North Korean authorities issued a new order pertaining to the expansion of trade with China just after the Sixth Session of the 14th Supreme People’s Assembly on Feb. 6–7.
The order allows organizations that have been unable to take part in trade since the closure of the nation’s borders to apply for new trade certificates, or waku. However, party-based restrictions on trade appear likely to continue.
According to a high-ranking Daily NK source on Friday, the Ministry of External Economic Relations issued an order to foreign trade organizations and related departments on Feb. 8. Essentially, the order allows the expansion of “state-led trade.”
The order calls for the continuation of the “fine-tuned” system of importing and exporting necessary supplies led by the party-state, while allowing trade solely through the city of Sinuiju, North Pyongan Province. The order also allows organizations not currently taking part in trade to apply for and receive waku.
That is to say, the order essentially allows more organizations to take part in trade, even as the authorities maintain the state-led trade system.
In fact, in his Cabinet report to the Supreme People’s Assembly, Premier Kim Tok Hun said the government would continue to promote efforts to restore the state’s “unitary trade system.”
Kim’s comments seem to indicate that North Korean authorities aim to revive North Korea’s past trading system, where organizations could take part in trading activities only through the state.
In short, trade-related organizations – previously free to trade on their own with little government intervention – would be back under state control.
The state would also tightly control both what gets traded and the income derived from these trade activities.
In related news, following the government announcement that it will be accepting applications for new trade permits, some trading organizations and individual traders previously active in Yanggang or North Hamgyong provinces are trying to make connections with traders based in Sinuiju or Dandong.
In order to receive a waku, North Korean trading organizations have to submit certificates and written trade plans for traders active in China’s Liaoning Province, where Dandong is located.
Because traders previously active in Yanggang or North Hamgyong provinces have been working with counterparts based in China’s Jilin Province, however, it is not easy for them to find new Chinese partners near Dandong.
Meanwhile, Chinese traders cannot easily move from region to region due to China’s COVID-19-related restrictions. Additionally, they suffer supply disruptions and increased transportation costs if they move outside their area of activity, so few Jilin Province-based traders are moving to Liaoning Province.
The source said that even if traders find new Chinese partners and import items into Sinuiju, they would need to pay the transportation costs to ship the goods to Yanggang or North Hamgyong provinces. Because of this, only large enterprises or wealthy individual traders are likely to participate in trade.
He further reported that expectations among traders are generally low despite the new trade measures, and that traders will have to wait to see how much trading the authorities will permit.
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