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In a press conference right after the FTA was concluded on Monday, Trade Minister Kim Hyun-chong said, "The United States has agreed, in principle, to designate an outward processing zone. The products made at the Kaesong Industrial Complex will also benefit from the FTA”, provided a committee “designates the Kaesong Industrial Complex as such a zone." In a statement on the same day, President Roh Moo-hyun said, "We have laid the foundation for having products from the Kaesong Industrial Complex recognized as South Korean goods."

But in a telephone interview with a U.S. journalist on Tuesday morning, Deputy U.S. Trade Representative Karan Bhatia said despite many discussions on the Kaesong Industrial Complex, the agreement doesn't include goods from the complex. He denied the industrial park stands to be designated as an outward processing zone. "I can tell you there’s no contemplation on the U.S.’ part right now to allow goods from North Korea into the U.S. somehow through the FTA. That won’t happen,” Bhatia said. "What we have agreed to do is create a committee ... and within that committee we are willing to discuss" economic development issues, he added. "I would caution you against reading too much into that."

North Korean laborers work in a South Korean factory in the Kaesong Industrial Complex.

That reflects the U.S.’ initial position that no North Korea-made goods can be included in the FTA unless Pyongyang makes noticeable political progress. A Unification Ministry official said Washington “has claimed that the foreign exchange earned through the Kaesong Industrial Complex is spent on developing weapons of mass destruction, including nuclear weapons.” It “is unlikely to change its negative attitude toward the Kaesong Industrial Complex unless there is explicit evidence refuting the U.S. allegation or an assurance from North Korea." That means products from Kaesong are unlikely to get free access to the U.S. market unless there is dramatic progress in the relationship between North Korea and the U.S. beyond their recent détente. No amount of pressure from South Korea would persuade the committee to designate Kaesong as an outward processing zone if the U.S. vetoes it.

Another obstacle to the Kaesong issue is a clause in the FTA on labor that envisages guaranteeing workers their basic rights and minimum wages. The U.S. special envoy on North Korean human rights, Jay Lefkowitz, has said, North Korean workers at the Kaesong Industrial Complex are being exploited in an environment that doesn't come up to the ILO standard. The South Korean government pays each North Korean worker at Kaesong US$66 on average per month, but Pyongyang takes most of that, as a levy for “social costs." As a result, the North Korean workers actually take home a mere 5,000 North Korean won (about $2) per month.

(englishnews@chosun.com )