ROK URGES ACTIVE, CONTINUED AMERICAN SUPPORT FOR

C O N F I D E N T I A L SEOUL 000827 SIPDIS SIPDIS E.O. 12958: DECL: 08/18/2015 TAGS: PHUM PREL EINV KS KN SUBJECT: ROK URGES ACTIVE, CONTINUED AMERICAN SUPPORT FOR KAESONG INDUSTRIAL COMPLEX Classified By: POL M/C Joseph Y. Yun. Reasons 1.4 (b),(d). SUMMARY -------------- ¶1. (C) Director General for North American Affairs Cho Tae-young told POL M/C on March 13 that the ROK was attempting to gain permission to pay wages directly to workers at the Kaesong Industrial Complex (KIC). Until that permission is granted, North Korean workers are being required to sign for their paychecks, so they know how much they are supposed to be paid. Cho stressed that the KIC was intended to nudge the DPRK toward economic integration with the outside world and that the project deserved active American support. END SUMMARY. KIC TO HELP INTEGRATE DPRK INTO WORLD ECONOMY -------------- ¶2. (SBU) Director General for North American Affairs Cho Tae-young requested a meeting with POL M/C on March 13 to discuss the Kaesong Industrial Complex (KIC). Cho noted that the ROK had recently arranged a trip to the KIC by foreign media representatives, but that not all of the subsequent reports had been positive. In fact, there appeared to be rising concern in Washington that the KIC was exploiting North Korean workers. ¶3. (U) In thinking about the KIC, Cho continued, it was important to be aware of the basic facts. The KIC had only begun last year and was still in the pilot stage. Thirteen of the first 15 companies had completed their facilities, but only eleven were in production, with 6,000 North Korean workers. There were approximately 500 South Korean staff, who returned home every other weekend. The ROK hoped to move to Stage One by next year, when the KIC would cover 3.3 square kilometers. If completed as planned, the KIC by 2012 would cover 26.4 square kilometers. KIC DESERVES ACTIVE AMERICAN SUPPORT -------------- ¶4. (C) The KIC, Cho stressed, was not intended "simply to give the North Koreans a pile of fish, but to teach them how to fish." Unlike the tourism project at Mt. Geumgang, the ROK believed that the KIC was a sustained undertaking that would lead to extensive, substantive contact between North and South Koreans. The KIC would teach North Koreans how factories and markets worked and would support the DPRK's economic integration with the outside world. It deserved active, continued American support. WORKERS SIGN FOR PAYCHECKS -------------- ¶5. (C) Turning to the issue of wages paid to North Korean workers at the KIC, Cho explained that Article 32 of the DPRK's labor regulations required that wages be paid to workers in North Korean won. The DPRK had refused to implement its own regulation at the KIC, however, and insisted that wages be paid to Pyongyang for distribution to the workers. South Korean firms had reluctantly agreed, but had repeatedly asked the DPRK to implement Article 32 at the KIC and continued to raise the issue every month at meetings of the KIC management commission. The question of wages was a "serious and substantive dispute" at the KIC, said Cho. The ROK had also asked the DPRK to establish a bank at the KIC so that it could exchange ROK won for DPRK won, and use the North Korean currency to pay the workers. Again, the DPRK had refused. In November, the South Korean companies had begun requiring each worker sign for his paycheck; in this way, the worker knew how much money he was supposed to receive, even if he did not actually do so. WILLINGNESS TO WORK OVERTIME SHOWS WORKERS ARE COMPENSATED -------------- -------------- ¶6. (C) The ROK did not know how much of their pay the North Korean workers were receiving, Cho acknowledged, although North Korean managers insisted the workers were receiving 100 percent of their wages. Cho noted that North Korean workers readily agreed to work overtime and Sundays, which Cho said indicated they were being compensated in some way and that the wages they received were broadly acceptable. Cho added that the ROK would raise the direct pay issue with North Korea at every opportunity. VERSHBOW