Two Koreas Agree to Next Round of Talks on Reviving Factory Zone

North and South Korea agreed to another round of talks over reviving work at the Gaeseong industrial park after failing to reach a deal on the factory zone that was shut in April as tensions spiked in the region.

The two sides will meet July 15 at the factory park about 10 kilometers (6 miles) north of the demilitarized zone, the South’s chief negotiator, Suh Ho, said after seven hours of talks at the site today, according to a Unification Ministry transcript of his remarks.

The decision left the door open for more reconciliation, as North Korean leader Kim Jong Un has toned down his rhetoric in the weeks since withdrawing his workers from Gaeseong in April. That move, meant to protest tightened United Nations sanctions over its nuclear weapons program and U.S.-South Korean military drills, followed threats of atomic strikes and denied Kim’s regime a key source of hard currency.

“The two sides are in a tug of war right now, and ultimately the North is at a disadvantage because it desperately needs the cash from Gaeseong,” said Chon Hyun Joon, senior research fellow at the state-run Korea Institute for National Unification in Seoul. “There is always a possibility that the North may again resort to raising tensions to threaten South Korea into doing what it wants the South to do, but that doesn’t seem likely for now.”

Photographer: Ed Jones/AFP/Getty Images

Vehicles make their way towards the Gaeseong industrial complex in Paju, north of Seoul, near the border with North Korea on July 10, 2013. Close

Vehicles make their way towards the Gaeseong industrial complex in Paju, north of... Read More

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Photographer: Ed Jones/AFP/Getty Images

Vehicles make their way towards the Gaeseong industrial complex in Paju, north of Seoul, near the border with North Korea on July 10, 2013.

The South urged the North to take measures to prevent future closures, while the North called on the South to stop doing anything -- such as conducting military exercises -- that hinders operations at Gaeseong, Suh said.

Facilities Survey

Sixty businessmen returned to the South after surveying facilities for rain damage and packing up completed goods they left behind when North Korea shut Gaeseong April 8.

The North’s chief envoy, Pak Chol Su, arrived for the talks in a Volkswagen Passat with a Pyongyang license plate and wore a red badge with portraits of the late Kim Il Sung and Kim Jong Il on his lapel, according to a pool report. North Korea doesn’t allow non-Korean media at inter-Korean meetings held in the North.

North Korean laborers plucked weeds in front of the talks venue, the pool report said. Two clock towers on the way to Gaeseong displayed the wrong time and a refrigerator in the cafeteria was empty save for some mayonnaise and other condiments.

Today’s meeting is “the first step toward building trust,” Suh said. “It is raining heavily and I’m very worried about the state of companies’ facilities and materials.”

Thirty-six administrators from Gaeseong’s management committee, KT Corp. (033780), Korea Electric Power Corp. (015760) and Korea Water Resources Corp. joined the businessmen at Gaeseong to check phone, water, electricity and other management issues, according to the ministry. One company reported a leak in the ceiling that a North Korean worker went in to fix, the pool report said.

North Korea has often reneged on its commitments, test-firing a missile last year and scrapping a plan for inter-Korean dialogue last month, days after proposing talks.

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

To contact the editor responsible for this story: Rosalind Mathieson at rmathieson3@bloomberg.net

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