INVOLVING THE DPRK IN NORTHEAST ASIA REGIONAL ECONOMIC AND ENVIRONMENTAL COOPERATION

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NAPSNet Special Report

Recommended Citation

Mark J. Valencia, "INVOLVING THE DPRK IN NORTHEAST ASIA REGIONAL ECONOMIC AND ENVIRONMENTAL COOPERATION", NAPSNet Special Reports, January 06, 1994, https://nautilus.org/napsnet/napsnet-special-reports/involving-the-dprk-in-northeast-asia-regional-economic-and-environmental-cooperation-2/

              INVOLVING THE DPRK IN NORTHEAST ASIA

          REGIONAL ECONOMIC AND ENVIRONMENTAL COOPERATION



                                 by



                          Mark J. Valencia

                            Senior Fellow

           Program on International Economics and Politics

                          East-West Center

                        Honolulu, Hawaii, USA






                            prepared for

            The Northeast Asia Peace and Security Network



                            January 1994





DRAFT  01/06/94





copyright Nautilus Institute





 Contents


                                                                                                                             
Page

Executive 
Summary..........................................................
..............1

I.   
Introduction.....................................................
.........................6

II.  Opportunities and Suggestions for the United States . . . . 
. . . . . . . . . . . . . . . 10


  A.     Constraints and Negative Implications of Cooperation . . 
. . . . . . . . . . . . .15


  B.     Go Slow:  Support Existing Initiatives . . . . . . . . . 
. . . . . . . . . . . . ..........16

III. Regional Economic Cooperation:  The Vision, the Reality,

  the Possibilities 
.................................................................
..........18


  A.     The Current Level and Composition of Northeast Asian 
Trade . . . . . . . . 19

                 Northeast Asia Trade with the

                    European Community (EC) . . . . . . . . . . . 
. . . . . . . . . . . . ............20

                 Intraregional Trade in Northeast Asia. . . . . . 
. . . . . . . . . . . . .......... 21

                 North Korea's Economic Situation . . . . . . . . 
. . . . . . . . . . . . ..........24


  B.     Ongoing and Proposed Regional Economic Initiatives . . . 
. . . . . . . . . . . 25

                 The Northeast Asia Economic Forum. . . . . . . . 
. . . . . . . . . . . . . .....26

                 An Association of Northeast Asian Provinces. . . 
. . . . . . . . . . . . . ...27

                 A Northeast Asia Economic and Social Commission. 
. . . . . . . . . . .  27

                 A Northeast Asia Development Bank. . . . . . . . 
. . . . . . . . . . . . . ......28

                 An International Free Trade Zone . . . . . . . . 
. . . . . . . . . . . . . .........31

                 The Tumen River Area Development Project . . . . 
. . . . . . . . . . . . . 32


  C.     Sectoral Cooperation .                                                                              
37

                 A Northeast Asia Labor Market. . . . . . . . . . 
. . . . . . . . . . . . . .........37

                 Regional Transportation and Communication 
Planning . . . . . . . . . . . . 38

                 Shipping:  Transnational Issues and Possible

                    Cooperative Responses . . . . . . . . . . . . 
. . . . . . . . . . . . . ..............40

                 Air Traffic Management . . . . . . . . . . . . . 
. . . . . . . . . . . . .............. 43

                 Energy Cooperation:  Joint Ventures in Petroleum

                    Exploration and a Northeast Asia Energy 
Consortium. . . . . . . . . .  44

                 Joint Ventures . . . . . . . . . . . . . . . . . 
. . . . . . . . . . . . .................... 47


  D.     Motivations for and Obstacles to Regional

         Economic Cooperation .                                                                              
48

IV.  Environment Cooperation:  Emerging Trends . . . . . . . . . 
. . . . . . . . . . . . . .52


  A.     Issues   . . . . . . . . . . . . . . . . . . . . . . . . 
. . . . . . . . . . . . . .....................52

         1.      Regional Economic Cooperation, Trade and

                 the Environment. . . . . . . . . . . . . . . . . 
. . . . . . . . . . . . . ................52

         2.      Transfrontier Air Pollution (Acid Rain). . . . . 
. . . . . . . . . . . . . .......55

         3.      Marine Pollution . . . . . . . . . . . . . . . . 
. . . . . . . . . . . . . .................56

                        Status of Marine Pollution in North Korea 
. . . . . . . . . . . . ...... 56   

                        Transnational Issues and Possible 
Cooperative

                           Responses. . . . . . . . . . . . . . . 
. . . . . . . . . . . . . ...................63

                        Transboundary Oil Spill . . . . . . . . . 
. . . . . . . . . . . . .............. 65

                        Nuclear Waste Dumping . . . . . . . . . . 
. . . . . . . . . . . . ............ 66

         4.      Fisheries. . .                                                                                        
67

                        The Issues. . . . . . . . . . . . . . . . 
. . . . . . . . . . . . ..................... 67    

                        Yellow/East China Seas. . . . . . . . . . 
. . . . . . . . . . . . .............. 67

                        Sea of Japan. . . . . . . . . . . . . . . 
. . . . . . . . . . . . . ...................69

                        Existing International Regimes. . . . . . 
. . . . . . . . . . . . ........... 70

                        Cooperative Approaches. . . . . . . . . . 
. . . . . . . . . . . . ............. 71

         5.      Protection of Shared Vulnerable Marine Animals

                 and Habitat. .                                                                                      
75


  B.     Regional Environmental Initiatives . . . . . . . . . . . 
. . . . . . . . . . . . . .......76

         1.      Recent Developments. . . . . . . . . . . . . . . 
. . . . . . . . . . . . . ............76

                        The North-West Pacific Region Action

                           Plan (NOWPAP). . . . . . . . . . . . . 
. . . . . . . . . . . . ............... 77

                        UNDP/GEF Program on Prevention and 
Management

                           of Marine Pollution in East Asian Seas 
. . . . . . . . . . . . . ......80

                        Intergovernmental Oceanographic 
Commission

                           (IOC/WESTPAC). . . . . . . . . . . . . 
. . . . . . . . . . . . . ............82

                        Northeast Asian Environment Programme

                           (ESCAP/UNDP) . . . . . . . . . . . . . 
. . . . . . . . . . . . . ............87

                        UNDP's Environmental Components of the

                           Tumen River Project. . . . . . . . . . 
. . . . . . . . . . . . ............. 89
                   INVOLVING THE DPRK IN NORTHEAST ASIA

           REGIONAL ECONOMIC AND ENVIRONMENTAL COOPERATION


                          Executive Summary

  The dissipation of Cold War tension and the convergence of 
emerging trends in Northeast
Asia--economic regionalism, natural economic territories, 
cooperation on environmental
protection, and in implementation of the Law of the Sea 
Convention--present opportunities for
involving North Korea in regional economic and environmental 
cooperation.

