EU shuns discussion on NKorea enclave at trade talks

(SEOUL) - The European Union has shunned discussions on South Korea's proposal to include a North Korean industrial park in their proposed free trade agreement (FTA), officials said.

South Korea wants the FTA to cover goods made at the park in the North's border town of Kaesong since 25 of the EU's 27 members have diplomatic relations with Pyongyang.

South Korea has also pushed the issue since it failed to gain clear consent from Washington for its inclusion in negotiations between the two countries which concluded a free trade pact in late June.

As free trade talks began here this week, European officials insisted this was an issue to be tackled in political discussions, South Korea's chief negotiator Kim Han-Soo told reporters late on Monday.

"At talks with the European Union, our side stressed the importance of the Kaesong industrial complex," he said.

"They expressed their understanding but said this is an issue that should be handled by the EU executive committee's foreign affairs department," he said.

Meanwhile, the London-based Financial Times reported Tuesday that European businesses have warned their leaders not to play politics with trade and exclude the park from any trade agreement with Seoul.

BusinessEurope fears EU employers would be at a disadvantage if goods produced at South Korean factories in Kaesong were classed as southern-made, it said.

In a letter, BusinessEurope's secretary-general Philippe de Buck, asked David O'Sullivan, head of the European Commission's trade directorate, which is leading trade talks with Seoul, to ensure Kaesong is excluded, it said.

"I would like to express our concerns about the risk of unfair competition from products manufactured in the Kaesong industrial zone in North Korea -- an area which is likely to remain off-limits for European companies given the current political situation in that country," de Buck was quoted as saying.

South Korea sees Kaesong as a flagship project to reform the North's moribund economy and ease the massive costs of any eventual reunification.

During a visit to Kaesong after a rare inter-Korean summit in Pyongyang this month, South Korean President Roh Moo-Hyun called it a place where the two Koreas "become one and work together for joint development."