The Legal Framework of the Gaesung Industrial Complex

Abstract

Since the 2000 inter-Korean Summit, the two Koreas have continuously carried out the Gaesung Project while overcoming some challenges. At the outset of the Gaesung Project, North Koreas military objected to opening the Gaesung by reason of the military defense line. North Korea made the decision to open the Gaesung toward South Korea to revitalize its economy by persuading its military to tolerate the Gaesung Project. Meanwhile, in the summer of 2002, when the two Koreas began to move ahead with the Gaesung Project by re-connecting the inter-Korean expressway and railroad crossing the DMZ, the United States strongly resisted the two Koreas attempts. Immediately afterwards, the two Koreas agreed on a detailed schedule for the reconnection of the inter-Korean expressway and railroad and North Korea designated Shinuiju, Kumgangsan and Gaesung as special economic zones. To date, the two Koreas have established, through painstaking negotiations, the foundational work for the Gaesung ICZs legal system. This article attempts to investigate the legal framework of the Gaesung Industrial Complex, focusing on the Gaesung Industrial Complex Zone Law enacted in 2002. After conducting a detailed discussion on the various aspects of the law such as the administrative structure, foreign currency control and taxation, the author looks into the factors that are necessary for the successful development of the Zone.