  Ongoing regional economic initiatives that include North Korea 
are:

  the Northeast Asia Economic Forum--a highly successful NGO 
devoted to facilitation of research, dialogue and dissemination 
of information on economic cooperation in Northeast Asia.

  the Tumen River Area Development Project (TRADP)--an 
international free trade zone at the trijunction of Russia, North 
Korea and China which proposes to combine complementary factor 
inputs such as Russian and Mongolian resources, Chinese and North 
Korean labor, and Japanese and South Korean capital, technology, 
managerial expertise and markets.

Proposed are:

  an Association of Northeast Asian Economies--a loose 
association of province level officials and their relevant staff 
mandated to establish the "rules of the game," set regional 
product standards, coordinate cross-border infrastructure 
development plans and help close the information gap constraining 
regional decision-making.

  a Northeast Asia Development Bank--a regionally focused 
institution which would finance, arrange for financing of 
infrastructure and "start up" projects, and trade, upgrade 
financial capabilities and function as a clearing union.

Sectoral cooperation might include:

  a regional labor organization to monitor and manage labor flows

  a transportation and communication planning forum to discuss, 
coordinate and prioritize

  national infrastructure projects necessary to enhance regional 
economic cooperation

  developing a mechanism to improve shipping safety, ship-sourced 
marine pollution,

  prevention and clean up, and contingency planning.

  coordinating air traffic management

  a Northeast Asia Energy Consortium--to promote a consensus on 
energy saving, diversification of supplies, integration of 
networks, nuclear safety, and environmental protection, and to 
enhance security of energy supply and demand, to examine the 
feasibility of large transnational energy projects, and to 
transfer technology and know-how joint ventures in petroleum 
exploration, production and refining, e.g., between North Korea 
and South Korea

  Regional cooperation on environmental issues might include:

  trade-environment linkages, e.g., setting and enforcing a 
common environmental regulatory framework for products, 
production processes and resource extraction methodologies, 
perhaps following the environmental principles of the TRADP, 
promotion of environmentally-friendly "green" industries, and 
common environmental negotiating positions vis-...-vis trade 
organizations monitoring, combatting and evaluating the impact of 
transboundary acid rain preventing marine pollution by 
harmonizing national policies, laws and regulations, and 
developing contingency plans for dealing with transnational oil 
spills monitoring and cleaning up dumped nuclear waste in the Sea 
of Japan ensuring sustainable development of fisheries through 
multilateral dialogue, research, and possibly establishment of a 
formal fisheries management mechanism protection of shared 
vulnerable marine animals and habitat

Ongoing regional cooperative environmental initiatives which 
involve North Korea include:

  the United Nations Environment Programme's Northwest Pacific 
Region Action Plan (UNEP/NOWPAP) for the wise use, development 
and management of the coastal and marine environment

  the United Nations Development Programme/Global Environmental 
Facility (UNDP/GEF) Program on Prevention and Management of 
Marine Pollution in East Asian Seas which includes China and 
North Korea in its efforts to support the participating 
governments in the prevention, control and management of marine 
pollution at both the national and regional levels

  the Intergovernmental Oceanographic Commission's Subcommission 
for the Western Pacific (IOC/WESTPAC) which defines regional 
problems and implements programs for regional marine scientific 
research, and facilitates regional exchange of scientific data, 
training and education

  the Northeast Asian Environment Programme which promotes frank 
intergovernmental policy dialogue on environmental problems of 
common concern to the region as a whole, information sharing, 
joint surveys and collaborative research and planning

  In engaging North Korea in the economic and environmental 
sectors, the United States
should support those ongoing initiatives in which North Korea is 
already participating, which also
involve China, and which show potential for success.  The United 
States should encourage Japan
to lead new initiatives.

  Thus in the economic sector, the United States might support 
the Northeast Asia
Economic Forum and the Tumen River Area Development Project while 
encouraging Japan to
take the leadership in discussions on an Association of Northeast 
Asian Economies, a Northeast
Asian Economic and Social Commission, a Northeast Asia 
Development Bank, a regional labor
market, a regional transportation and communication forum on 
Northeast Asia shipping and
navigation issues, and on regional air traffic management.

  Similarly in the environment sector, the United States might 
support implementation of
the UNEP/NOWPAP and the UNDP/GEF--the latter through its U.S.-
Asia Environmental
Partnership, while encouraging Japan to lead and support regional 
cooperation on trade and
environment issues, acid rain, fisheries management and 
protection of valuable and vulnerable
species.  A current serendipitous opportunity U.S. involvement 
with North Korea might be U.S.
assistance in monitoring and/or retrieving the dumped Russian 
nuclear submarine reactors in
North Korean waters.
I.   Introduction

  The amelioration of political tensions in Northeast Asia and 
the internationalization of the
world economy are stimulants for economic cooperation in 
Northeast Asia.  Positive
developments include Sino-Russian rapprochement and economic 
cooperation between South
Korea and both China and Russia.  The nuclear issue remains a 
significant obstacle to improved
relations between the DPRK (North Korea) and the rest of the 
region.  However it should be
remembered that prior to the surfacing of this issue, the general 
trend was toward an incipient
North Korean economic "opening," and improved political 
relationships with the United States,
Japan, and most dramatically, South Korea.  Indeed there is a 
school of thought in South Korea
that believes Pyongyang's attitude is slowly becoming more 
positive and that North Korea's
tentative quest for foreign investment and diplomatic recognition 
should be supported.

  In this region, geoeconomic patterns are rapidly replacing 
existing geopolitical alignments. 
Indeed, a "soft" regionalism may be emerging--associations that 
lack organizational structure but
instead are based on the flow of capital, technology, goods and 
people across ideological-political
boundaries.  The region is also being affected by several 
emerging global trends--economic
regionalism, the growth of natural economic territories (NETs), 
regional cooperation on
environmental protection and on implementation of the provisions 
of the Law of the Sea
Convention.  These trends present opportunities for involving 
North Korea in regional economic
and environmental cooperation.

