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(LEAD) S. Korea moves to curb trade with N. Korea
By Sam Kim
SEOUL, May 13 (Yonhap) -- South Korea is warning companies doing business with North Korea to refrain from new ventures in the communist state because relations between the divided countries may deteriorate further, an official said Thursday.
Unification Ministry spokesman Chun Hae-sung told reporters that the government has urged about 200 companies to refrain from signing new deals or supplying resources to North Korea.
"We thought there were possibilities the companies may suffer unexpected losses under the uncertain and murky circumstances" on the Korean Peninsula, Chun said.
Last month, North Korea confiscated or froze South Korean assets at a joint mountain resort on its east coast in anger over Seoul's refusal to resume cross-border tours.
The move prompted South Korea to pledge retaliatory measures. Inter-Korean relations further eroded amid suspicions that an elusive North Korean submarine attacked a South Korean warship on March 26, killing 46 crew members.
Chun said the ministry warning did not apply to the more than 110 South Korean companies operating in the North Korean border town of Kaesong, where they employ about 42,000 North Korean workers to produce labor-intensive goods.
Inter-Korean consignment trade, in which vendors here supply raw materials to North Korea to be assembled into final products, amounted to US$254 million last year, Chun said. The vendors have favored factories in Pyongyang and the western port city of Nampo.
A multinational investigation is under way in South Korea to examine the suspected North Korean attack on the South Korean corvette Cheonan near the western inter-Korean border. North Korea denies any role.
Observers say the South Korean retaliatory measures are likely to come after investigators announce their results, which are expected as early as next week.
South and North Korea remain technically at war after the 1950-53 Korean War ended in a truce. Their relations have sunk over the past two years as South Korean President Lee Myung-bak has linked massive aid to progress in North Korea's denuclearization.
samkim@yna.co.kr
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