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South Korea Agrees With North on Plan to Open Gaeseong

Park Chol-Su, head of North Korea's working-level delegation, left, and Kim Ki-Woong, head of South Korea's working-level delegation, exchange agreement documents after their meeting at Gaeseong Industrial District Management Committee in Gaeseong, North Korea on Aug. 14, 2013. Photographer: Lee Seung-Hwan-Korea Pool/Getty Images
Park Chol-Su, head of North Korea's working-level delegation, left, and Kim Ki-Woong, head of South Korea's working-level delegation, exchange agreement documents after their meeting at Gaeseong Industrial District Management Committee in Gaeseong, North Korea on Aug. 14, 2013. Photographer: Lee Seung-Hwan-Korea Pool/Getty Images

Aug. 15 (Bloomberg) -- North Korea reached an agreement with the South that aims to reopen the jointly operated Gaeseong industrial complex that was shuttered in April as ties deteriorated over the North’s nuclear program.

The two sides agreed to “make active efforts so companies can repair and re-operate their equipment” and seek ways to attract foreign investors to the site, according to the accord released last night. The deal calls for forming a joint committee to prepare Gaeseong to reopen. No timetable was given.

Gaeseong is located just north of the demilitarized zone that has divided the countries for six decades and had been the last area of detente between the two Koreas. The North pulled its 53,000 workers out in April amid heightened tensions after a February nuclear-device test prompted tighter United Nations sanctions and the U.S. and South Korea held joint military drills.

The agreement came after eight hours of talks yesterday, which South Korea had signaled would be the last chance for a deal to save Gaeseong after six previous rounds failed to produce progress.

Before the shutdown, the park housed more than 120 South Korean companies manufacturing electronics, apparel and other goods. Last year, it produced $470 million worth of products.

“There may still be hurdles in future negotiations, but another shutdown is improbable,” said Koh Yu Hwan, a professor of North Korea studies at Seoul’s Dongguk University. “North Korea needs its talks with South Korea to go well because that can lead to talks with the U.S.”

Guarantee Demanded

South Korea had demanded that the North guarantee it will not shut down the park unilaterally again and the government of President Park Geun Hye has repeatedly warned that it would take a “grave decision” if the North didn’t comply.

The two sides agreed yesterday to ensure operations at the site continue regardless of political circumstances.

Park welcomed the agreement, saying she hopes relations between the countries will now “restart,” according to a statement on her office’s website last night.

“The North needs the park alive to show the world it is serious about drawing investments, while the South needs it as a starting point for improving ties,” Jo Dong Ho, a professor of North Korea studies at Seoul’s Ewha Womans University, said in a telephone interview yesterday.

In a sign that the Gaeseong deal may help ease tensions, Park today called for reviving a program to reunite families separated by the Korean War, setting up a peace park in the demilitarized zone and continuing humanitarian aid to the North in a speech marking the country’s Liberation Day.

The Gaeseong talks resumed days before another round of joint U.S.-South Korean military drills that typically strain relations between the countries. The North hasn’t yet reacted to the plan for the annual exercises set to take place in the South from Aug. 19 to 30.

To contact the reporter on this story: Sam Kim in Seoul at skim609@bloomberg.net

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

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