- The Washington Times - Tuesday, June 20, 2000

The Clinton administration yesterday lifted a 50-year embargo on trade with communist North Korea just days after the first meeting of the heads of North and South Korea.

The decision will allow American individuals and companies to export and import consumer goods to and from North Korea and transfer money. U.S. ships and planes will now be allowed to dock and land in North Korea for the first time since the 1950-53 Korean War.

But since North Korea remains on the State Department's list of nations sponsoring terrorism, the United States will continue to oppose any loans by the World Bank or International Monetary Fund, said State Department spokesman Richard Boucher yesterday. Also yesterday, U.S. drug policy chief Gen. Barry McCaffrey, on a trip to China, cited growing evidence that North Korea produced opium and methamphetamines.

The announcement lifting the embargo leaves in place trade rules barring any exports of U.S. technology or equipment that could have a military application.

"The actual opportunity for trade may be limited by the state of the North Korean economy," said Mr. Boucher. Most North Koreans are too poor there has been widespread famine and hunger for several years to purchase American products.

And the shoddy state of North Korea's manufacturing facilities as well as infrastructure such as roads, power grids and ports, makes it unlikely it will be competitive in U.S. markets.

However, the easing of sanctions will allow South Korean firms to beef up their use of extremely cheap North Korean labor to manufacture products that they will now be able to export to the United States, said Selig Harrison, a Korea expert at the Century Foundation in Washington.

"The cost of labor in North Korea is one-tenth that of South Korea," said Mr. Harrison. "Two hundred and fifty South Korean companies already have production contracts with North Korea. They send parts to be assembled in the North and then shipped back to the South. These goods were previously barred from the United States."

North Korea has been furious over what it saw as a U.S. failure to live up to a promise it made in 1994 when the two countries signed a nuclear framework accord: North Korea agreed to freeze its suspected nuclear weapons program in return for an end to the U.S. trade embargo, said Mr. Harrison.

Then in September, President Clinton once more promised to end the trade embargo, this time in return for a North Korean moratorium on long-range missile testing.

Administration officials say the North Koreans have largely lived up to the freeze of their nuclear program and have not tested another long-range missile.

Asked yesterday why it took nine months for the trade embargo to be lifted, Mr. Boucher said it was because it required rewriting complex rules.

However Mr. Harrison said the delay was due to Clinton administration fears of Republican opposition on the Hill.

It was only after the summit of North Korean leader Kim Jong-il and South Korean President Kim Dae-jung and the thaw it produced that "the administration felt it had the cover to drop the sanctions," said Mr. Harrison.

"That makes sense," said a Republican congressional aide yesterday, speaking on the condition of anonymity.

"Those guys are chicken. They've muted the next-day reaction. No one wants to dump on good news" coming so close to the historic North-South summit meeting in Pyongyang, North Korea's capital.

"But the fundamental problems with North Korea are still there," said the Republican aide. "They still possess the capacity to hit us with a weapon of mass destruction, they still play brinkmanship and are still capable of very bad acts. They are not a reliable partner at all."

He also noted that the lifting of sanctions was due to take place after the visit of a high-level North Korean official to Washington.

"He never came, never showed up," said the Republican official, "but we gave them something when they haven't met the original condition."

The new trade rules published yesterday in the Federal Register require all importers of goods from North Korea to apply for a license with the federal Office of Foreign Assets Control and prove that their North Korean supplier is not linked to any military groups a cumbersome task that could well put a damper on trade.

A previous U.S. agreement to allow imports of magnesite, a mineral used to produce high-quality steel, never got off the ground due to North Korea's poor infrastructure, said several experts.

The new rules also leave property and assets of North Korea in the United States that were previously blocked by the U.S. government still blocked for now.

Meanwhile, Gen. McCaffrey, during a visit to China, said over the weekend that there was "considerable" evidence the North Koreans were "manufacturing methamphetamines in serious amounts and have been smuggling it out to other nations, sometimes using official actors."

"Whether that is state-sponsored or individual criminal activity is hard to determine," he said Saturday in Beijing.

Methamphetamine, nicknamed "the poor man's cocaine," stimulates the nervous system and becomes quickly addictive with use.

Gen. McCaffrey said the drugs produced in North Korea and smuggled out of the country were a threat to Asia.

"Clearly, we want to be supportive of an attempt to eliminate that problem," he said.

Gen. McCaffrey also accused North Koreans of producing "a considerable amount of opium" although he admitted "on a world scale, it's sort of minor."

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