Seoul rejects Pyongyang`s demands

South Korea rejected the North`s demands for sharp increases in wages and rent involving a joint industrial complex in Gaeseong, North Korea, during their third round of talks yesterday.

Negotiators from the two sides exchanged views on the operation of the industrial park and the North`s detention of a South Korean worker.

In previous talks, the North demanded a four-fold wage increase for its workers and a 31-fold raise in rent. It would lift monthly wages to $300 per worker from the current $70-80, and the rent to $500 million from the $16 million South Korean developers paid when the park opened in 2004.



Kim Young-tak, who led the South Korean delegation, explained Seoul`s position on the cost issue and demanded the North release the detained worker, Seoul officials said.

On Tuesday, President Lee Myung-bak said after the summit meeting with U.S. president Barack Obama in Washington that the North`s "unreasonable demands" will not be accepted.

Most South Korean companies in Gaeseong, which have invested tens of billions of won to build and run factories there, claim that $300 in monthly salaries would mean they would have to pull out from the industrial complex.

Lower wages and the language issue were just about the only comparative advantages Gaeseong had over Chinese towns, according to the companies. Unlike in China, South Korean firms in Gaeseong had to bring construction equipment and material from home because the North lacks adequate equipment or material to build the factories in the first place. It even lacked electricity.

The joint park was born out of the first historic inter-Korean summit in 2000 and continued to grow under South Korea`s liberal governments, despite the North`s first nuclear test in 2006. More than 100 South Korean firms currently operate there, making clothes, kitchenware, electronic equipment and other labor-intensive goods with about 40,000 North Korean employees.

But unraveling political relations have taken their toll on the businesses. A clothing manufacturer withdrew this month, marking the first pullout by a South Korean firm from the industrial park.

Kim Young-tak gave a lengthy explanation on why the release of the detained South Korean Yoo Sung-jin is a top priority.

Yoo, an unmarried man in his 40s, was arrested on March 30 on charges of criticizing the North`s political system and trying to instigate a North Korean female worker to defect to the South. He has been denied access by South Korean officials since his arrest.

Watchers doubt there will be any room for negotiations, with few signs of compromise from both sides.

Unlike the previous round, Seoul headed to the talks with a clear position after Lee rejected the North Korean demands as "unacceptable" during his summit with Obama.

Unification Minister Hyun In-taek acknowledged the last-remaining inter-Korean venture is now at a critical moment.

"One step you take and one stone you lay in today`s talks will be crucial to inter-Korean relations. In that sense, I ask you to remain cool-headed during the talks," Hyun told the delegation before its departure.

Hyun has said Seoul is willing to build dorms and nurseries for North Korean workers, mostly women in their 20s and 30s, as part of the demands put forward by North Korea along with the wage and rent hikes. (sophie@heraldm.com)

By Kim So-hyun