North Korea's Foreign Trade Amount in the First Half of 2000

(Unit: US$1000, %)

2. Recent Trends in N.K.'s Foreign Trade by country

(Japan)

The total trade amount between North Korea and Japan in the first half of 2000 was recorded at US$225.12 million (JPY27016.723 million). Exports to Japan reached a sum of US$120.68 million, up 37.7% from the same period of the previous year, while imports from Japan showed no less than a 61.4% increase at US$144.3 million. This rapid increase of trade between the two countries was affected by recent favorable conditions in political and diplomatic relations, such as December's resumption of diplomatic conferences following a North Korean announcement three months earlier that promised a temporary suspension of local missile testing. This encouraged a resumption of humanitarian food assistance from Japan to North Korea. In addition, North Korea is in the process of recovering from its economic crisis and the operation ratio of its domestic industry is experiencing a rising trend.

North Korea's export to Japan was recorded at US$120.68 million, up 37.7% from the same period of the previous year. Aquatic products were recorded as the largest export item (as in the previous year), at an amount of US$44.7 million, up 35.3% from the previous year. This comprised 37.1% of the total trade amount. These figures show that cooperation within the fishing industry between the two countries, which started from last year, is continuously expanding.

Of the traded aquatic products, the export of baby clams occupies 60% of the total export amount at US$26.99 million, followed by crabs (US$6.38 million), clams (US$2.06 million), and sea-urchins (US$2.04 million). Articles of apparel and clothing, one of the main processed items for export to Japan, increased by 30.3% compared to the previous year, and occupied 26.6% of the total export amount. This sector was led by the manufacture of men's and boy's suits, jackets, and pants. Electrical instruments were dominated by the processing of transformers (US$6.25 million -> US$8.95 million) and insulated wire (US$2.27 million -> US$2.34 million), which is estimated to have resulted from an increase in the operating rate of processing factories in North Korea. Especially noteworthy is the fact that rice straw export, typically one of the North Korea's main export items, reduced sharply while iron and steel products rapidly increased. In particular, non-alloyed pig iron (US$5.92 million), which did not show any export results last year, began export to Japan. In the meantime, rice straw exports were drastically lowered after the onset of foot and mouth disease in the beginning of the year, and were also affected by Japan's import relationship with Chinese rice straw (US$7.11 million -> US$4.36 million). As for mineral product exports, anthracite was exported to Japan along with magnesium to a total amount of US$2.42 million.

North Korea's imports from Japan reached US$144 million, up 61.4% from the same period of the previous year, and the largest import items registered as vehicles, parts and accessories thereof for the second consecutive year. The import of vehicles increased by 81.7%, led by used cars (US$10.58 million), trucks (US$ 8.38million), and buses (US$2.41 million). Rice import (39,893 tons), classified as an "other" item, clocked in after vehicle imports, reaching US$18.38 million. It is estimated that North Korea was partly supplied with food from Japan, following their promise at the North Korea-Japan Red Cross Conference in last March to assist; this falls under the aegis of the World Food Program (WFP). Electrical product imports increased by 40% compared to the previous year, led by permanent magnets to manufacture transformers (US$3.71 million), generating sets and rotary converters (US$3.36 million), insulated wire (US$1.84 million) and others. In addition, fabric piece import for textiles manufacture (such as wool fabrics) reached US$11.57 million, and US$9.39 million in heavy fuel oil (45,665 kl) was imported from Japan in order to supply the KEDO.

North Korea and Japan made efforts to normalize their relationship during the 9th and 10th friendship conferences held in March and August respectively this year. The 11th conference will commence in Peking as of October 30. It is expected that Japan will actively launch negotiations with North Korea despite the negative factors which still prevail in the nation. In terms of economic cooperation, trade between North Korea and Japan is expected to briskly rise this year as Japan has agreed to donate 500 thousand tons of rice (from the end of this year to early next year) in addition to its guaranteed 100 thousand ton food assistance gift of last March. Furthermore, it seems that the increase in the trade of processed goods will exert an influence on the general trade market.  