  Multilateral organizations in the Asia-Pacific region have 
increased from nearly nil in the
1940s to more than 70 in the 1980s, including the Pacific 
Economic Cooperation Council (PECC)
and the Asia-Pacific Economic Cooperation grouping (APEC).  In 
earlier years, Asia-Pacific
regional organizations largely originated outside the region to 
assist in the development of nations
within the region.  Indeed the region previously obtained and 
maintained what cohesiveness it
had through bilateral arrangements between smaller states and 
their protectors, especially the
United States.  More recently, the impetus to establish regional 
organizations has originated
much more often from, and has been directed by, the nations 
within the region as self-help
initiatives.  This regional multilateralism is relatively new to 
Asia and more regional "self-help"
associations can be expected.

  As a consequence of the amelioration of political and 
ideological tensions, a new
phenomenon is emerging in Asia--natural economic territories 
(NETs).  This cross-border
utilization of economic complementarities for rapid growth in 
trade, investment, technology
transfer and division of labor can be spontaneous and driven by 
private enterprise such as the
"Greater China" NET--Hong Kong, Taiwan and southern China.  
Others are largely the result of
governmental or intergovernmental initiatives designed to combine 
the distinct labor, capital and
natural resource endowments of adjacent subregions.  In Northeast 
Asia a broad NET may be
emerging which includes northern and western Japan, the Russian 
Far East, Manchuria, North
and South Korea and Mongolia.  This NET is centered on the Tumen 
River valley at the
trijunction of China, Russia and North Korea, and has the backing 
of those governments as well
as Mongolia, South Korea and UNDP.

  Regional environmental cooperation is a "growth industry" in 
Northeast Asia.  The 1992
Earth Summit officially known as the UN Conference on Environment 
and Development brought
environmental awareness to the highest level of government.  In 
its aftermath, China, Japan,
South Korea and even North Korea have been busy establishing new 
institutions, commissions,
agencies, and regulations to enhance environmental protection.  
Transnational issues--both global
and regional--are receiving renewed attention and the necessity 
of cooperation on issues such as
acid rain, transportation and dumping of toxic wastes, marine 
pollution and ecosystem and
fisheries conservation has become obvious.  UNEP's Regional Seas 
Program which targets 12
regions including 140 coastal states has now initiated a 
Northwest Pacific Action Plan
(NOWPAP) including North Korea, covering the Sea of Japan and the 
Yellow Sea. 
ESCAP/UNDP have also launched regional environmental initiatives.

  Nevertheless, poorer countries continue to argue that poverty 
is the main cause of
environmental degradation and that what they need is "trade not 
aid."  They want environmental
issues to be linked to the GATT process, more technology transfer 
at affordable prices, new
definitions of intellectual property rights, and large infusions 
of "green" aid.  Although
developing countries reject the principle of attaching 
environmental conditions to lending and aid
programs, the trend is clearly in that direction, and both 
countries and multilateral lending
institutions take strongly into account environmental aspects in 
making their aid and grants.  For
example, the Asian Development Bank has decided that 50% of its 
financing must go to projects
which list environmental or social goals as their principal 
objectives.

  The Law of the Sea Treaty has now been ratified by the 60 
countries necessary to bring
it into force in 1994.  The Convention heralds a new era of 
transnational rule making regarding
national rights and responsibilities in the oceans and serves as 
a framework within which nations
exercise these rights and fulfill their responsibilities.  
Article 122 of the Convention calls for
states bordering semienclosed seas like the Sea of Japan and the 
Yellow Sea to cooperate with
each other in the implementation of various Treaty provisions.  
The venue for addressing issues
of ocean law and policy is thus moving from the global to the 
regional level as nations within
regions such as Northeast Asia recognize that global standards 
and regimes may not adequately
address their special circumstances of physical geography, uses 
or policies.  These factors are
leading to an incipient marine regionalism and maritime regime 
building in Northeast Asia.
II.  Opportunities and Suggestions for the United States

  Northeast Asia and the North Pacific area almost unique for 
their lack of regional
institutions.  This impoverishment reflects the conflicts among 
the governments in the region,
particularly the divided countries--Korea and China--which create 
enormous problems of
membership.  There is however a gradual development of a thin net 
of regional institutions
covering the region in the economic, environmental, and to a 
lesser degree the political arenas,
but within a broader Asia-Pacific framework.  Economically, the 
principal broad-gauged
nongovernmental institution is the Pacific Economic Cooperation 
Council (PECC), which grew
out of a 1980 conference in Canberra.  The intergovernmental 
Asia-Pacific Economic Cooperation
forum (APEC) followed in 1989 and consists of annual ministerial 
meetings and 10 working
groups.  The heads of government met in a "leadership conference" 
alongside the APEC
ministerial meeting in Seattle in November 1993.  PECC includes 
among its membership all the
major North Pacific economies (although North Korea and Mongolia 
do not yet participate), but
the APEC does not include many smaller nations--and Russia.

  Although solutions to divided states and regional problems are 
primarily the responsibility
of the parties immediately concerned, they cannot be resolved 
solely by those parties since
external states are also involved, directly or indirectly.  Thus 
solutions to Northeast Asian
regional issues must be sought through a series of concentric 
arcs:  the immediate parties, the
vitally interested external nations, and the regional or 
international organizations that can exercise
influence or provide assistance.  Present trends provide an 
unequalled opportunity to think boldly
and to be innovative about solutions in general and about regime 
building in particular.  I would
argue that United States and Japanese support for this effort 
would be in their long-term interest. 
The important question is which should take the lead on what 
specific initiatives.

  America's stated overall policy for the Asia/Pacific region is 
to help build a "New Pacific
Community"--a vision that sees America actively engaged in 
multilateral economic, political and
security processes.  To this end America will promote confidence-
enhancing measures and
regional initiatives that reduce tensions.  Potentially prominent 
among these are economic and
environmental initiatives.  To achieve this vision, all vestiges 
of the Cold War in Asia must be
erased, including the tension on the Korean peninsula.  It is 
thus vital that every effort be made
to bring North Korea into the international community.  The major 
carrot that can be dangled in
front of Pyongyang is the prospect of diplomatic relations with 
the United States and the West,
the lifting of economic sanctions, and foreign cooperation in the 
economic development of the
country.  To start the process of international socialization and 
normalization, the United States
should take a comprehensive approach which includes support for 
regional economic and
environmental initiatives involving North Korea.

