April 13, 1999

The Government of the People's Policy on Inter-Korean Exchanges and the Current Situation


Efforts to Resume South-North Dialogue

Based on the principle that all pending inter-Korean issues should be resolved through South-North dialogue, the Government of the People°™the Administration of Kim Dae-jung°™has, since its inauguration, been making various efforts to entice North Korea into dialogue.

South-North Government-level Talks

For the first time since government-level talks had been suspended three years and nine months previously, South and North Korea held a conference of government representatives on April 11-18, 1998 and discussed ways to improve inter-Korean relations and other issues of mutual interest. At the conference, South Korea showed a strong desire to liquidate the unproductive past relations characterized only by the signing of agreements but not by their implementation. The South urged the North to establish a new relationship based on reconciliation and cooperation. In particular, the Administration worked out a new framework for future inter-Korean relations by conveying to the North its policies of separating economic issues from political issues and basing relations on the principle of reciprocity.

The Fifth Meeting of Red Cross Representatives

The Red Cross Societies of the two Koreas held their fifth meeting in Beijing on March 25-27, 1998 to discuss ways to deliver the third installment of aid goods to North Korea. Aid to North Korea by the Red Cross Society of the Republic of Korea depends entirely on contributions from private organizations. The South asked the North to include in the agreement a pledge to reveal how and where the aid goods are distributed as the donors want to know.

After several working-level meetings, held to discuss how to confirm the distributions of aid goods, the two Red Cross Societies signed an agreement concerning the supply of the third installment of aid goods which called for delivery, by the end of May 1998, of a total of 50,000 tons (based on corn) of grain, which was about the same amount that had been shipped in the first and second installments.

Four-Party Meeting

In April 1996, the Governments of the Republic of Korea and the United States proposed to the Democratic People's Republic of Korea and the People's Republic of China that a Four-Party Meeting to Promote Peace on the Korean Peninsula be convened. After nearly two years of on-again, off-again negotiations, the first plenary session was held in Geneva, Switzerland on December 10-11, 1997. At this meeting procedural matters were discussed and it was agreed to meet again in March 1998.

The second plenary session was held on March 16-21, 1998 after the inauguration of the Kim Dae-jung Administration. The ROK presented principles for the establishment of a peace structure on the Korean Peninsula and proposed the formation of two committees: one to discuss the establishment of a peace structure and one to discuss the relaxation of tension. While a consensus was reached on forming one committee, the discussions bogged down because North Korea insisted that the questions of the withdrawal of U.S. troops from Korea and the conclusion of a peace treaty between the U.S. and the DPRK be included on the agenda.

At the third plenary session held on October 21-24, 1998, the ROK proposed that a clear and concrete agreement on operating rules and procedures be reached to assure substantial progress. The meeting agreed to form two committees as proposed at the second session. They then adopted a memorandum concerning the establishment of committees and their operation. The agreement provided the basis for discussion of substantive matters in future meetings.

The Four-Party Meeting entered a new phase with the fourth session held on January 19-22, 1999 when the two subcommittees met for the first time. They agreed to meet again in the middle of April, establishing a pattern of fairly regular meetings.

Until now, the four countries have mainly dealt with organizational and procedural matters. In forthcoming discussions on the agenda, the ROK and the U.S. are expected to propose starting with easier topics such as alleviating military tension and then proceeding to more complicated issues. However, North Korea has long insisted on settling the fundamental issues of the withdrawal of U.S. forces from South Korea and the signing of a U.S.-DPRK peace treaty first.

Recognizing the importance of the Four-Party Meeting to the establishment of a solid peace system on the peninsula, the ROK is approaching the talks from a long-range perspective and will persevere with patience. In this process, it will be essential to coordinate diplomatic efforts with the U.S. and the PRC and to carry out its peace initiatives persistently.

Preparations for Implementing the South-North Basic Agreement

In President Kim's inaugural speech and remarks at the March First Independence Day ceremony, the Government of the People proposed to North Korea across the board implementation of the Agreement on Reconciliation, Nonaggression, and Exchanges and Cooperation Between the South and the North (Basic Agreement). It believes that the implementation of the Basic Agreement is most urgent if the two Koreas are to resolve any issue between them, and that it should be the foundation for the improvement and normalization of inter-Korean relations. The ROK Government included the implementation of the Basic Agreement in the 100 major national tasks and is steadily developing ways to succeed in this task.

