통일부

1. Summary
   1. The fifth meeting of the South-North Economic Cooperation Promotion Committee was held in Pyongyang from May 19 to May 23, 2003.
      
      - South and North Korea issued a seven-point agreement on ways of implementing major inter-Korean economic cooperation projects and the schedule for their implementation.
   2. The meeting faced a snag from the outset when the party from the North made threatening remarks to the effect that a "disaster" could befall the South if the going was tough and publicly released the remarks unilaterally. The North made the remarks in a keynote speech during the first plenary session May 20.
      
      - The party from the South proposed a chief delegates' contact in the afternoon of May 20 and demanded an acceptable explanation for the "disaster" remarks.
      
      - In response to repeated demands from the South for a clear clarification through contacts of delegates and liaison officials at the meeting, the North proposed May 22 a contact between the delegates to discuss the matter. Discussion resumed.
      
      - The North presented a clarification prepared in advance and the two parties came to terms on the matter and proceeded to work out the draft of the agreement.
   3. The two parties coordinated the schedules for major economic cooperation projects in progress. Particularly noticeable was that they agreed to hold working-level contacts and discussions by sector either in Gaeseong (North Korea) or Munsan (South Korea).

2. Clarification of "Disaster" Reference by the North
   1. In a keynote speech delivered at the first plenary session in the morning of May 20, the North, alluding to the "further steps" remarks contained in the recent ROK-U.S. Joint Statement, used a threatening expression to the effect that a "disaster could befall the South in the event of an anti-North Korean confrontation."
   2. The South thought that the North's utterance of this sort posed a serious problem and was injurious to the progress of inter-Korean relations.
   3. Through the contact of the chief delegates in the afternoon of the same day, the South said the reference to "disaster" posed a threat to the people in the South and expressed deep regrets over the North's release of the keynote speech in violation of a mutual agreement not to do so. It demanded a clarification.
   4. The matter stalled the session for hours. Through the contact of the chief delegates May 22, the North gave a formal clarification over the "disaster" remarks as follows:
      
      "The remarks were made in hopes that the two sides should turn out well lest an intensified confrontation could bring the inter-Korean relationship to naught and bring misfortune to either the South or the North."
   5. Given the past experiences with the North, the South scored a success by obtaining an explanation of regretful nature.
      
      - This is in part due to an increasing inter-dependence between South and North Korea as well as the South's enhanced leverage on the North with the progress made in the reconciliation and cooperation between them.

3. Major Agreed Points
   1. Reconnection of Railways and Roads
      1. Agreement to hold ceremonies to mark cross-border connections means that South and North Korea are a step nearer to opening the inter-Korean traffic since the ground-breaking ceremony in September 2002. It also reaffirms the willingness to complete the connection work at an early date.
      2. The ceremony will be a modest, working-level affair as agreed during the fourth working-level contact (March 10-12).
      3. Working-level personnel will discuss details concerning the matter of delivery of materials and equipment and on-site surveys for signals, communication, electricity and designs.

2. Construction of the Gaeseong Industrial Complex
   1. Holding a ground-breaking ceremony for the complex will mean the consummation of various tasks that have been under discussion since last year by the authorities and businessmen of the two Koreas. The businessmen were nearing agreement on the ceremony at the end of April when they discussed the matter April 14-16, but the outbreak of the SARS virus has caused a delay.
   2. The ground-breaking ceremony will be symbolic at working-levels and the work is preparatory in nature, like working-level on-site surveys.
   3. Following the ground-breaking ceremony, work will be implemented in stages. Even before the ground-breaking ceremony, schedules will be carried out for the proclamation of the five lower-level regulations and a discussion on other regulations and on-site surveys.
   4. The two sides agreed to positively cooperate in deciding on the terms of land rentals and in removing various obstructions on the land to improve the competitive value of the industrial complex.

3. Flood Prevention Program along the Imjin River
   1. A joint survey of the Imjin River basin in June will be conducted for basic preparatory work that will enable flood preventive measures by stages. The two sides agreed to install flood forecast facilities before the arrival of the rainy season.
   2. The North's promise to provide the South with Imnam Dam data prior to the arrival of the rainy season should be regarded as a positive step mitigating the concerns about the safety of the dam.
      
