Koreas to reopen factory park

South Korean businessmen, who run factories in the Kaesong complex, welcomed news it would reopen.
Heo Kyung/News 1via Reuters
South Korean businessmen, who run factories in the Kaesong complex, welcomed news it would reopen.

SEOUL — North and South Korea agreed Wednesday to reopen a joint industrial complex, reviving the last remaining symbol of their economic cooperation in a sign that the two sides are inching toward a thaw after a series of bellicose exchanges this year.

The breakthrough came during what the South billed as a final round of make-or-break negotiations on whether to restart or permanently shut down the Kaesong industrial zone, a factory park in the North Korean border town of the same name.

The complex had been in operation for almost a decade, unlike the other cross-border projects set up during an earlier period of rapprochement and then halted one by one as relations soured in recent years. Kaesong’s future became uncertain this year after North Korea pulled its workers out in April, blaming joint US-South Korean military exercises that were being conducted at the time, and the South responded by withdrawing its factory managers.


Since last month, North and South Korea have held six rounds of talks but have been unable to agree on the terms under which they could resume operations at the complex. They could find no compromise on the important South Korean demand that the North take responsibility for the damages caused by the suspension of production and take steps to ensure that it would not shut the complex again for military or political reasons.

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The breakthrough came Wednesday, when North Korea accepted an agreement under which the two Koreas “guarantee that the normal operation of the Kaesong industrial complex will not be affected by political situations under any circumstance.” The two sides also agreed to set up a joint panel to discuss compensating the South Korean companies for damages.

In another significant gain for the South, North Korea agreed to invite foreign investors into Kaesong and honor “international business standards” there. South Korean officials have insisted on the presence of foreign investors, saying that would make it more difficult for the North to use the complex as a political bargaining chip against the South.

At stake in the talks was more than the future of the Kaesong complex, where 123 South Korean companies employing 53,000 North Korean workers produced $470 million worth of textiles, electronic parts, and other labor-intensive goods last year. Analysts have said that an agreement to reopen the complex will be an important test for inter-Korean relations under the young North Korean leader, Kim Jong Un, and the new South Korean president, Park Geun-hye.

“Kaesong is the one thing left,” John Delury, a North Korea expert at Yonsei University in Seoul, said of the significance of the complex in inter-Korean relations. Its failure to reopen would have had “severe implications” for relations, he said.


The agreement Wednesday did not specify when the complex would resume operations.

Kim Ki-woong, the chief South Korean negotiator, indicated that it would take some time. The two Koreas, he said, first have to create the joint panel, which would also be charged with putting in place the terms of the Wednesday agreement, including the safe passage for South Korean factory managers and the protection of their investments. Their factories also needed time to repair their long-idled equipment.

Park said in a statement released by her office, “I hope that the agreement today will be an occasion for South-North relations to make a fresh start.”

Park, beginning a fixed five-year term, took office in February looking for a middle ground between unrequited friendship of liberal presidents and the hard line of predecessor Lee Myng-bak. During her trip to Washington in May, Park told Congress that she wanted to build trust with the North through exchanges and cooperation, leading the way to a peaceful reunification. ‘‘But as we say in Korea, it takes two hands to clap,’’ she said. ‘‘Trust is not something that can be imposed on another.’’

Park’s strategy has proven popular; her approval rating is near 60 percent. She is also calculating, analysts say, that the North feels increasing pressure to improve ties with the South. Aid and trade would help the North’s decrepit state-run economy while also counterbalancing its heavy reliance on China. Tellingly, North Korean state media has made only a few nasty quips about Park — a change from Lee, who was pilloried almost daily.


Pushing Park away at this stage would mean ‘‘the continuation of another four-plus years of a cold shoulder,’’ said Scott Snyder, senior fellow for Korea studies at the Council on Foreign Relations. ‘‘Frankly, given North Korea’s tangible [economic] circumstances, to shut that door would [mean] some significant consequences.’’

Material from the Washington Post was used in this report.