Moreover, the ROK renovated Freedom House in the truce village of Panmunjom, completing it on July 9, 1998, and turned it into a support facility for inter-Korean conferences, contacts, and exchanges. Depending on developments in inter-Korean relations, it could be used as the meeting place for separated relatives and a postal exchange station between the South and North.

The Direction for Inter-Korean Dialogue

Based on a belief that all Korean problems should be resolved by the two Koreas through dialogue, the ROK decided to always keep the door open for talks and steadily try to persuade the North.

The implementation of the Basic Agreement, which could be described as the "bylaws of the Korean People," is more important than anything else for the resolution of Korean problems. It is desirable to put into operation the joint commissions the two sides have already agreed to set up in specific areas. But if North Korea finds it difficult to put them into operation at once, the ROK is ready to consider a permanent organization for dialogue between government officials of the two Koreas to discuss and resolve important and urgent pending issues.

At the same time, the ROK will continue to urge the North and push plans to exchange special envoys to confirm the will of the top leaders of the two sides to improve inter-Korean relations and find a breakthrough for an improvement of ties.

In order also to solve the issue of separated families, which is a top priority concern, the ROK will actively push the reopening of the South-North Red Cross Conference. Contacts between Red Cross representatives will also be steadily pushed to help relieve North Korea's food shortage and facilitate private-level aid.

Expansion of Inter-Korean Economic Cooperation Based on the Principle of the Separation of Economics from Politics

Based on the principle of separating economics from politics, the ROK introduced a measure for the expansion of inter-Korean economic cooperation on April 30, 1998. It will respect the independent judgement of corporations and will work to foster a favorable climate for private economic cooperation with the North.

In addition, the ROK Government allowed the chairmen of big business groups, as well as heads of economic organizations, to visit North Korea and put into practice a system that will allow them visit there anytime they choose. It has also lengthened the period during which South Korean businessmen are allowed to contact North Korean citizens from one year to three years.

In the area of trade and business projects, the Government has increased the number of goods for import on a blanket approval basis while reducing the number of items that required prior approval from 205 to 178. The Government also eased restrictions on shipments to North Korea of manufacturing facilities for production of goods there by South Korean business companies and eased restrictions on the level of investment in the North. As for the kind of businesses into which South Koreans are not allowed to invest, the Government decided to put them into a negative list.

The Current State of Economic Exchanges

Inter-Korean trade declined sharply even though the ROK has eased regulations and simplified procedures for approval. Inter-Korean trade which totaled US$308 million in 1997 reached two thirds that level in 1998.

Such a sharp drop in inter-Korean trade was caused by decreases in the exchange rate of the won currency and a business slowdown in the South, resulting in a corresponding drop in imports of North Korean goods.

The ROK approved five cases of investment in North Korea by qualified businessmen. The ROK also approved three businesses: fishing and processing, establishment of joint farming projects in the Najin-Sonbong area, and experiments and joint research for growing corn.

Inter-Korean Trade in 1999

(Unit US$ million)




Rate of Change

















Figures in parentheses are the real trade balance, excluding aid to North Korea

In accordance with measures for the vitalization of inter-Korean economic cooperation, Chung Ju-yung, honorary chairman of Hyundai Group, visited North Korea and, as a result, the Mt. Kumgangsan tour project was put into operation.

While maintaining firm national security, the Government will steadily expand inter-Korean economic cooperation based on the principle of separating economics from politics.

Furthermore, the ROK will help expand off-shore production of South Korean goods by allowing shipments of manufacturing facilities to the North. As a means to overcome the current economic crisis, it will also study ways to vitalize inter-Korean economic cooperation, by fostering a favorable climate for direct trade between the South and North.

Expanding Social and Cultural Exchanges

In the first six months of the Government of the People, there were active inter-Korean exchanges in academic, cultural, artistic and religious fields. These included a performance in Pyongyang by the Little Angels group on May 2-12, 1998; the exploration of cultural sites in North Korea by the Unification Research Institute of the Joongang Ilbo newspaper on July 7-21, 1998; and an on-the-spot coverage of the Mt. Kumgangsan development plans by the Dong-A Ilbo on August 25-September 5, 1998. Three other cases, including an academic debate on problems of unification, are being pushed.

In the cultural and social areas, the ROK Government approved six cooperative projects of which five cases were completed. They include the establishment and operation of a university of science and technology in Najin, the establishment of a pharmaceutical company and operation of an existing hospital by the Korean People's Welfare Foundation, and the collection and computerization of information on cultural assets in North Korea by the Korea Culture Network Institute of the Kyonghyang Shinmun.