  The United States has yet to articulate specific policies for 
the economic and
environmental sectors in Northeast Asia.  However it does have 
several relevant global initiatives
in these sectors.  It is a very active member APEC--an economic 
grouping established to better
manage the effects of growing interdependence in the Pacific 
region.  And it is a member of the
Asian Development Bank and has reluctantly agreed to an increase 
in the Bank's cash backing. 
Also, the U.S. Agency for International Development sponsors the 
United States-Asia
Environmental Partnership program (US-AEP)--with a total expected 
funding of US$500 million
over five years.

  The Executive Director of the APEC Secretariat is an American--
a former Ambassador
to the South Pacific.  APEC senior officials oversee 10 working 
groups on topics such as human
resource development, regional energy cooperation, marine 
resource conservation,
telecommunications, transportation and fisheries.  The human 
resources development group seeks
ways to exchange information among Asia-Pacific economies in 
business administration,
industrial training and innovation, project management and 
development planning and promotes
university partnerships between U.S. and Asia/Pacific 
universities, outreach and cooperative
education activities.  The regional energy cooperation group 
develops cooperative projects which
as a regional database on energy supply and demand, and exchanges 
views on coal utilization,
technology transfer, and resource exploration and development.  
The marine resource conservation
group exchanges information on policy and technical aspects of 
marine pollution, advancement
of integrated coastal zone planning, and dealing with red 
tide/toxic algae problems.  The
telecommunications group compiles information on each member's 
telecommunications
development activities and its policies and regulatory 
environment, and explores ways to develop
regional networks and capacity building.  The United States leads 
the transportation group which
studies and recommends ways to improve infrastructure, and 
facilitate safe and secure movement
of passengers and freight.  The fisheries group surveys 
cooperation in the development of
fisheries resources.  An APEC Eminent Persons Group is developing 
a strategy on trade
facilitation which includes cooperation on environmental 
policies.

  The US-AEP partners to solve environmental problems in Asia and 
the Pacific; links
businesses, communities and governments on both sides of the 
Pacific in public-private,
nongovernmental sector partnerships; mobilizes appropriate U.S. 
environmental technology,
expertise and financial resources; coordinates participation of 
25 U.S. government departments
and agencies; and leverages public, private and nongovernmental 
sector resources.

  The US-AEP program provides services in four areas:

  Professional and organizational development:  training, 
fellowships and exchanges for Asian and American professionals 
and technical assistance for specific environmental problems

  Technology cooperation:  opportunities for Asians to contact 
providers of U.S. environmental goods and services and Americans 
to learn about business opportunities through US-AEP-funded 
technology cooperation offices in Hong Kong, India, Indonesia, 
Korea, Malaysia, the Philippines, Singapore, Taiwan and Thailand

  Environmental and energy infrastructure:  information, advisory 
services and innovative financing methods for clean power, water, 
waste water, municipal solid waste and hazardous waste projects 
in Asia and the Pacific

 Biodiversity conservation:  grants that support efforts of local 
people to analyze and use their natural forest and marine 
resources for subsistence and commercial purposes while 
conserving the region's biodiversity.

  US-AEP also sponsors Environmental Action Teams that respond to 
specific
environmental problems in Asia.  The Teams bring together U.S. 
environmental experts to
undertake short-term assignments.  They are led by experts from 
the United States Environmental
Protection Agency (EPA) and may include members from other 
federal or local government
agencies, international organizations, businesses, and 
nongovernmental organizations.  Action
Team findings are shared with US-AEP partners to coordinate 
appropriate follow-up activities.

  The East-West Center, a non-profit think-tank on Asia-Pacific 
issues funded by the U.S.
Congress and headed by Michel Oksenberg, has organized several 
conferences involving
participants from North Korea on security issues and on 
transnational ocean management
problems and opportunities.  These latter meetings were held in 
Vladivostok in 1990 and Dalian,
China in 1991.

A.   Constraints and Negative Implications of Cooperation

  There are several obvious obstacles to U.S. involvement in 
economic or environmental
cooperation in the region, particularly that involving North 
Korea.  The Clinton administration
views Japan as an increasingly important global partner in 
peacekeeping, in promoting
democracy, in protecting the environment and in addressing major 
challenges in Northeast Asia. 
The economic sphere is of course Japan's strength and its 
capacity to lead in this sector is
obvious.  However it is not clear that Japan is politically able 
or willing to lead.  Nevertheless,
Japan may not fully welcome a U.S. regional leadership role in 
these sectors.  And despite the
stated U.S. policy, there is a possibility that different 
agencies of the U.S. government are
sending conflicting signals to Japan regarding the U.S. view on 
Japan taking a leadership role in
some sectors.  Thus if the United States truly wishes Japan to 
assert more leadership and
responsibility on the world stage, it should not be seen as 
undercutting Japan's leadership efforts
in its own region.  The United States should instead be seen as 
unambiguously approving and
strongly encouraging Japan to take the lead in these areas.

  Second, North Korea could be a troublesome partner.  It may 
withdraw, reject or greatly
complicate American and others' initiatives in these sectors if 
it feels--as it often does--that there
is a "conspiracy" to engage or "subvert" it.  For North Korea to 
be productively involved in any
regional economic and environmental initiative would require a 
sea change in its attitude and
openness as well as a massive capacity building effort to bring 
its relevant personnel up to speed. 
Third, Russia's involvement in regional initiatives makes 
progress unpredictable and complicated
because of its own instability and tensions, and conflicting 
interests between the Russian Far East
and the center.  Finally, "regional" cooperation could convey a 
sense of exclusivity to those left
out.  But on the other hand, familiarity may breed contempt.

