Economic Cooperation with North Korea: Could It be Possible?


2018 has been an important year for the Korean peninsula. With North Korea accepting South Korea’s invitation to the 2018 Winter Olympics and South Korea and the United States holding summits with North Korea, the era of President Obama’s strategic patience has arguably ended. As ties between North Korea and South Korea thaw, evidenced by the suspension of certain military exercises and the beginnings of the actual demilitarization of the DMZ, South Korea, under the Moon Administration, is looking into starting economic projects with North Korea. Specifically, the Moon Administration seeks to invest in North Korean infrastructure, such as roads and railways, so as to ease the cost on South Korea were a reunification with North Korea to happen, and so that South Korea can preserve the recent positive changes made in South-North Korean relationships.

However, there are many barriers to an economic partnership between North and South Korea, the biggest arguably being United Nations Security Council Resolution 1718, which imposed sanctions on North Korea in response to the North Korean October 2006 nuclear test. These sanctions ban North Korea from trading, not only in arms, nuclear technology, financial services, and fuel, but also seafood and textiles. Economic projects, especially those aimed at rebuilding North Korean infrastructure, could potentially violate those sanctions. Another barrier is the US’s current stance when it comes to dealing with North Korea. Despite the opening of a dialogue with North Korea, the US has insisted on strong sanctions against North Korea until it embraces denuclearization. As the US is not only a prominent player in international politics, but also plays a major role in North-South Korean relations (e.g., it was the US that signed the Korean Armistice, not South Korea), South Korea’s economic projects would have a better chance of successfully commencing if they first received US approval.

One way for South Korea to advance its planned economic projects with North Korea is to put the US at ease. The US is not inflexible when it comes to North Korean sanctions. The Kaesong Industrial Complex is a good example. The Complex provided the North Korean regime with a revenue stream of approximately $20 million per year, produced products that could not be traded under Resolution 1718, such as textiles, semiconductor components, and communication components, and the US was still supportive of it due to the benefits it provided, which included a lessening of tensions between the two Koreas, thereby lessening the chance of an armed conflict that could reignite the Korean War, the possibility that the Complex could be a “trojan horse” containing US market economy values, and that supporting the Complex would satisfy a close ally, South Korea. An economic project involving railways and roads would likely serve as a better trojan horse than the Complex since it would involve more interaction between North Korea and the international community. Therefore, South Korea could convince the US that such a project aligns with the objective of UN Security Resolution 1718 and is worthy of an exemption. Also, note that South Korea is also looking forward to reopening the Kaesong Industrial Complex.

Another way of putting the US at ease would be for South Korea to strongly enforce the explicit parts of the Resolution 1718 sanctions. By enforcing the undisputed terms of the sanctions, such as blocking North Korean coal imports, South Korea could prove that it is not willing to violate UN sanctions unless North Korea proves complete denuclearization. Clear communication and coordination with the US will also assuage the US’s concerns. With this in mind, South Korea setting up a working group with the US to coordinate its approach regarding North Korea is a step toward the right direction.

A more creative way South Korea could justify its proposed economic projects is to term some of them as humanitarian aid. The Korean War has appear to have ended, but in actuality it has merely been suspended through the Korean Armistice, so the two Koreas are still technically at war. This situation could be defined as an “International Armed Conflict” (IAC) under the Geneva Conventions of 1949. State parties of an IAC “shall allow the free passage of all consignment of medical and hospital stores … intended only for civilians of another [State party], even if the latter is its adversary. [A State party] shall likewise permit the free passage of all consignments of essential foodstuffs, clothing and tonics intended for children under fifteen, expectant mothers and maternity cases” (Geneva Conventions of 1949 Article 23). Using this customary international law principle, South Korea can support economic projects that support North Korea’s agriculture both directly and indirectly (barring transfer of agricultural machinery) and public health, despite UN Security Council Resolution 1718. Note that even Resolution 1718’s restriction on scientific and technical cooperation allows scientific exchange when it comes to medical exchanges, and its emphasis is sanction on nuclear and missile-related technology, rather than agricultural technology.

Ultimately, the survival of South Korea’s proposed economic projects with North Korea depends on South Korea’s ability to make them palatable to the international community. By convincing the US of the utility of such projects, by enforcing UN sanctions in good faith, and by appealing to the humanitarian purpose of these economic projects, South Korea could take steps that might eventually lead to North Korea’s integration into the international community.


Gihyun Kim is a second-year J.D. student at Columbia University, where he is focusing on international trade law and comparative law. He received his B.S. in Policy and Management from Carnegie Mellon University. He has worked as a legal intern at the New York State Department of Financial Services and as an interpreter in the Republic of Korea Army.