North Korea's Main Export Items to Japan (more than US$1 million)

(unit: US$1,000, %)

North Korea's Main Import Items from Japan (more than US$1 million)

(unit: US$1,000, %)

* Source: World Trade Atlas, Report of KOTRA Officer in Charge of Trade

(China)

The total amount of North Korea's import trade from China in the first half of 2000 registered at US$172.83 million, up 14.9% from the same period of the previous year. This demonstrated an overall increase in import activity in opposition to the consecutive downward trend which has typified recent market activity (1999 showed a 20.9% decrease from 1998 figures). However, in the first half of 2000, exports to China registered a decrease (by 20.8%) in line with a trend of decline from the previous year (a 40.9% decrease during the same period). The export decrease toward China is fundamentally caused by the fact that export products with commercial value are not produced at all.

Main export items to China are lumber (US$2.54 million), iron & steel (US$2.89 million), petroleum (US$1.12 million), and marine products (US$330 thousand - Alaska pollack and US$240 thousand - cod). Wood products including lumber showed a 29.8% decrease compared with the previous year, effected by the embargo on material lumber executed by North Korean authorities.

On the other hand, imports from China overcame the decreasing trend of the previous year (a 17% decrease compared with the same period of 1998) and recorded a relatively sharp increase (19.8% compared with the same period of 1999) along with import expansions of grain (48.6% increase), organic chemical materials (28.5% increase), machinery (62.9% increase), electrical products (73.3% increase), weaponry (356.1% increase) and others. Though grain imports subsided last year, they sharply increased by dint of grant aid from China. Also, the remarkable import increase in chemical products, machinery and electrical & electronic products runs counter to the notion that production in the heavy chemical industry is briskly gaining ground.

In the meantime, a number of imports suffered a loss in volume, including milling industry products (31% decrease), vegetable and animal oils and fats (52.3% decrease), fertilizers (58.4% decrease), and vehicle parts (24.5% decrease). It is judged that the decrease in fertilizer import is due to North Korea's expanded domestic demand for such products on the back of agricultural assistance from South Korea.

North Korea's Main Export Items to China (more than US$100,000)

(unit: US$1,000, %)

* Source: China Customs Statistics, World Trade Atlas

North Korea's Main Export Items to China (more than US$2 million)

(unit: US$1,000, %)

(Thailand)

North Korea and Thailand maintained at least a US$30 million trade level during every year in the mid 90's; this rapidly decreased in 1998 to a US$ 10.53 million level, due to aggravated economic conditions in Thailand which were provoked by an Asia-wide economic crisis.

In 1999, the trade level recovered its average level of US$37.95 million, and this year shows a US$69.57 million trade just in the first half (261.5% increase from the same period of the previous year). What is especially noteworthy is that as much as US$7.78 million of this balance is derived from the trade of petroleum & related products, which were not exported to Thailand in the previous year at all. Much of this is estimated to be from the processed products of crude oil.

Other main export items include capacitors, iron & steel products (flat-rolled products), electronic integrated circuits, man-made fibers and others. Import items from Thailand comprise the trade of polycarbonates (US$6.43 million), sugar cane (US$4.72 million), wool yarn (US$3.78 million), data input/output equipment (US$3.71 million), telephone and TV components (US$3.19 million) and others. This record shows that polycarbonates became the largest import item, in spite of having no import record at all in the previous year.

Although Thailand has traditionally played an important role as a food base, North Korea's 1999 rice imports from Thailand remained at a constant level of US$106 thousand, and had only attained a mark of US$54 hundred by August of this year. This is because North Korea's credit purchases of rice (US$90 million) from Thailand are still unsettled. The forecast is, that if the trend of the first half of this year is maintained, Thailand will leap into the position of 3rd strongest trading partner following Japan and China.

(India)

The total trade amount between North Korea and India in the first half of 2000 registered at US$61.63 million, a 10% decrease from the same period of the previous year. Exports to India attained only a level US$1.85 million, which is a whopping 91.2% decrease from the same period of the previous year, although imports from India increased by 25.5% to hit US$59.78 million.

The rapid decrease in export amounts to India was caused by general downward trend for main export items on the whole, including pig iron, steel, organic chemicals, and machinery etc. This downward trend is in addition to an export decrease in electronic products (US$11.31 million in the first half; US$12.75 million per annum) to a total of US$190 thousand.

The increase of imports from India was greatly affected by the trade of edible oils, which totaled a sum of US$18 million at a remarkable 264% increase compared with the same period of the previous year. North Korea's main import items from India include cotton yarn, drugs & medications, organic chemicals, dyes, edible oils and perfumery etc. Currently, the import of drugs & medications is resting at US$1.03million, although last year's import amount registered at US$12.18 million. Indian cotton yarn has achieved a steady ranking as one of the top import items backed up by its low price.