B.   Go Slow:  Support Existing Initiatives

  Given the risks associated with engaging North Korea and the 
need to encourage and
permit Japan to lead in its own region, the United States should 
support those economic and
environmental initiatives in which North Korea is participating 
and which show potential for
success, and encourage Japan to lead new initiatives.  Those 
ongoing initiatives which also have
China's participation and support should be particularly targeted 
since China may be helpful in
encouraging North Korea's positive participation.  Thus in the 
economic sector, the United States
might support the Northeast Asia Economic Forum and the Tumen 
River Area Development
Project while encouraging Japan to take the leadership in 
discussions on an Association of
Northeast Asian Economies or a Northeast Asia Economic and Social 
Commission, a Northeast
Asia Development Bank or a Northeast Asia window in the Asian 
Development Bank, a regional
labor market, a regional transportation and communication forum 
or plan, on Northeast Asian
shipping and navigation issues and air traffic management.

  As a longer term goal, on the economic front, the United States 
should consider
encouraging North Korea to join the APEC process initially as an 
observer in some of the more
relevant working groups, particularly human resource development, 
and transportation which is
led by the United States.  In the interim the United States might 
extend support to the Northeast
Asia Economic Forum, perhaps funding a meeting to explore the 
whole question of cooperation
with North Korea, including North Korea's sectoral interests and 
priorities.  In particular, it could
support the Tumen River Area Development Project, funding 
American firms to contribute to the
pre-feasibility studies and the environmental impact assessments.

  Similarly in the environment sector, the United States might 
support UNEP's NOWPAP
and UNDP/GEF's Programme--the latter through its US-AEP while 
encouraging Japan to lead and
support regional cooperation on trade and environment issues, 
acid rain, fisheries management,
and protection of valuable and vulnerable species.  

  If intergovernmental agreements prove unacceptable or difficult 
for North Korea, then U.S.
support should be extended to nongovernmental initiatives like 
that of the East-West Center.  A
current serendipitous opportunity for U.S./North Korea 
cooperation might be to offer assistance
in monitoring and/or retrieving the dumped Russian nuclear 
submarine reactors in North Korea's
exclusive economic zone.  This could even be a joint U.S.-Japan 
initiative under the
environmental aspects of its global partnership.  Japan should 
also be strongly encouraged to join
the Tumen River Area Development Project at least in a modest 
manner.
III. Regional Economic Cooperation:  The Vision, the Reality, the 
Possibilities

  The economic potential of Northeast Asia can be perceived by 
imagining the region as
one country--without political boundaries and economic barriers--
and the implications of this
vision for transportation and infrastructure as well as the 
matching of needs and assets.  For
example, Russia could export to South Korea by railway through 
North Korea.  North Korea
could export to South Korea directly without transshipment via 
Hong Kong or Japan.  Planes
could fly between Japan and China directly over the Korean 
peninsula.  And China and perhaps
Mongolia could use the Tumen River for direct access to the Sea 
of Japan.

  The region has many potential complementarities.  Russian 
resource-based industry,
Japanese and South Korean heavy and technology-intensive 
industries, and Chinese and North
Korean light industry and agriculture all complement one another.  
Japan and South Korea have
considerable capital, technology, and managerial skills.  North 
Korea and China have abundant
cheap labor.  And the Russian Far East, Mongolia, northeast 
China, and North Korea have
abundant natural resources--coal, oil and gas, timber, fresh 
water, minerals, and agricultural
products.  The Russian interest in developing its Far East and 
the focus of Japan and South Korea
on overseas resources and markets are also converging incentives.

  Moreover, the Sea of Japan coasts of all Northeast Asian 
countries are underdeveloped. 
Indeed, there is a gap in economic development between the 
eastern and western coasts of the
Korean peninsula, between the eastern and western coasts of 
Japan, between the European and
Asian parts of Russia, and between the southeastern and 
northeastern coastal areas of China. 
These activities need to redress these imbalances to reduce 
internal factionalism and political
tension.  Northeast Asian economic cooperation could help 
ameliorate these economic differences
by stimulating development around the Sea of Japan.  Thus 
political relaxation, potential
complementarities, existing and potential transportation 
linkages, and historical development
patterns make Northeast Asian economic cooperation a real 
possibility.

  But research is needed to determine which specific industries 
and industrial sectors are
likely to be enhanced.  A more detailed analysis is needed of 
what specific kind of cooperation
should be pursued.  It may be unlikely that simple liberalization 
of the sort being promoted in
ASEAN and APEC would do much to stimulate growth in the Russian 
Far East or North Korea
or northeast China.  Rather, the cooperation might need to take 
the form of strategic industry
policy wherein countries target specific industries for 
nurturance through trade, credit, training
and other policies.  There will also be a need to invest in 
infrastructure, both physical and social. 
Industry targeting and infrastructure cooperation are especially 
important in promoting sustainable
rather than just higher growth development.  And in this context, 
there is need to know what the
environmental impacts of different policy packages/approaches to 
regional economic cooperation
are likely to be.

A.   The Current Level and Composition of Northeast Asian Trade

  Countries and parts of countries in Northeast Asia have wide 
differences in their degree
of international specialization and approach integration with 
outside markets very differently
(Table 1).  South Korea has by far the greatest export share in 
output, high exports per capita and
the highest recent growth rate in exports per capita.  North 
Korea is way below optimum on all
measures of international specialization.  China and Northeast 
China also have a long way to go
to achieve a respectable per capita export effort.

  Northeast China's exports are greater than the Chinese average 
export effort but is still
far behind the more open economies.  Russia lags far behind the 
United States and Japan in
export effort and the same is likely true for the Russian Far 
East.  Though comparable data are
not available, a reasonable guess would be that the export share 
and effort are relatively low in
Mongolia and North Korea.  These relative performances show 
clearly the scope for trade
development in developing Northeast Asia and the potential for 
regional cooperation that
facilitates trade development.


  Northeast Asia Trade with the European Community (EC)

  Northeast Asia (including all of China and Russia) has a 
surplus with the EC, due solely
to trade with China and South Korea.  Thus unless a deficit in 
trade in services offsets this
surplus there is a net capital outflow from Northeast Asia to the 
EC.  Northeast Asia has
surpluses with the EC in food and minerals and other resource 
based exports.  Together these
resource based categories account for over 20% of DPRK exports to 
the EC.  Northeast Asia's
surplus in labor intensive production, i.e., the "textiles plus" 
category and the labor intensive part
of other manufacturing is significant--35% of China's large 
exports to the EC are in the "textiles
plus" category and over half of North Korea and three-fourths of 
Mongolia's exports are also in
this category.

