Future Tasks and Strategy for Inter-Korean Fisheries Cooperation

Abstract

IntroductionHow should North Korea's structural economic problems, which have been evolving for decades, be addressed? North Korea's socialist economy, which had begun its downward spiral in the mid-1980s, plummeted dramatically to a near-collapse condition coincidently with, and in the wake of, global disintegration of the Cold War structure in the early 1990s.1 Economic data supplied by a number of organizations, including the United Nations, estimate that North Korea's total imports in 2008 were US$2.7 billion, while recording exports of US$1.2 billion in the same year. Since 2000 onward, North Korea has suffered severe hard-currency pressures, stemming from huge trade deficits averaging US$1.0 to $1.5 billion annually. For its economy to survive, North Korea has to earn foreign currency. The core problem here is that the North Koreans have, at least at present, no ability to foster the nation's industries that sufficiently demonstrates their export competitiveness, especially in the short term.In a general pattern, countries at the incipient stage of their economic development tend to have interests in exporting goods such as fishery products that can not only be easily produced by relatively low-skilled or manual labor, but that can also be easily converted into hard currency. This has been the case for South Korea. By the mid-1960s, its fishery products accounted for 20 percent of its total exports. Even by the early 1970s, fishery products remained as South Korea's main export staple, accounting for about 10 percent of its total exports.North Korea shows the same story at present. Fishery production in North Korea still occupies a heavy position in respect to its export performance and potential. For about a decade since 2000, North Korea's fishery products have accounted for about 20 percent of its total exports; 75 percent of the exports have gone to South Korea in the form of inter-Korean trade (Minchok Naebu Korae). South Korea's fishery imports from North Korea have increased by an annual growth rate of 20 percent- 25,000 tons in 2000, 50,000 tons in 2005, and 60,000 tons in 2008 (equivalent to US$40 million in 2000, US$60 million in 2005, and US$120 million in 2008, respectively). Although North Korea had exported significant amounts of fishery products to Japan, Japanese economic sanctions toward North Korea, including a trade ban in the aftermath of North Korea's underground nuclear test in October 2006, dramatically severed North Korea-Japanese economic ties, halting Japan's trade with North Korea almost completely. On the other hand, recent fishery trade between North Korea and China has been tending to decrease.2Considering the current trend in inter-Korean trade-and if cooperation is implemented successfully-South Korea's fishery imports from North Korea are projected to rise by 150,000 to 200,000 tons within five years. Because there is a huge gap in the fishery product market prices between the North and South, the imported products would gain tangible benefits from higher selling prices.3From the North Korean perspective, a prediction such as this suggests that the country may gain another source of foreign currency that would contribute to the improvement of its trade balance by utilizing renewable natural resources. It also has the effect that about 20 percent of South Korea's total fishery imports would be replaced by cheaper North Korean products.The potential benefits from this exchange will be significant to South Korea as well as to North Korea. The South can cover 10 percent of its total domestic demand by means of fish and shellfish imported from its geographically closest neighbor. This means that South Korea may secure a stable import source at a cheaper price, while, at the same time, the North may secure an export market. A dream of mutual prosperity will come true by means of this cooperation, making the confidence-building tasks between the two Koreas more promising. …