Moon Jae-in Government is Making a Law to Allow North Korean Companies to Operate Businesses in South Korea
2020-6-1, Freedom-Korea.com [Translation]
Moon Jae-in stands while Kim Jong-un signs, 2018
The Moon Jae-in administration recently released a draft amendment to the “South-North Exchange and Cooperation Act” (남북교류협력에 관한 법률). It was confirmed to have newly established provisions that allow North Korean companies to conduct commercial activities in South Korea. In other words, the new provisions will change South Korean law in order to allow North Korean companies to make money in South Korea, hire South Koreans for their business activities, and own real estate and stocks in South Korea.
This goes against the U.S. led economic sanctions against North Korea. The Moon Jae-in administration, however, intends to push for inter-Korean activitiees, not relying only on denuclearization discussions. If the law changes, it would mock the U.S. method of sanctions against North Korea of “keeping pace in the progress between inter-Korean cooperation and denuclearization.”
It was confirmed that the “Economic Cooperation Project (Article 18-3)” was newly established in the draft, which defines activities for inter-Korean economic activities. It states “South Koreans and North Koreans can make profits in each other’s region for the main purpose of economic profit.” The new additions to the draft not only ensure South Korean companies to go to North Korea and do business there, but also North Korean companies to do business in South Korea.
The new article allows economic cooperation in areas such as: distribution of profits from joint investments and output in each other’s “regions” [does not say “countries”] or third countries; securities and bonds; land and other real estate; intellectual property rights, including industrial rights and copyrights; mining rights, fishing rights, and energy development (using electric, heat, and water resources) and use rights. For North Korean companies doing business in South Korea, the draft law also allows North Koreans to do joint ventures with third-country companies. North Korean companies are also permitted to directly hire South Korean workers in South Korea.
There are many parts in the draft that conflict with the existing international community-led sanctions against North Korea. The UN Security Council Resolution 2375 prohibits its members from establishing and maintaining joint ventures or business partnerships, both existing ones and new ones, with North Korean businesses and individuals in UN members’ countries. The UN Security Council Resolution 2397 requires UN members to repatriate all North Korean workers who have been making income in the UN members’ countries, including logging workers and restaurant employees, to North Korea by December 22, 2019.
South Korea’s “5.24 Measures” prevented South-North exchanges. When the South Korean government expressed its intention to abolish the 5.24 Measures and change the Inter-Korean Exchange and Cooperation Act to pursue active engagement with North Koreans, the U.S. Department of State made it clear that “the US is working with its ally, South Korea, to keep pace with progress in denuclearization.” Nevertheless, the Moon Jae-in government had an online public hearing on amendments to the Exchange Cooperation Act on May 28, 2020, and plans to introduce the legislation within this year.
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