Bloomberg News

U.S. Urges ‘Extreme Caution’ as North Korea Opens Economic Zone

June 10, 2011

June 10 (Bloomberg) -- The U.S. urged other nations to use “extreme caution and vigilance” in doing business with North Korea as China announced it will develop joint economic zones with the country.

“We urge transparency, extreme caution and vigilance in any business dealings with North Korea,” said Mark Toner, a spokesman for the State Department, in response to the reports.

North Korea announced June 6 that it would create the Hwanggumphyong and Wihwa Islands Economic Zone to “boost friendship with China and expand and develop external economic relations,” North Korea’s state-run Korean Central News Agency said. The Chinese announcement followed yesterday.

China is North Korea’s closest ally and a source of economic support as international sanctions against the North’s nuclear program leave it increasingly isolated. The announcement is the clearest sign yet that Leader Kim Jong Il may have won China’s pledge for deeper economic cooperation during three trips to China in the past year, according to analysts including Cho Bong Hyun of the Seoul-based IBK Economic Research Institute.

China last year accounted for 83 percent of North Korea’s $4.2 billion of trade as global sanctions left the regime increasingly isolated. With the development of Hwanggumphyong and Wihwa, “economic cooperation between the two countries will further accelerate,” Cho said in a telephone interview.

The concern for countries trying to punish North Korea for its pursuit of nuclear weapons is that trade with China undermines international sanctions against the regime.

Security Council Resolutions

Toner said the U.S. urges “all United Nations member states to fully implement” Security Council resolutions that “target North Korea’s continued involvement in proliferation, nuclear weapons development and luxury goods procurement.”

The U.S., China, Russia, Japan and South Korea have conducted talks on the North’s nuclear program in the past. North Korea has recently expressed interest in restarting talks, which it abandoned in 2009.

Kurt Campbell, assistant secretary of state for East Asian and Pacific affairs, told reporters today in Seoul that the U.S. had urged China to use its influence to encourage North Korea to improve its relationship with South Korea.

--Editors: Bob Drummond, Laurie Asseo.

To contact the reporters on this story: Nicole Gaouette in Washington at ngaouette@bloomberg.net; Bomi Lim in Seoul at blim30@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net


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