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. Last Updated: 07/27/2016

Seoul Says Economic Ties With North Need Treaty

SEOUL, South Korea -- South Korean President Kim Dae-jung said Wednesday an investment treaty and an economic coordination body were needed to deal with rapidly growing business ties with Stalinist rival North Korea.

Kim proposed earlier this month the establishment of an inter-Korean body to handle such things as joint development of roads, railroads, ports and raw materials.

Although they are separated by the world's most militarized frontier, economic ties between the two Koreas have begun to blossom since Kim came to office two years ago with his "sunshine policy" of engagement with the old foe.

Bilateral trade reached $330 million last year and Seoul provided another $200 million in food and fertilizer aid to famine-struck North Korea, which relies on international handouts to feed its 22 million people.

South Korea's Hyundai Group has agreed to invest nearly $1 billion to ferry tourists to a mountain resort it is building in the North and a South Korean company will soon break ground on an automotive joint venture in North Korea's western port of Nampo.

"When they have private-level cooperation such as this, we will have to make an investment guarantee and an avoidance of double taxation treaty between the two Koreas," Kim said at a news conference. "That can only be done at a government level."

"Therefore, it is obvious that we'll have to have a certain organization for cooperation between the Koreas and we can expect that to happen in the future."

Under an investment guarantee treaty, the host country agrees to protect the right of foreign investors, including such things as the ability to repatriate profits.

North Korea's official media has dismissed the economic community idea as nothing new. But President Kim noted that Pyongyang had not explicitly rejected the idea.

The president said Seoul would push ahead with the policy of economic cooperation, regardless of how political ties develop.

"Aid and economic cooperation has to be based on a division between economic and political relations with North Korea."

The government was "quite positive" about providing fertilizer aid again this year, even if there are problems in bilateral talks, Kim said.

Seoul has been asking North Korea to agree to hold reunions of families that were separated when the peninsula was divided into the communist North and capitalist South after World War II. North Korea has rejected linking aid and reunions.

Kim said he supported efforts by Japan and the United States to normalize ties with North Korea as consistent with his engagement policy - but not at the expense of isolating South Korea.

Kim also sought to downplay Seoul's recent spat with Beijing over China's forcible repatriation of seven North Korean refugees, who South Korea fears will face execution at home.