[Asia Economy Reporter Yoo In-ho] The situation in which the inter-Korean direct rice trade, promoted by the government in 1991 to improve inter-Korean relations, faced difficulties due to opposition from the U.S. agricultural sector was revealed on the 15th.
At the time, the negative stance of the U.S. agricultural sector on inter-Korean direct rice trade was known, but detailed consultations between the South Korean and U.S. diplomatic authorities regarding this issue had not been confirmed until now.
The declassified diplomatic documents released by the Ministry of Foreign Affairs on this day show that the rice trade pursued in 1991 by South Korea’s Cheonji Trading Company with North Korea’s Kumgangsan International Trade Development Company became a major issue in South Korea-U.S. relations.
In March 1991, Cheonji Trading Company signed a contract with Kumgangsan International Trade Development Company to exchange 100,000 tons of rice for 30,000 tons of North Korean anthracite coal and 11,000 tons of cement.
At the time, Foreign Minister Lee Sang-ok instructed the ambassador to the U.S. on April 5 to explain the transaction to the U.S. side, emphasizing that “this is not trade between countries but a barter exchange between South and North Korea, and it does not disrupt the U.S. overseas rice export market.”
The U.S. Embassy reported that after explaining to the Korea desk officer at the State Department, “there seemed to be no particular objections,” but the State Department’s attitude changed abruptly during a meeting on April 17.
The State Department asked about media reports that the total rice trade volume was 100,000 tons and stated, “The U.S. Rice Milling Association and others are concerned that direct trade between South and North Korea could set an undesirable precedent in the international rice trade order, and there are further concerns that this transaction might be just the tip of the iceberg.”
In response, the government said, “If the issue is continuously raised only from a commercial perspective, it could negatively affect domestic public opinion in South Korea,” but the U.S. Department of Agriculture continued to raise objections.
On April 18, the head of the USDA trade division expressed dissatisfaction with South Korea’s position shown at the end of 1990 during the Uruguay Round negotiations and said, “Rice exports to North Korea are also causing concerns in the U.S.” during a meeting with the U.S. Embassy.
The government held a countermeasure meeting in May and decided on a response plan stating, “If the U.S. side blocks the export of 100,000 tons of rice between South and North Korea, it could provoke anti-American sentiment among the Korean people, and efforts will be made to gain understanding.”
The plan also included a note to “be careful not to leak the consultation process with the U.S. in light of the U.S. interest in the rice issue.”
At the South Korea-U.S. Foreign Ministers’ meeting held at the State Department on July 2, this issue was also a major agenda item.
Robert Zelik, Deputy Secretary of Economic Affairs at the State Department, pointed out, “If the rice trade volume increases further or if North Korea re-exports Korean rice without South Korea opening its domestic rice market, it will be even more difficult to convince stakeholders such as the U.S. rice producers.”
Eventually, on July 18, the U.S. notified that “basically, the U.S. does not oppose rice trade between South and North Korea, but similar transactions should be conducted within frameworks such as GATT or FAO.”
However, the government was negative about this approach, as it was not easy to secure exemptions from GATT.
In the end, a ship carrying 5,000 tons of rice from Cheonji Trading Company arrived in North Korea at the end of July, but thereafter, inter-Korean relations cooled, and due to concerns about trade friction with rice-exporting countries including the U.S., inter-Korean rice trade did not expand significantly.
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