Imports from North Korea: Existing Rules, Implications of the KORUS FTA, and the Kaesong Industrial Complex [June 23, 2011]   [open pdf - 306KB]

"In early 2011, many Members of Congress focused their attention on U.S. rules and practices governing the importation of products and components from North Korea. Their interest was stimulated by debate over the proposed South Korea-U.S. Free Trade Agreement (KORUS FTA) and the question of whether the agreement could lead to increased imports from North Korea. Some observers, particularly many opposed to the agreement, have argued that the KORUS FTA could increase imports from North Korea if South Korean firms re-export items made in the Kaesong Industrial Complex (KIC), a seven-year-old industrial park located in North Korea, where more than 100 South Korean manufacturers employ over 45,000 North Korean workers. Two concerns expressed by critics are (1) that South Korean firms could obtain low-cost KICmade goods or components, incorporate them into finished products and then reship the goods to the United States with 'Made in [South] Korea' labels so that they would receive preferential treatment under the KORUS FTA; and (2) that such exports would benefit the North Korean government. […] The issue of how best to handle imports from North Korea appears to center on customs controls, cooperation, and enforcement. The complex nature of many types of goods, such as automobiles and electronics, poses a particular challenge for Customs and Border Protection officials to determine the origin of these products."

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CRS Report for Congress, R41843
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