Trade b/w Koreas soars in '06 despite sanctions

Seoul, Jan 4: Trade between the two Koreas increased by nearly 30 per cent in 2006 to top 1 billion dollars for the second-straight year despite UN sanctions on the North for its nuclear test, the South's Unification Ministry said today.

The main reason for the increased trade was the expansion of a business park in the North's border city of Kaesong where South Korean companies take advantage of cheap North Korean land and labour to manufacture goods, it said.

Trade volume between the two Koreas was 1.35 billion dollars up by 27.8 per cent from a year earlier, it said.

South Korea, which fears instability in its impoverished neighbour, has kept the Kaesong factory project growing during the past year arguing it serves as a model for economic integration in the event of unification.

South Korea suspended food aid to North Korea after Pyongyang defied international warnings and test-fired seven missiles in July 2006.

Seoul said it would abide by the UN sanctions, aimed at halting the North's weapons trade and imports of luxury goods for its leaders, imposed on Pyongyang for its October nuclear test.

Fewer South Koreans visited a mountain resort in North Korea in 2006 run by an affiliate of the South's Hyundai Group.

Tourists visits were down to the Mount Kumgang resort by 21.4 per cent from the year before. South Korean officials have said fewer people wanted to visit the resort due to political tensions on the peninsula.

The United States has criticised the resort, where visitors must pay fees to cross into the North, saying it could serve as a cash cow for Pyongyang's leaders.

REUTERS

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