  The EC surplus with Northeast Asia is in the more human and 
physical capital and
technology intensive trade categories, such as chemicals and 
metal manufactures--basically heavy
industry, and heavy manufacturing.  Regional economic cooperation 
in Northeast Asia might lead
to import substitution in the heavy industry category as some 
fear, but it could just as well lead
to increased exports of resource based manufactures and skilled 
labor intensive manufactured
goods to the EC (and other developed regions) in exchange for 
consumer goods and capital
equipment, thus increasing trade.


  Intra-regional Trade in Northeast Asia (Tables 2 and 3)

  Intra-regional trade apparently increased steadily throughout 
the 1980s and early 1990s. 
However, the precise extent of intra-regional trade cannot be 
ascertained, since data are hard to
obtain and are unreliable.  There is no trade data for 
clandestine partners, e.g., South and North
Korea, data exists for one year only, and data are not 
disaggregated by parts of countries, e.g.,
Northeast China and the Russian Far East.

  The desired subnational trade coverage is unavailable and thus 
China and Russia must be
substituted for Northeast China and Russian Far East.  Further, 
most intra-regional trade is barter
trade and difficult to price and there is no uniform compilation 
of trade data for developing
Northeast Asia.  Export orientation is low and regional trade is 
low in Northeast Asia--5 to 6%
for developing Northeast Asia.  This ratio might be somewhat 
higher if only the Russian Far East
and Northeast China were included rather than all of Russia and 
China.  Nevertheless it is
woefully below the potential for such trade.  Only Mongolia and 
North Korea have a large part
of their trade with regional partners--mostly the CIS--and both 
have regional deficits.  North
Korea has an even larger deficit than Mongolia (35% of imports), 
but is essentially in balance
with Northeast Asia--its deficit with developing Northeast Asia 
is just offset by its surpluses with
South Korea and Japan.  This is unlikely to continue, since there 
is no way to finance North
Korea's overall deficit.

  Broader regional dependence is larger--23% of developing 
Northeast Asia exports go to
and 14% of developing Northeast Asia imports come from Northeast 
Asia defined to include
South Korea and Japan.  Interestingly enough, developing 
Northeast Asia has a large surplus with
Northeast Asia, although a deficit with the world.  Although 
South Korean and Japanese trade
with developing Northeast Asia is growing rapidly, there is much 
room for improvement in intra-
regional trade, especially given the inherent resource 
complementarities and the experience in
other large regional markets.  This is sufficient reason to be 
highly bullish about any changes,
including regional cooperation possibilities, that would open up 
and so increase economically
efficient intra-regional trade.

  North Korea receives the bulk of its oil from China, especially 
for its military.  A wide
variety of Northeast China exports (coking coal, agricultural 
products, and to a lesser extent,
garments and textiles, chemical products, and tires) also go to 
North Korea.  Jilin province has
a huge surplus with North Korea with food exports largest, 
followed by textiles, light
manufactures and resource based goods.  The small return imports 
are mostly ethnic Korean food
and minerals and other resource based goods.  Jilin's exports 
include automobiles, TVs, sewing
machines and other manufactured goods.  They get back timber, 
rice, seafood and products
transshipped through North Korea from third countries.  
Heilongjiang has essentially zero imports
from North Korea and exports leather, hides, glass, forest 
products and chemicals to North Korea. 
A large change not fully reflected in these data is China's 
conversion of trade with North Korea
from barter to hard currency payments.  In the absence of 
considerable reforms, probably only
possible with international cooperation, either trade will shrink 
to the low levels of North Korean
exports or untenable levels of Chinese financing of North Korea 
must occur.

  North Korea/Russia-Russian Far East trade reflects the command 
economies of both and
the high level of dependency of North Korea.  The latter exports 
agricultural products--fruit,
vegetables, garments, other textiles, steel, metals, and non-
staple foods to Russia and imports
basic necessities such as crude oil and petroleum products, 
coking coal, ores, metal, transport
equipment and machinery.  With Russia's conversion of its trade 
with North Korea from barter
to hard currency payments, that trade has dwindled rapidly.  
North Korea's leaders know that they
must increase exports by improving the professional capabilities 
of North Korean "businessmen"
and the availability of necessary information; create export 
industries based on local raw materials
(processing industries based on comparative advantage and cheap 
labor); and adopting an
appropriate tariff structure.


  North Korea's Economic Situation

  North Korea has lost its export markets in Eastern Europe and 
an important source of hard
currency and technology--East Germany.  Worse, both Russia and 
China have abolished subsidies
on crude oil which North Korea must wholly import, and now 
require payment largely in hard
currency.  For the first time in its history, the country 
experienced negative growth rates--
estimated by South Korean economists at 3.7% in 1990 and -5.2% in 
1991.  Percentage
cchievements of major targets in 1990 ranged from 19% in marine 
products to 54% in fertilizers. 
To partially compensate for its predicament, North Korea reversed 
its long term noncommittal
position and strongly endorsed joint ventures with industrialized 
countries.  In 1992 it passed
three joint venture laws with generous provisions for foreigners, 
designated several cities as free
trade zones, and became an active participant in the Tumen River 
project and in 1993
promulgated legislation allowing foreign banks to trade in North 
Korea.  Its new economic policy
has three primary objectives--agricultural development, light 
industry production, and export
promotion.  North Korea has also agreed to direct trade with the 
South and in 1992, this trade
was at $209 million, the fourth largest after Russia, China and 
Japan.  Such direct trade could
gradually narrow the economic gap between the two and ease the 
pain and dislocations of
unification.

B.   Ongoing and Proposed Regional Economic Initiatives

  At this stage, the key to fostering economic cooperation and 
maintaining momentum is
to keep discussions informal and representation "unofficial."  To 
get the cooperative process
going there is a strong need for unconstrained discussions of the 
many issues involved in the
most politically neutral arena possible.  A frank and open 
interchange reflecting different country
concerns is required to clear the air, improve transparency, and 
establish trust, thus providing the
basis for meaningful compromise.  This applies to discussion of 
the various possible approaches
to regional cooperation and of the specific proposals so far 
presented.  Trial balloons need to be
released and research on the realistic possibilities needs to be 
organized, financed and carried out. 
This is especially important in Northeast Asia, where government 
to government exchanges tend
to involve little more than ideological platitudes and careful 
non-committal statements.  Several
forms of institutionalized nongovernmental organizations (NGOs) 
have been suggested, ranging
from regional centers for information exchange to a PECC-like 
organization including academics
and business representatives, with government officials as 
observers.


