A Study On Economic Cooperation Between South Korea And North Korea

International order is advancing in cooperative system that aims forco-existence，co-prosperity under the motto of cooperation，prosperity and pursuit ofpeace. As a system is implemented to manage “humanistic lives，”this institutionpresents the prioritized values requested in this era and describes the character andcomposition of the new international order. Thus，many nations emphasize theimportance of regional cooperation through peaceful competition，exchange andcooperation regardless of the ideology system.These changes have rapidly increased international exchange，which is formedby the flow of openness and globalization. Furthermore，it has led to the developmentof the supranational phenomenon for building a larger regional community bytranscending national boundaries and the economic reasoning of ‘survival of thefittest，’ which emphasizes that only those equipped with top competitiveness cansurvive in society. Also，non-political space has widened to activate exchange andcooperation of non-political groups. These movements signify that the internationalsociety is being re-organized toward multilateral economic cooperation，pursuit ofpeace and co-prosperity.Amid such changes in international order，a hopeful future is blossoming in therelationship between the two Koreas. Although the North and South have experiencedtension and conflicts due to sudden incidents in the past，it has continuously made efforts to achieve reconciliation，cooperation，peace and unification.Due to these efforts，it has already been20years since the two Koreas haveengaged in economic cooperation. However，considerable efforts must still be madeto achieve systemized，institutionalized economic cooperation. Although it is true thatinter-Korean economic cooperation has continuously developed with theimprovement of environment，inter-Korean economic cooperation still presentsfluctuations according to political situations.The purpose of inter-Korean economic cooperation project is not only based onthe acquisition of short-term economic benefits. Instead，these projects are consideredthe growth engine of unification and can be used to expand opportunities ofinter-Korean economic cooperation for resolving tension and conflicts and uniting thetwo Koreas into one. Furthermore，the unification of Korea holds greater significancein upgrading the general quality of life of the public through unification.This study examined the problems for achieving activation of inter-Koreaneconomic cooperation and searched measures for improving and activating economiccooperation.Due to weak trade，inter-Korean economic cooperation was mainly achievedthrough indirect trade than direct trade. Also，although the total trade volume hasincreased，the increase is mainly caused by non-trade concerns rather than economictransactions. Thus， the problem of inter-Korean economic cooperation can beexplained as the lack of labor flexibility that prevents companies from freely usingmanpower. Furthermore，although free economic activities must be supported todevelop inter-Korean economic cooperation projects， inter-Korean economiccooperation presents restricted transfer of manpower and materials due to its unique regional characteristics. In addition，there is the problem of origin，as it is difficult toknow where the products have been manufactured. Furthermore， many otherproblems are presented in this process，including insurance problems that are shownin various accidents that can be generated in production activities.However，the activation of inter-Korean economic cooperation is important notonly for gaining economic profits，but also to resolve tension and confrontations inthe Korean Peninsula and ultimately achieving unification. To achieve this，it isessential to maintain consistency of the existing North Korea policy，pursue activationto create ‘win-win benefits’to both the North and the South and achieve phasedcooperation.The task for activating inter-Korean economic cooperation is to transferproblems in inter-Korean economic cooperation not as negative factors，but aspositive factors to create elements that can be used to activate inter-Korean economiccooperation. To achieve this，this study presented measures for increasing trade，activating investment，strengthening economic cooperation and activating traderelations.To solve the problem of labor flexibility，the related parties must be encouragedto experiment meaningful employment relations through laws governing inter-Koreantrade labor. An effective measure would be to use the analysis of similar casespresented in other countries. Furthermore，the present wage reception system can beconverted into a method that enables the worker to directly receive wages.To solve restrictions in personal and material exchange，it would be effective toanalyze foreign cases. The related parties must search for a measure to minimize theentry/travel process through mutual cooperation. Convenience of transport and travel will facilitate free movement of materials and promote production activities.Also，there is the need to alleviate the passing system to take flexible measures forvarious situations. The weak logistics facilities of North Korea can be improvedthrough Gyeongui Line，which connects the entire region of Korea，and byinstalling a logistics infrastructure in the Dorasan region. To simply the customsprocedure，it is important to create a unified form. The enactment of a unified formbased on the agreement of the two Koreas will largely contribute to the simplificationof the customs procedure as it eliminates the need to carry out the customs process inboth the North and the South.To solve the problem related with the place of origin，the method that is mostrealistically useful is to adopt special regulations within the FTA for acknowledgingproducts created by Korean companies in North Korea as products ‘Made in Korea’.To adopt these regulations，it is crucial for North Korea to take consistentpolitical，economic measures.The problem of insurance is fundamentally related with the insurance provisionability of insurance companies. Domestic insurance companies can take variousintervention methods to solve this problem，such as making companies apply forinsurance in domestic insurance companies or re-acquiring insurance of the ChosunInternational Insurance Company. Also，a new insurance company can beestablished through the collaboration between the Chosun International InsuranceCompany and a domestic insurance company，like the case of Germany.There are various measures that can be used to activate investment. First，anexpansion strategy can be provided through collaborative investment. As a jointventure company，both companies can invest in the business. The managementrights will be granted to the North Korean company and foreigner investment can be repaid through manufactured goods or through profit distribution. Another methodcan be the active use of indirect investment. The indirect investment method willallow the company to expand in collaboration with a3rdcountry，which will in turncontribute to the dispersion of investment risks. If the3rdcountry is a nation that hasestablished diplomatic relations with North Korea，it will also prevent the creation ofother investment risks. Furthermore，this method can considerably alleviate thenegative effect of political problems on inter-Korean economic exchange cooperation.The range of economic cooperation can be promoted through the construction ofan energy cooperative system. By cooperatively developing main energy sources suchas coal and electricity，long-term economic cooperation can be achieved between thetwo Koreas. Furthermore，the joint development of resources will not only promotethe economic sector but will also develop other fields，such as energy cooperationand implementation of demilitarized zone and continental development. Thus，it isalso important to consider these forms of cooperation.Inter-Korean economic cooperation must be based on win-win projects thatprovide mutual benefits. Companies must not begin business in North Korea solelybased on ethnic emotions or vague expectations for the future. Such businesses willonly end in failures，which will not only burden the South Korean economy，butwill also negatively influence the economic expansion of North Korea to the outsideworld.It will take a considerable amount of time to solve the various problems relatedwith inter-Korean economic cooperation. However，both Koreas must progressnegotiations with patience and perseverance under the principle of thoroughreciprocity rather than unilateral support policy.