(Hong Kong)

The total trade amount between North Korea and Hong Kong in the first half of 2000 reached US$55.54 million, up 8.3% from the same period of the previous year (US$51.28 million). North Korea's trade to Hong Kong has been continuously decreasing since 1992, although it did surge up to a level of US$123.78 million in 1997.

The trade balance is slowly regaining the annual amount reached during the early 90's, increasing the importance of Hong Kong as one of North Korea's main trading partners. In particular, the role of Hong Kong as a supply base for goods and materials is expanding, as North Korea's imports from Hong Kong experience a continuous increase.

North Korea's main export items to Hong Kong are comprised of plastic and its related products (US$4.42 million), fiber fabrics (US$1.58 million - polyester, US$1.41 million - polyurethane), bovine leather (US$1.16 million), electronic integrated circuits (US$1.04 million) and others.

What is especially noteworthy is that gold exports from North Korea, which reached US$12.30 million last year, had only met a level of US$810 thousand as of the first half of the year. Although Hong Kong has demanded more gold imports in the latter half than is usual, it is expected that this year will register a major decrease in imports compared with the previous year.

Hong Kong's Trade Results to North Korea in the First Half of 2000

(Unit: US$1,000, %)

(Russia)

Trade results between North Korea and Russia during the first half of 2000 registered at US$ 26.31million, a 14.6% decrease from the US$30.82 million from the same period of the previous year. Exports to Russia totaled US$1.57 million, a 29.4% decrease from the same period of the previous year, while imports from Russia recorded a 13.5% decrease of US$24.74 million.

North Korea's export items toward Russia include machinery (US$550 thousand), transport equipment (US$320 thousand), magnesium (US$260 thousand), fiber products (US$170 thousand), and electronic products (US$100 thousand) etc. It is estimated that machinery and electronic products from Japan and China were exported to Russia by intermediary trade.

Ultrasonic fish finders (US$3.87 million) were recorded as the largest single import item. Other main import items include transport equipment (US$3.74 million), iron & steel (3.74 million), machinery (US$3.65 million), fertilizer (US$2.63 million), petroleum (US$1.73 million) and others. The first-ever import of ultrasonic fish finders reflects an increasing demand for fishing equipment as North Korea's fishing industry is getting activated.

Also, it is estimated that the import of transport equipment (tractors, trucks etc.) and machinery (machine parts and internal-combustion engines) reflects a demand increase for farmland development and factory maintenance.

As for the relationship between the two countries, Russian Foreign Minister Igor Ivanov visited North Korea in last February to sign the 'New North Korea-Russia Friendship Treaty' (provisionally signed by the Russian Foreign Vice-Minister last year), which served as a groundwork to clear away the uncomfortable relations of the past. It is expected that further economic exchanges will be activated in the near future, as Russian President Vladimir Putin visited North Korea in July for the first time as a Russian leader. It was he who adopted the 'North Korea-Russia Joint Declaration' after holding summit talks between the two countries, where they discussed: economic cooperation between the two countries for the repair and maintenance of factories constructed with the support of the former Soviet Union, forestry and fishery cooperation, reconnection of the inter-Korean railroad to the Trans-Siberia Railroad (TSR), natural gas and oil pipelines, and other matters. However, possible economic cooperation between North Korea and Russia is fundamentally limited by Russia's economic crisis, and the unsettled attitude of North Korea's foreign policy toward Russia.

(Singapore)

In the first half of 2000, the total trade amount between North Korea and Singapore was recorded at US$22.26 million, a 14.2% decrease compared with the same period of the previous year. The trade decrease in the first half was greatly affected by a decrease of imports from Singapore, which registered at only US$20.45 million, down 17.2% from the previous year (US$24.70 million).

Although exports to Singapore rose with a 47% increase to US$18.1 million, the export amount is still not so remarkable. North Korea's main import items from Singapore include tobacco, petroleum products, aluminum ingot, soy-bean oil, copper products, computer parts and peripherals etc. What is especially noteworthy is the rapid decline for imports of petroleum & its products (formerly the largest import item from Singapore), which decreased by 88% compared with the same period of the previous year.

In the meantime, tobacco imports sharply increased (US$4.95 million->US$15.10 million) to move into position as the largest import item, and machinery imports such as excavators and fiber machines also saw a sharp increase (US$2.74 million->US$5.29 million).  