Mt. Kumgangsan Tourism

The Mt. Kumgangsan tourism project is the most prominent symbol of the initial effects of the policy of gradual engagement°™the Sunshine Policy toward North Korea. In June 1998, Mr. Chung Ju-young, honorary chairman of the Hyundai Group met with representatives of the Asia-Pacific Peace Council of the DPRK and agreed that South Korean and international tourists would be allowed to travel to North Korea's famed Kumgangsan (the Diamond Mountains) on sea routes.

On August 6, 1998, the Government approved Hyundai's application to be a cooperating business with North Korea. On the following September 7, it also designated Kumgangsan tourism as a cooperative business project, opening the way for a major tourist exchange between Seoul and Pyongyang.

Hyundai quickly completed the Tonghae Port terminal on the East Coast and a temporary terminal at North Korea's Changjon Harbor to accommodate the tours. On November 11, 1998, the first Kumgangsan cruise ship left Tonghae with 826 South Koreans aboard. As of the end of the year, 10,544 South Koreans had toured the picturesque mountains. The luxury liners make three to four round trips a week.

The Changjon terminal is scheduled to be completed during the first half of this year. It will include a performance hall, restaurants, markets, parking lots and other recreational facilities. As of February 1999, 1800 South Korean engineers and laborers had gone to the construction site to work alongside their northern compatriots. An average of 400 South Korean workers stay there in any given week.

On October 29, 1998, Hyundai signed an agreement with the North Korean authorities to further expand the Kumgangsan tourism project. The bilateral pact authorizes the South Korean corporation to utilize the land and facilities in the Kumgangsan region and exclusively develop a long-term tourism project. Among the Hyundai plans are developing hotels and other beach resort facilities. In January 1999, the Government approved Hyundai's revised application to expand its cooperative programs with North Korea.

The Priority Issue of Separated Families

In view of the fact that many members of the separated families are getting old or dying, the ROK Government is giving top priority to the problem of meetings between members of separated families. Accordingly, the ROK Government has conveyed its desire to resolve the problem to the North through the inaugural speech of President Kim and in his remarks at the March First Independence Day ceremony. At the Government-level meeting held in Beijing April 11-17, 1998, the ROK also proposed to set up a meeting place for separated families and a postal exchange office and establish ways to confirm whether members of separated families are still alive.

At the same time, the ROK Government is actively supporting private-level efforts to realize meetings of separated relatives in third countries. In addition, it is preparing for substantial exchanges of separated family members through arrangement by the two Governments or Red Cross Societies.

First, it has begun to pay expenses for the arrangement of reunions for poor separated families. It has paid about 400,000 won to separated family members to confirm whether their relatives are dead or alive and to find out their whereabouts. It also paid about 600,000 won for arranging reunions and travel expenses to a third country for reunions.

Second, the Council for Separated Family Exchanges was formed on May 28, 1998 with the participation of private organizations. Thus, private-level efforts to realize reunions of separated family members were strengthened considerably.

Third, the ROK Government has made steady efforts to simplify procedures for elderly members of separated families to visit the North. As a result, from September 1, 1998, any elderly member of a separated family can visit the North freely just by reporting the fact to the Government, instead of having to seek approval as before.

Fourth, in the first quarter of 1999, the Government is preparing to establish an information center for separated families which will gather and store information in computers and offer other services to those who are seeking reunions with their separated relatives.

The Current State of Separated Families

The number of applications for Government approval for reunions with separated relatives in the North rose sharply to 3,726 cases as of 1998, up from only 761 cases in the whole of 1997. The increase is 4.9 times more than 1997, thanks to the Government's expressed intention to make family reunions a top priority, the South-North government-level talks, and a television program on separated families.

Meanwhile, there were 377 confirmations of whether separated family members were still alive or not as of August 20, 1998, up from 164 cases in the whole of 1997. The cases of actual reunions also rose about 1.8 times to 108 as of December 1998, up from 61 cases in the whole of 1997.

Contacts Between Separated Families             (Unit : cases)













Confirmed if alive or not











Meetings in Third Countries












Aid to North Korea on Humanitarian Grounds

Despite economic difficulties, the new South Korean Administration is not neglecting humanitarian aid to compatriots in the North who are suffering from an extreme food shortage. The ROK Government is actively participating in the World Food Program (WFP) and other international support programs for North Korea. On the private level, the Republic of Korea is providing North Korean people with practical support through various means, including direct aid by the Red Cross Society.

