Inter-Korean accords proposed

Inter-Korean accords proposed

SEOUL (AFP): South Korea proposed an accord on investment guarantees in economic talks on Monday with North Korea on promoting cooperation between the two sides.

The proposal came in the opening session of two-day talks to follow up on the milestone reconciliation agreement signed between the leaders of the two Koreas in June.

The accord paved the way for the two Koreas, still technically at war, to put their economic exchanges on track.

But South Korean businesses have shunned any major investment in the communist state, saying the two sides need legal protection for their investments.

"The June summit opened a new era of economic ties. But a lack of legal systems has hampered investments from our side in the North," the South's chief delegate Lee Keun-Kyung said in a keynote speech.

Lee proposed the two sides sign four safeguard accords on investment guarantees, the avoidance of double taxation, dispute resolution and transaction settlement.

"First of all, two sides must work out a legal device to protect investments," Lee said.

North Korea's stance was not disclosed but South Korean officials remained optimistic over the economic talks, which coincided with the first meeting of South and North Korean defense ministers on the southern island of Cheju.

The North's three-member economic delegation was led by Jong Un-Op, chairman of the National Economic Cooperation Federation.

Inter-Korean trade amounted to US$333 million last year, with South Korea exporting $212 million worth of goods mostly through third countries.

At the end of July, South Korea's investments in the communist state stood at $15.4 million.

The inter-Korean rapprochement, launched by the June summit, will create a new era of economic cooperation between the two Koreas.

In August, South Korea's Hyundai Group announced an ambitious project to build a giant industrial and tourism complex along the North's southwest coast.

Hyundai, which runs a tourism complex on the east coast, hopes to follow a Chinese model for special economic zones for its new project in Kaesong near the border between the two Koreas.