  The Northeast Asia Economic Forum, An Association of Northeast 
Asian Provinces, A

  Northeast Asia Economic and Social Commission, and a Northeast 
Asia Development

  Bank, an international free trade zone, and the Tumen River 
Area Development Project

  The Northeast Asia Economic Forum is an NGO formed to 
facilitate research, dialogue
and dissemination of information on Northeast Asia economic 
cooperation.  The forum has
sponsored four conferences to date--three of which were attended 
by North Korean participants--
Changchung in 1991 at which the Tumen River project was first 
mooted to an international
audience; Pyongyang in 1992, a truly landmark event hosted by 
North Korea's Ministry of
External Economic Relations; Vladivostok, 1992; and Yongpyong, 
South Korea 1993.  The
Yongpyong meeting focused on alternative futures for the region, 
cooperative financing of
development, cooperation in planning transportation and 
communication infrastructure, utilization
of labor and institution building, and the role of the private 
sector in these efforts.  The next
conference is planned for Niigata, Japan in 1994.  This NGO 
effort was successful because of
the linguistic and diplomatic skills and network of the founder, 
and its availability at a time when
the world and the region were undergoing a major political 
transformation.

  Differences in the legal, social and paralegal environments 
affecting economic decision
making can best be discussed in a non-governmental setting such 
as the Northeast Asian
Economic Forum.  The "rules of the game" have to be formulated 
and agreed for all forms of
substantive regional economic cooperation, from joint ventures 
through international economic
zones to even eventual EEC type integration.  Achieving a 
consensus on these issues is a
necessary but insufficient condition for economic cooperation.

  However, a formal international commission may be needed to 
take substantive steps
toward codifying the "rules" in existence and to organize 
research and to hold meetings needed
to reach agreement on what cross-border activities will be 
undertaken.  Thus one goal of this
process might be the establishment of a loose association of 
province-level officials and their
relevant staffs--an Association of Northeast Asian Economies or 
Provinces--or alternatively a
Northeast Asian Economic and Social Commission.  Besides helping 
establish the "rules of the
game" and setting regional product standards to ensure consistent 
acceptable quality, such a
regional organization could help in negotiating plans for cross-
border infrastructure development
and close the huge information gap now constraining regional 
decision making.  This objective
could be accomplished by establishing the accepted definitions 
and reporting rules for data
categories, by carrying out training proposals and by providing 
policy research that would serve
decision making.  High on the agenda is research on ways to 
finance the immediate infrastructure
requirements which would promote regional economic cooperation.  
Also needed is a clear image
of the costs and benefits, feasibility studies for various 
proposed projects and agreements.  These
studies should emphasize economic returns, with and without 
economic reforms.  The political
process will supply the weights for the numerous other factors 
that will ultimately be involved. 
At some point an intergovernmental regional association could 
provide an appeals court for
businesses contesting the interpretation of the "rules" of 
regional cooperation or for settling
business conflicts between nationals of the different countries 
involved.

  Another possibility is a Northeast Asia Development Bank 
(NEADB) which could be both
a development lending and a catalyzing institution.  The 
necessary level of domestic and
international banking sophistication for economic cooperation is 
largely missing in developing
Northeast Asia.  A financial system that can clear domestic and 
international accounts is a high
priority.  Although the timing may be in question, funding of 
basic infrastructure and financial
modernization are both necessary conditions for achieving 
Northeast Asia's strong potential for
economic development.  The transportation, communications and 
energy infrastructure projects
needed for sustainable industrial development often involve 
externalities not captured by market
returns, as well as long payout periods that make raising private 
capital difficult--unless the risk
is shared.  Development banks have been more efficient than the 
private banking sector in
organizing project finance of the sort required in Northeast 
Asia, because the development banks
can more often overcome international political barriers and can 
better spread the risks of finance
through effective and skillful development banking.  There is 
also a clear need for "start up" or
seed money loans, both to determine the feasibility of specific 
lines of production and to foster
"learning by doing."  Finally, for rational investment decisions 
to be made and outside investors
to be attracted, there is a need to carry out project related 
research and evaluation and to monitor
lending risks--necessary steps in the banking process.

  Together these preconditions for self-feeding growth suggest 
the value of establishing a
regional development bank servicing developing Northeast Asia.  
Such an NEADB would
facilitate the financing infrastructure and "start up" projects 
by raising and channeling funds,
generating equity capital, serving as a lead broker or guarantor 
of loans, and upgrading general
financial capabilities.  It would have a broader mandate than 
existing multilateral banks, possibly
providing trade finance and clearing services as well.  It could 
also be a clearing union for intra-
regional trade in developing Northeast Asia to economize on the 
reserves held in the region or
to clear transactions internationally.  But this would be 
difficult given that only parts of China
and Russia are involved.  An NEADB could establish regional 
training centers and develop other
ways to help regional nationals learn basic banking skills.

  Even though all countries of the region (except North Korea) 
are already members of one
or more of the ADB, World Bank or EDB, there are at least three 
reasons why a regional bank
is needed.  First, infrastructure projects in Northeast Asia will 
be better planned and carried out
as multinational projects than on a country-by-country basis, as 
required by the charters or self-
imposed lending criteria of the existing banks.  Second, given 
the very different economic
systems involved and the transition problems being faced, it does 
not seem likely that any but
a regionally specialized lending institution will be sensitive 
enough to the region's special
economic requirements and political realities.  Third, staff of a 
regional bank would concentrate
on Northeast Asia and not be continuingly shifting back and forth 
between Northeast Asia and
the many other regions covered by the World Bank, the ADB, or the 
European Development
Bank.  If a separate NEADB is not feasible, an alternative would 
be a Northeast Asia window
or facility within the ADB.

