North Korea: Seminar on the Economics of International Trade and Investment

Although it still seems a far way to go until the DPR Korea considers an integration into regional or international trade agreements and regimes a great number of Korean economic experts showed up at the People’s Palace of Culture in Pyongyang where the three-day seminar on the Economics of International Trade and Investment was held. At the centre of this event co-organized by the Friedrich Naumann Foundation and the DPR Korea’s Ministry of Education and hosted by the Ministry of Foreign Affairs were not only theoretical approaches to trade and investment but also international institutions and trade regulations.

The Friedrich Naumann Foundation had invited two economic experts from Germany, Mr. Georg Koopmann from the University of Hamburg and Dr. Lutz Werner who currently serves as Head of Division at the Department for External Economic Policies of the Federal Ministry of Economics and Technology. The seminar was opened by the Friedrich Naumann Foundation’s Resident Representative, Walter Klitz, and the Deputy Director of the General Department for International Cooperation and Exchange at the Ministry of Education. In his congratulatory address, the German Ambassador, H.E. Friedrich Löhr, expressed his support for the Foundation’s training seminars and pointed out that these are not only capacity but also trust building measures. He expressed his hope that the DPR Korea would become an important stakeholder in the international community and economy.

During the first two seminar days, Mr. Koopmann presented theories of trade and driving forces of foreign direct investment. Referring to Krugman and Obstfeld the senior economist from the University of Hamburg emphasized that “probably the most important single insight in all of international economics is that there are gains from trade – that is, when countries sell goods and services to each other, this exchange is almost always to their mutual benefit”. The evolution of the international trading system and the workings of the WTO were also broadly discussed. Contrary to what economic theory would predict, the past had shown that it was not free trade, but rather protectionism, that prevailed in trade politics. Even today, the international exchange of goods and services was still far away from the theoretically ideal state of free trade. In general, the questions of the participants not only reflected their good knowledge of international economics but also were an indicator of what is important to them. For example, the Korean participants asked about the advantages and benefits for less developed countries of being a member of the WTO. They were also interested in the question why Russia has been negotiating its accession to the WTO for more than ten years without any success (so far).

Mr. Koopmann also spoke about the regionalisation of international trade and its implications for the multilateral trading system. With the exception of Mongolia many of the WTO member countries are also member of more than one Preferential Trade Agreement, with multiple memberships quickly growing. And there still is a huge potential: If every one of the WTO’s 150 members were to strike a free-trade deal with every other, the world would be criss-crossed by more than 11.000 bilateral deals, as compared to about 200 currently. At the time of the seminar, a bilateral free trade agreement between the Republic of Korea (South Korea) and the United States was finalised.

Dr. Lutz Werner focused in his presentation on the practical side of international trade, i.e. trade policy and common rules of external trade of the European Union and Germany. He stressed that global trade and cross-border investment are basic prerequisites for increased growth, employment and prosperity in the European Union and Germany. For example, in the German economy, one in three Euros is earned abroad and one in four German jobs depends on the successful export of German products and services. He also pointed out the ways in which the Federal Government supports German companies in their efforts to gain access to and secure their position in foreign markets.

With regard to the promotion of foreign trade and investment, a broad range of instruments is available to provide consultancy to companies planning activities in new markets and to help cushion the specific risks and burdens associated with international business. Since the Federal Ministry of Economics and Technology is in charge of these instruments Dr. Werner could give practical information to the Korean participants. Abroad, state institutions such as the German foreign missions and the German Office for Foreign Trade (bfai) and the state-supported business centres like the German Chambers of Commerce promote foreign trade and investment.

At the request of Korean partner institutions the Foundation had also organized a roundtable on currency policy in Pyongyang at the beginning of April.