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PYONGYANG WATCH
Seoul's secret
success
By Aidan Foster-Carter
Our last column (Re-Orienting: Seoul's new No 1
market, October 16 - over a month ago: sorry about
that) noted that China had just surpassed the United
States as the main market for South Korea's exports, and
it speculated on the potential political implications of
what history may see as a key turning point. We also posed a cognate
question concerning the other Korea: Which nation last
year overtook which other nation as the principal buyer
of North Korea's distinctly more meager exports?
This one is harder, for several reasons. First,
find the figures. Ask Pyongyang? Forget it. Despite
boundless official wishful thinking in Seoul, North
Korea's slow-motion shuffle in the direction of economic
reform doesn't yet extend to publishing any regular
statistics. Not any. None. Nada. Even this year's
budget speech, which gave a few percentages, did not
contain one single actual hard number.
That in
itself tells you something important. Normal countries
publish figures. Even less than normal countries manage
a few. The numbers may be lousy, or indeed lies, but
this is what states do; for their own self-respect,
because the World Bank and International Monetary Fund
(IMF) insist upon it and above all, because without
numbers no one can be sure what is really going on, and
so how can investors or other economic actors commit
themselves and make meaningful market decisions?
Therefore, when the DPRK (Democratic People's Republic
of Korea) Central Statistics Bureau starts doing its job
in public, then (and only then) will we know that reform
in North Korea is for real and irreversible.
Until then, others must struggle to plug the
gaps. For obvious reasons, the most and the best of them
are in South Korea. There was a time when these sources
were tainted with propaganda, but no longer. Or rather,
the bias has gone into reverse. Whereas before they did
their damnedest to put the red swine down, these days,
if anything, the folks in Seoul bend over backwards to
bathe their Northern brethren in the kindliest light.
Yet on certain matters they themselves are also, as we
shall see, inordinately modest and self-effacing.
Like all good bureaucrats, those in Seoul have a
strict division of labor. For the North Korean economy
this is threefold. The ROK (Republic of Korea) central
bank, the Bank of Korea (BOK), estimates national
income, growth and output by sector using intelligence
data and arcane formulae of its own. Meanwhile KOTRA
(Korea Trade-Investment Promotion Agency) - a division
of the Ministry of Commerce, Industry and Energy (MOCIE)
- tracks foreign trade and economic trends generally.
Separately again, the Ministry of Unification (MOU), as
its name suggests, monitors all matters inter-Korean,
including trade and aid. With me so far?
Like
the proverbial blind men and the elephant groping in the
dark, the BOK does its best to weigh and reconcile a
whole raft of unknowns. Its methodology has been
attacked, especially when it pronounced that the North
Korean economy grew by 6.2 percent in 1999 suggesting a
dynamism not visible on the spot.
But with
trade, we should be on firmer ground. It takes two to
trade - so even if Kim Jong-il ain't telling, his
partners would. This entails much toil, and involves
ferreting through the rest of the world's customs
records and trade figures to dig out their (usually
microscopic) intercourse with North Korea.
Beside hard graft, there are pitfalls for the
unwary. JETRO (Japan External Trade Organization),
Japan's equivalent of (and model for) KOTRA, which used
to be one of the main sources for North Korean economic
data before Seoul got interested, once discovered a new
and unexpected Pyongyang partner when Mexico suddenly
emerged from nowhere as a major exporter to North Korea
- only to pop up a year later as a leading importer.
That was obviously suspicious. Trade patterns tend to be
fairly stable over time; although in fact North Korea's
are less so than most suggesting a pattern of one-off
deals (unpaid for, perhaps?). Mexico, it turned out, was
quite imaginary - some Mexican customs officials simply
got their Koreas muddled up and ticked the wrong box, so
a certain amount of the much larger trade with South
Korea got classed as Northern by mistake.
Human
error is one thing, deliberate obfuscation another. I've
a bone to pick with Seoul's statisticians, and pick it I
shall. But back to our initial question, simple and
straightforward: What country last year was the main
market for North Korean exports? And which other country
did it dislodge from the top slot?
Well, the
KOTRA website offers a seemingly full account of
Pyongyang's trade in 2002, complete with lots of tables.
I salute their hard work, which produces some
fascinating nuggets. One is that, reversing the normal
sequence, primary goods have become the main export item
while manufactures are in decline. Thus, last year
animal products, mainly seafood, displaced textiles as
North Korea's top earner.
Overall, KOTRA tallies
North Korea's trade totals in 2002 as almost identical
to the 2001 figure of US$2.26 billion - pretty puny by
today's Asian or global standards. Imports of $1.52
billion against exports of just $735 million left, as
usual, a hefty trade deficit. As for its partners, China
and Japan - again, as usual - ranked first and second
with $738 million and $370 million respectively,
accounting for nearly half of total trade.
With
Beijing, Pyongyang's exports of $271 million nowhere
near covered its imports of $467 million, though at $196
million the shortfall was less than half of 2001's
gaping $404 million. South Korea has tallied the
cumulative China-DPRK trade deficit since 1990 - when
Moscow finally pulled the plug on its maverick protege,
and Kim Il-sung simply took his overdraft elsewhere - at
a cool $4.4 billion.
