About a week has passed since the Seoul government banned all inter-Korean trade and exchanges after officially accusing the North of torpedoing a South Korean naval ship. Seoul began giving selective approval on shipments from North Korea and several South Korean companies in the North’s border town started preparing an exit strategy.
The South Korean government on Monday gave the green light to bringing in North Korean- processed products for the first time since it announced punitive measures against the North’s alleged attack on the Cheonan.
The road leading to the Gaeseong industrial park is empty near the inter-Korean border office in Paju, Gyeonggi Province, on Monday. Yonhap News
An official at a clothing manufacturer said his company recently shipped 3,000 pairs of shorts processed in Pyongyang to Incheon via Dandong, a Chinese port on the border with North Korea.
The clothes arrived in Incheon last Wednesday, but got stuck in the port due to deferred customs clearance. The customs authorities cleared the shorts from Pyongyang on Monday, marking the first acceptance of North Korean-processed products since Seoul banned inter-Korean trade (with the exception of the Gaeseong industrial park) Thursday as part of punitive measures against the Cheonan attack.
Seoul said Friday that it will consider selective acceptance of end products processed on commission in North Korea.
“The shorts were made with materials sent (to Pyongyang) between late April and early May,” the company official said.
“Another 2,000 pieces of children’s clothing (from North Korea) are scheduled to arrive in Incheon this Wednesday via Dandong, but I’m concerned whether the government will let us bring them into the country.”
About four out of five South Korean companies that have their products processed in North Korea ship the end products through the Dandong-Incheon passenger ships.
It remains to be seen whether Seoul will allow other shipments from North Korea including clothes, frozen seafood products and radios brought in by a third country-registered freighter called the Trade Fortune, which docked in Incheon on Saturday. The companies discussed on Tuesday ways to minimize their losses in the aftermath of the latest measures.
South Korean companies operating in the joint factory park in Gaeseong, just north of the inter- Korean border, are largely perturbed as the fate of the enclave continues to hang in the balance.
A major reduction in orders in the wake of the naval disaster led one of the companies to suspend business. Several other companies that had employees stay in dormitories within the Gaeseong park made them commute instead.
An official of a South Korean firm in Gaeseong said his company had 500 of its 850 North Korean employees take leave after Seoul announced retaliatory measures on May 24 against the Cheonan sinking.
company explained that they had to temporarily cut the work force due to dwindling orders as the wages and board expenses were getting burdensome.
The company still has to pay about 60 percent of the wages for employees on leave, but that was better than fully paying them, the official said.
North Korean workers in Gaeseong are paid a monthly average of about $70 plus overtime, board and commuting expenses, which altogether comes to a total of around $110-140.
One of the companies is building a plant in Guangzhou, China, to replace its North Korean factory due to a growing shortage of manpower in Gaeseong.
Fears are rising over the future of the industrial enclave as South Koreans have been prohibited from investing further in the Gaeseong park, where the number of South Korean workers has been halved.
The companies are urging the Seoul government to come up with measures to ensure their security and expand the insurance coverage for inter-Korean economic cooperation.
About half of the 121 companies operating in Gaeseong wish to withdraw from the enclave due to reductions in orders, but voluntary pullouts are not covered by insurance under current rules.
“I am worried the Gaeseong complex may be degraded to an incompetent industrial park with growing uncertainties and dwindling orders,” said Kim Kyu-chul, who represents a nongovernmental group on inter-Korean economic cooperation.
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