      - On May 31 last year, the North notified the South of its intention to control the water levels of the Imnam Dam in advance, but then released a total of 3.1 million tons of water between June 3 and June 26.

4. Ensuring Institutional Devices for Economic Cooperation
   1. As the two sides agreed to implement at an early date four agreements on economic cooperation (shipping, communication, customs and quarantine involving the Gaeseong Industrial Complex), the South will take necessary domestic procedures including acquiring the approval of the National Assembly.
      
      * A motion to conclude the four agreements on economic cooperation has been pending in the National Assembly since June 2001. Pacts involving the industrial complex, agreed upon in December 2002 by the two sides, are also in the process of going through internal procedures.

5. The Mt. Geumgang Tourism Project
   1. Mt. Geumgang tours by land and sea are likely to resume in June, brightening prospects for the revitalization of tourism.
   2. When overland tour becomes routine and the plan to develop the Mt. Geumgang area as a special zone is launched fully, the area will become a convenient and promising tourist attraction.

6. Provision of Food Loan
   1. Since 1995, the South has been extending grain to the North on humanitarian grounds to ease food shortages. The 400,000 tons of rice promised to the North in the form of a loan is being provided in the same vein.
      
      * It is estimated that North Korea lacks about 1.5 million tons of grain every year.
   2. In deciding to provide rice to the North, the South took into consideration various factors such as the farmers' situation and rice stocks in the country, as well as National Assembly discussions about it.
   3. As in last year, rice is being provided in the form of a government-level loan. The loan is of a commercial nature and will be conducive to deepening a substantive, cooperative relation between the two Koreas in the long run.
      
      * As in 2002, the terms of loan call for repayment in 20 years after a ten-year grace period and the annual interest rate set at 1 percent. And, the rice bags will bear "Republic of Korea" labels.
   4. The South was assured of maximum transparency in the process of rice distribution in the North. The South will ensure that its assistance will be of substantial help to the North Korean people by obtaining the results of distribution as well as by on-site confirmation of the distribution processes. It also hopes that the food support will ease the North Korean antipathy toward the South.
      
      * The South was notified of the outcome of rice distribution four times: December 17, 2002, January 7, 2003, February 10 and 18, respectively, and confirmed on-site the scenes of distribution on January 20, 2003.
      
      * For better transparency this year, the North is required to notify the South in writing of the distribution results for every 100,000 tons of rice distributed, and the South will send at least two monitors to distribution sites in the eastern and western regions.

2. The Significance of the Agreed Points

Despite the sensitive pending issues like North Korea's nuclear problem, an inter-Korean agreement on continued dialogue and cooperative projects will contribute to easing internal concerns over the recent situation and allow stable management of the situation on the Korean peninsula.

1. Also, an inter-Korean consensus was formed, supporting that instead of seeking new agreements, it was better to proceed with the implementation of the already agreed points to help solidify the inter-Korean relationship.
2. The three major economic cooperation projects agreed to this time are expected to greatly contribute to improving the inter-Korean relationship in the future as both sides showed keen interest in them.
   
   - The projects will help expand personnel exchange and increase trade as they will reduce logistics costs and eventually lay the groundwork for an inter-Korean economic community.
3. Implementation of the economic cooperation will increase contact as well as the opportunities for cooperation between the military authorities of the two Koreas. It will also expand mutual understanding, and possibly lead to military confidence-building.
   
   * Direct telephone calls are already available between the military officials responsible for railway and road work.
4. Economic cooperation projects are also expected to contribute to conditions in North Korea for change and openness, as they will provide opportunities for North Koreans to learn about the market economy.
   
   * Actually, discussions about the construction of the Gaeseong Industrial Complex are being conducted in a way to reflect South Korea's position based on the notion of "competition." In addition, efforts are also being made to make the Mt. Geumgang area a free and convenient tourist attraction.