choi said.

"Rapid and radical economic change will throw the regime into confusion, so it is desirable to have some buffer by taking gradual steps in joining the international community via trade agreements," he added.

A successful example is Vietnam, whose bid to join the WTO was approved in 2007. Up to 15 years are needed for a country to join the WTO.

"Samsung began investing in Vietnam in 2008, only a year after the country joined the international body. If North Korea is able to follow in its footsteps, it can become another success story of a once economically challenged nation," he said.


Lee Kyung-min lkm@koreatimes.co.kr


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