(Bangladesh)

Trade between North Korea and Bangladesh in the first half of 2000 resulted in a balance of US$17.65 million, a 46.8% increase compared with the previous year's US$12.03 million. Traditionally, North Korea maintains a trade surplus toward Bangladesh and this year also shows that export to Bangladesh reached a mark of US$14.25 million, up 24.7% from the previous year.

As for North Korea's export items, fiber products (US$480 thousand ->US$3.69 million) and paper products (none->US$3.11 million), which sharply decreased last year, began and upward climb, while machinery exports (US$2.95 million ->US$3.09 million) rose slightly. North Korea's imports from Bangladesh registered at US$3.40 million, a sharp increase from the previous year's US$600 thousand, led by leather (US$450 thousand->US$1.82 million) and articles of apparel (US$140 thousand->US$1.29 million).

(The United Kingdom)

In the first half of 2000, the total trade amount between North Korea and the U.K. registered at US$14.12 million, up 13.7% from the previous year's US$12.42 million. While North Korea's export balance to the U.K. decreased to US$1.01 million, down 28.4% from the previous year's US$1.42 million, imports from the U.K. increased by 19.1% to US$13.10 million compared with the previous year (US$11 million). North Korea's main export items to the U.K. are articles of apparel (US$401 thousand), carton box manufacturing machines (US$175 thousand), and plastic (US$159 thousand). Its main import items from the U.K. are machinery (US$2.6 6million) and electrical & electronic products (US$1.5 3million), recording 20.3% and 11.7% of the total import amount respectively. Meantime, paper products (US$1.23 million) and precious metals (US$1 million) were imported to the tune of more than one million dollars each.

It is expected that diplomatic relations between the two countries will soon be normalized, as North Korean Foreign Minister Paek Nam-sun sent a letter of proposal for a friendly relationship to Robin Cook, Foreign Minister of the U.K. last September. The U.K. responded by expressing its intention of a treaty of amity with North Korea in October. 

3. Estimates and Prospects

Increase of food and energy resources

North Korea's import structure is centered around the inducement of goods and materials (including food and energy resources) in order to overcome its economic crisis, and it has intensively injected its limited foreign currency funds into the acquisition of food since the middle of the 90's. During this era the food crisis was aggravated, but in the last year, North Korea has showed signs that it is overcoming this extreme food shortage - something which has been the largest road block to the recovery of its economy - on the back of support from international societies and favorable crop results etc. Accordingly, it could use even more foreign currencies in purchasing energy resources. Also in the first half of this year, it was revealed that (as its food condition was improved thanks to assistance from the international community including Japan and China), North Korea promoted the input of resources to normalize industrial production by increasing its import of energy resources threefold. This includes factors such as crude oil for the operation of national factories. The latter half of the year is also prospected to see an increase in industrial production as South Korea, Japan and other countries are planning to assist with the donation of additional food to North Korea.  

Expanded object production centering around the heavy chemical and processing industries

North Korea's import items show that the import of capital goods (such as vehicles and machinery as well as raw and subsidiary materials - including materials for processing industry and heavy chemical industry) is increasing. Accordingly, an analysis shows that North Korea is expanding its object production by centering around the heavy chemical and processing industries for a second consecutive year. The object economy seems to be in a process of recovery as exports from the fiber industry (where production had been in a downward trend) are increasing in particular with exports to Japan. In addition, the import of machine parts and chemical materials is rising, as the repair and maintenance of factories becomes a priority.

Trade amount this year to hit a US$200 million level

Based on the first half of 2000, North Korea's trade balance reached US$850 million, which is no less than a 28% increase from the previous year. Although the trade amount includes assistance from the international community, it is estimated that the trend of economic recovery is continuing for its second consecutive year, and that trade will also experience this tendency to rise in the latter half of the year. Production and export of goods will also surely increase in the latter half, as imports are rising in the field of capital goods (including machinery and transport equipment, raw materials, subsidiary materials, and energy resources). As well, from the point of international factors, North Korea's foreign trade environment will see positive effects as the South-North economic cooperation swings into active movement. These beneficial repercussions will be doubled through improved relations with the U.S. and Japan, as well as by efforts to normalize diplomatic relations with the EU. Furthermore, considering the fact that North Korea's trade has accelerated more in the latter half of the year than in the first half, and that Japan and the international community are expanding assistance for North Korea, it is prospected that the foreign trade amount this year will reach the US$200 million level.