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Trade suspension to cost N. Korea US$280 mln annually: report
SEOUL, June 11 (Yonhap) -- A suspension of inter-Korean trade is expected to cost North Korea about US$280 million annually, a report said Friday, pointing to more pressure on the North's cash-strapped regime in governing its country.
The report comes as tensions continue to escalate after a team of international investigators recently found the North to be behind the deadly sinking of one of South Korea's naval patrol ships by a torpedo attack. Pyonyang denies any role in the incident.
South Korea referred the March 26 sinking -- which killed 46 sailors -- to the U.N. Security Council last week. All trade with the North has been suspended with the exception of an industrial complex in the border town of Kaesong.
According to the report by the state-run Korea Development Institute (KDI), the loss estimate is based on North Korea's trade with South Korea last year, but excludes figures for the Kaesong industrial complex.
The loss was calculated with regard to a $234 million surplus the North posted in general trade last year and US$50 million profits from trade of processed goods, the report said.
"Excluding the Kaesong complex, the immediate impact will be felt in general trade that belongs to commercial exchanges and processed goods trade," the report noted.
General trade accounted for 15.6 percent of inter-Korean trade last year, while processed goods made up 25 percent. The ratio of the Kaesong complex was the largest at 57.3 percent, the report said. Last year, inter-Korean trade totaled US$1.68 billion.
The report said that a suspension would have a more negative impact on the North, considering South Korea is the communist county's second-largest trading partner.
The North depends on inter-Korean trade for 32.8 percent of its total external exchanges, while the ratio for South Korea stood at 0.24 percent, according to the report.
The KDI said that the North will be pushing to find alternative trade partners to fill the holes, but it would be tough considering its main export items to the South consists mostly of agriculture products, coal and zinc.
"The first country on its mind might be China, which is its No. 1 trading partner. But China does not desperately need those items sold in the South and it is already exporting them," the report said.
kokobj@yna.co.kr
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