Beijing is pretty fed up
with this, and occasionally tries to get Kim Jong-il to
pay up. But like his father before him with the then
Soviet Union, he defaults and gets away with it because
he can. Russia is still owed some $3.6 billion in
Soviet-era debts, some now belatedly being repaid by
sending contract labor - or latter-day serfs, according
to human-rights critics - to forestry and other projects
in eastern Siberia.
While comrades are for
milking, with Japan, North Korea is careful to stay in
the black and earn some yen. Last year exports of $234
million tidily exceeded imports of $135 million. The
country's next-largest trade partners, according to
KOTRA, were Thailand, India, Germany, Singapore and
Russia, with all of whom North Korea once again ran
sizable deficits. (Do they ever pay anyone, you wonder?)
But hold on. Something is missing here. While
the article occasionally mentions South Korea - noting
for instance that inter-Korean textile processing on
commission (POC), which means getting garments made in
Pyongyang to order, with materials and sometimes
machinery supplied, is rising while POC with Japan has
fallen - it suddenly dawns on you that the other Korea
is completely absent from all of these tables and from
most of the analysis and conclusions. Very odd. Don't
the two Koreas trade?
Of course they do. But
Seoul, in its wisdom, classifies this as internal - thus
avoiding World Trade Organization (WTO) rules and
duties. Hence a different sidebar takes you to what they
pointedly call "intra" (not inter)-Korean trade - and a
whole new set of substantial and important figures,
which completely change the above picture.
Here,
and in more detail on the MOU website, we learn that not
only do the two Koreas trade, but that their intercourse
is positively leaping ahead. Last year inter-Korean
trade - as I shall continue to call it: this is foreign
trade between two separate states, so can we please stop
being silly? - shot up by 59 percent, from $403 million
to $642 million. In fact, Seoul's $370 million of
Northward exports were mainly aid goods. By contrast,
North Korea's Southward exports of $272 million were
nearly all real commercial deals.
Obviously, to
get a true picture of North Korean trade we must smash
KOTRA's statistical apartheid and integrate all these
figures. Doing that quite transforms the situation.
China is still Pyongyang's No 1 partner - but South
Korea is not far behind at No 2, pushing Japan into a
distant third place.
Also, this bumps up North
Korea's total trade to $2.9 billion, and exports to just
over $1 billion - credit where it's due, I say. So it's
false for KOTRA to say that Japan and China make up 49
percent of North Korean trade. It's really 38 percent.
More to the point, China, South Korea and Japan account
for 60 percent of the total.
And whom did
Pyongyang sell to most in 2002? What Seoul's
statisticians seemingly don't want you to know is -
you've guessed - it was them. A total of $272 million in
Northern exports to South Korea just topped the $271
million worth sent to China. You'd think all good Korean
nationalists would rejoice at this doing business
together, and shout it from the rooftops. Instead they
hide it under a bushel. Most odd.
And since
we're tracking trends, with another year almost over,
how about 2003? KOTRA, helpfully, has collated the
numbers for the first half of this year. North Korea's
trade with Japan is way down at $134 million, its lowest
for a decade, due to worsening political relations:
nukes and kidnaps in a nutshell. China is holding
steady: $378 million in total, with $108 million in
exports and $270 million imports.
And South
Korea? A total of $269 million in the first half of
2003, comprising $112 million in Northern exports and
$157 million in imports. Seoul is well on track to
retain pole position as Pyongyang's top market, and
second place in trade overall. But in fact since July
the trend has accelerated, to reach $587 million in the
first 10 months. That means South Korea is snapping at
China's heels, and poised to overtake it next year as
North Korea's main trade partner.
Which of
course is as it should be: a good thing, a step toward
reunification. So why try to hide it? To purport to
analyze North Korean foreign trade minus South Korea is
like Hamlet without the prince. I bet Koreans
would be annoyed if foreigners were to do it. Well, this
foreigner takes a dim view of so-called Korean
nationalism, when it fiddles the numbers to make a petty
and irrelevant political point.
Why don't
Seoul's statisticians do what Koreans traditionally were
happy to do, and practice sadae (look up to
China)? Whatever criticisms may be made of Chinese
statistics for exaggerating growth, at least they don't
let politics mess up the units of analysis. For
foreign-trade purposes, Beijing lists Hong Kong, Macau
and even Taiwan as separate entities: even though the
first two are legally part of China now, while the
People's Republic notoriously rejects Taiwan's claims to
political independence.
Politics is politics,
but numbers are numbers - and we need the right stuff.
So, dear KOTRA: next time you analyze North Korean
trade, please be less self-effacing. The fact is, Seoul
is now a central player in Pyongyang's foreign trade. To
exclude this is frankly mendacious. So please, count
yourselves in.
Aidan Foster-Carter is
honorary senior research fellow in sociology and modern
Korea, Leeds University, England.
(Copyright
2003 Asia Times Online Co, Ltd. All rights reserved.
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