Two Koreas Start Talks on Opening Shuttered Joint Factory Park

North and South Koreans met at a border village today to discuss opening a jointly run factory park, an effort to mend ties that deteriorated after the North tested a nuclear weapon in February.

Three officials from each side started talks at 11:45 a.m. local time in Panmunjom after a delay of about two hours to repair malfunctioning communications lines, South Korea’s Unification Ministry said today in a text message. The border village was the site for the signing of the armistice that ended the 1950-1953 Korean War without a peace agreement.

The South will “focus on negotiating facilities and equipment inspections at Gaeseong, retrieval of completed products from the zone and normalization of operations,” ministry official Suh Ho said on a live broadcast to reporters this morning before he crossed the border to lead the South Korean delegation.

Today’s working-level talks come after the two sides failed on June 9-10 to arrange discussions among more senior officials. North Korean leader Kim Jong Un appears to be softening his stance after earlier defying the United Nations with the nuclear test and threatening strikes against the U.S. and the South.

“North Korea is trying to showcase both domestically and internationally that it is willing to ease tension with South Korea and take the lead in doing so,” said Kim Yong Hyun, a North Korean studies professor at Dongguk University in Seoul. “North Korea’s top priority right now is senior-level talks with the Americans which could get them much-needed aid, and the U.S. is unwilling to engage the North when inter-Korean tensions are so high.”

Dialogue

The North withdrew its workers from the Gaeseong industrial zone in April to protest UN sanctions and U.S.-South Korean military drills. Last month the North requested talks with the South on opening Gaeseong, scrapped the offer over a protocol dispute, then less than a week later suggested high-level talks with the U.S. on a peace treaty to formally end the Korean War.

Any talks between Kim’s regime and the U.S. would be the first since the North fired a long-range rocket in April 2012, breaking its pledge of a moratorium on weapons testing in exchange for 240,000 metric tons of food aid.

The North faces increasing diplomatic isolation as China, its biggest trading partner, tightens enforcement of UN sanctions targeting financial transactions and joins the U.S., South Korea and Japan on no-tolerance for North Korea’s nuclear ambitions.

Cash Source

Closing the complex at Gaeseong, about 10 kilometers (six miles) north of the demilitarized zone, deprived the Kim regime of a key source of hard currency. Recalling nearly 54,000 of its workers employed by 123 South Korean companies has disturbed the $100 million the North earns in annual profits, according to Yang Moo Jin, a professor at the University of North Korean Studies in Seoul.

On July 3, the North agreed to restore the Panmunjom hot line and allow South Korean executives access to Gaeseong. The businessmen want to visit on July 9, according to an e-mailed statement from the association of companies operating in the zone.

Panmunjom, about 60 kilometers northwest of South Korea’s capital Seoul, is used for diplomatic engagements and negotiations. It straddles the military demarcation line that runs through the four kilometer-wide demilitarized zone -- the world’s most fortified border.

Three North Korean fishermen, who were rescued by the South after their boat capsized, traveled through Panmunjom yesterday to return home, the Unification Ministry said in an e-mailed statement.

To contact the reporter on this story: Sangwon Yoon in Seoul at syoon32@bloomberg.net

To contact the editor responsible for this story: Stanley James at sjames8@bloomberg.net

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