Since the inauguration of the new Administration, as a result of an agreement at the fifth meeting of representatives of the Red Cross Societies of South and North Korea in Beijing on March 25-27, 1998, the third installment of food aid was shipped between April and May. The third installment was worth US$9.35 million or 54,000 tons (based on corn) which also included fertilizer and medicine. In addition to the existing shipment by sea and land through a third country, for the first time, 500 head of cattle, donated by Chung Ju-yung, honorary chairman of the Hyundai Group, went to North Korea through the truce village of Panmunjom on June 16, 1998. The problem of food distribution in North Korea has also been improved as monitoring by International Red Cross Society officials became possible.

The ROK Government has also decided to take part, as a member of the international community, in the fourth plan for aid to North Korea by United Nations organizations. On May 9, 1998, it decided to donate US$11 million worth of food to North Korea through World Food Program (WFP).

Since September 1995, all private aid to North Korea has had to be sent through the Korean National Red Cross. However, on February 10, 1999, the Administration announced that private organizations would be able to send aid directly to North Korea after obtaining permission from the Government. This change in policy was put into effect in an effort to expand contact between the two Koreas and improve inter-Korean relations. The first such aid consisted of children's clothing sent by a Christian organization on March 4, 1999.

Aid to North Korea            



Republic of Korea

International Community

Before the Kim Dae-jung
Administration was launched(6/95-2/98)


US$262.42 mil

UN Organizations

US$171.86 mil


US$22.29 mil


US$172.73 mil



International NGOs

US$72.01 mil


US$284.71 mil


US$416.60 mil

After the Kim Dae-jung
Administration was


US$11.00 mil

UN Organizations

US$218.1 mil


US$20.85 mil


US$79.43 mil



International NGOs

US$17.37 mil


US$31.85 mil


US$314.5 mil


US$316.56 mil

US$731.1 mil


1.907 mil. tons
(on the basis of corn)

3.729 mil. tons
(on the basis of corn)


Protection and Support for North Korean Defectors

Defections by North Koreans have increased steadily every year since 1994, with the number, which totaled 86 in 1997, rising to 70 as of December 1998. As a result, there are 761 North Korean defectors living in the South as of February 1999. The background of the defectors has become diverse of late, and the defection of families is on the increase.

Moreover, there is a considerable number of defectors who left North Korea because of economic difficulties and are living in China and Russia. Many of them also want to come to the South.

In principle, the Administration maintains the position that it will accept all North Korean defectors who want to come to the South on the basis of love for compatriots and on humanitarian grounds. At the same time, with the understanding that there must be systematic and efficient support for these defectors, the Administration is undertaking the overall management and support for the settlement and adjustment in South Korean society by the defectors in accordance with the Act Concerning Protection and Settlement of North Korean Defectors, passed on July 14, 1997.

In particular, in order to boost private participation and support, it has established the Association of Supporters for Defecting North Korean Residents which, along with religious, women's and welfare organizations, provide North Koreans with various forms of support and consultations.

Systematic Execution of the KEDO Project

Shortly after the inauguration, the Administration enunciated its plans to carry out the Korean Peninsula Energy Development Organization (KEDO) project as planned and is carrying it out without a hitch. This reflects the ROK's determination to maintain peace and stability not only on the Korean Peninsula but also in the Northeast Asian region. It was an opportunity to reassure other countries and further consolidate the joint efforts by the Republic of Korea, Japan and the United States to resolve the North Korean nuclear problem.

The groundwork for the construction of the lightwater nuclear reactors which began in August 1997 was completed a month earlier than scheduled in July 1998. Additional work has also been carried out, and dormitories, dining halls, tennis courts, a medical clinic, physical training facilities, and other things needed by the workers there have been built. Moreover, a facility to receive satellite and cable television programs from the South, as well international broadcasts, has been set up for the workers.

The Republic of Korea, the United States, Japan, the EU and others who are KEDO Executive Board members reached a negotiated agreement at the end of July 1998 on how much each member-nation was to shoulder for the construction of the lightwater nuclear reactors that began at the end of 1997. In order to carry out the central role for the project, the Republic of Korea promised it would cover 70 percent of the cost. When a contract between KEDO and Korea Electric Power Corp. is signed, full-scale construction is expected to begin in the middle of this year.

The ROK Government plans to pursue follow-up negotiations between KEDO and North Korea. The two sides have already signed agreements on six protocols, including on the passage of personnel and communications. It will conclude in stages agreements on the remaining seven protocols for the guarantee of quality, training of personnel, and delivery. Thus, the Government plans to back up the demand that North Korea carry out its responsibility to freeze its nuclear weapons program.