  An NEADB is needed also because of the lack of financial 
systems in developing
Northeast Asia, and high risk premiums charged by private lenders 
and investors.  The functions
of an NEADB would include providing or arranging for long-term 
capital for infrastructure and
large industrial/agricultural projects, privatization of state 
enterprises, and support for the capital
growth of existing businesses and new firms, guarantee loans or 
arrange equity and debt
financing.  An NEADB could also finance trade, provide working 
capital, help the growth of the
service sector, provide loan guarantees to private sector lenders 
thus reducing risk, and establish
a regional clearing union.  The staff of the NEADB would provide 
economic research and
information for these activities and for government and business 
decision-making, thus reducing
information and search costs for the private sector.  It would 
also establish training centers to
teach basic banking skills.

  Japan and South Korea might be expected to fund an NEADB in 
order to influence the
direction and priorities of regional development and to take 
advantage of the economic
complementarities in the region.  Japan could also see an NEADB 
as a means to help mitigate
its conflict with Russia and develop its interests in Northeast 
China while avoiding the suspicion
and resistance that often accompanies its direct approaches.  
Japan may also see it as a means
to draw North Korea out of its isolation and to channel funds to 
it, thus mitigating that potential
threat.

  South Korea could see an NEADB sharing the coming burden of 
modernizing North
Korea, and use it to channel investment there.  It would also 
enhance its entry into the Northeast
China market, thus facilitating its current move to a higher 
technology based industrial structure. 
Taiwan could also be an important source of capital for an NEADB 
and use the bank to invest
in Northeast China.  The United States might provide at least 
moral support to an NEADB
allowing it access to U.S. capital markets and it could use it to 
move capital into North Korea
and Northeast China.  The next step is a careful feasibility 
study of each possibility followed by
meetings of representatives from each of the countries to 
determine whether the possibilities
should be recommended to the relevant governments.

  A complementary approach is an international free trade zone.  
All developing Northeast
Asia's borders could be opened for trade, with only a few 
exceptions--much as trade between the
States in the United States is open.  The North American Free 
Trade Agreement and Europeann
Community (EC) are current examples of such an approach, but 
neither involves parts of
countries, which could require customs check points between the 
Russian Far East and the rest
of Russia and Northeast China and the rest of China.  There would 
have to be a central
committee to establish rules and fix border access as Brussels 
does for the EC.  A large free trade
zone of this sort could yield the maximum benefits possible from 
regional cooperation.  Given
the initial starting point there would probably be much more 
trade creation than trade diversion
in such a zone, particularly in manufacturing and assembly, with 
major growth in productivity. 
More likely--at least initially--is an international free trade 
area limited to some narrow
contiguous cross border enclave of the countries participating, 
as is the case with the proposed
Tumen Project.  Within such a free trade zone a broad range of 
economic functions would be
covered--manufacturing, transshipment, warehousing and storage, 
trade and marketing, regional
headquarters, international finance, services, research, tourism, 
and shopping.

  The Tumen River Area Development Project is the most widely 
discussed regional
version of an international free trade zone.  Ideally, the zone 
or adjacent connected zones would
combine factor inputs and partly processed goods accessed from 
all member countries and
beyond, bypassing normal tariff constraints or quotas, in the 
production of goods for export
outside the zone or zones.  Resources would be imported from the 
Russian Far East, Mongolia,
China and North Korea.  Labor would come mostly from Northeast 
China and North Korea. 
Technical skills and management would come from all members plus 
South Korea or from Japan. 
Capital would mostly come from outside the riverine countries, or 
regions, with Japan joining
Hong Kong, south China and South Korea as the major providers.  
The goods produced would
be sold in the participating countries or exported, either by 
rail to Europe, through a new port at
the Tumen River mouth, or through the container facilities 
planned for Rajin, Troizki or Posyet.

  Benefits for Mongolia and the Russian Far East are that their 
natural resources that
otherwise might remain in the ground would be used to comparative 
advantage and, possibly,
some transfer of technology.  The Russian Far East would also 
gain from the probable increased
demand for its research capabilities and high technology inputs.  
China and North Korea would
have the productivity of its workers increased as well as the 
workers' share of the value added. 
They would also retain training effects and the secondary ripple 
effects of increased employment
and wages.  All members would benefit from any subsidization of 
infrastructure loans used to
get the project underway.  However organized, an important part 
of the Tumen Project will be
the connection of the zone or zones with container port 
facilities in the Russian Far East or North
Korea, or both.  These could involve significant reductions in 
transportation costs as well as
increases in economic specialization for Northeast China.  
Similarly, Mongolia would gain access
to an international port.  And, if the Tumen ports can be 
connected to existing transcontinental
rail routes, there could be further advantages.  South Korea and 
Japan would have access to
developing Northeast Asia's resources.  They would further 
benefit from the additional market
for their machinery and equipment, both in the provision of the 
necessary infrastructure and in
the establishment of the production/fabrication/assembly 
activities in the zone or zones.  And
along with the rest of the world they would benefit from any real 
economies made possible by
zone activities.

  The 1993 UNDP meeting in Pyongyang established the Tumen River 
Development
Corporation, a riparian States Coordinating Committee, and a 
Tumen River Economic
Development Area Advisory Commission.  A draft international 
agreement and a corporate
charter have been prepared.  Remaining tasks include the formal 
signing of the agreements,
establishment of the working capital budget and merchant banking 
war chest, negotiating the
individual land leases, valuation and allocation of the shares 
and commencement of operations.

  However, the project is not without controversy, particularly 
regarding exactly how it will
be organized and managed.  North Korea prefers separate national 
zones with separate national
rules and with a commission representing the three riverine 
countries advising on relations across
the zone borders.  China supports the concept of each riverine 
country ceding sovereignty to
some degree over a portion of its contiguous lands and placing 
the "international" zone thus
created under the supervision of a zonal management corporation, 
with control in the hands of
riverine countries but with board positions open to others.  
Mongolia supports China while the
Russian Far East is closer to the North Korean position, 
apparently because of a belief Moscow
would not approve the loss of sovereignty involved and its fear 
that the project will draw
investment and trade away from its ports and free trade zones at 
Vostochny and Nakhodka. 
South Korea, expected to be an important player in the zone, 
supports the Chinese position

  It will make a considerable long-run difference whether there 
are three contiguous national
free trade zones or one international zone covering the territory 
of three countries and whether
there is a single authority able to grant investment rights, 
settle disputes and be responsible for
infrastructure.  In the scenario of three separate zones, 
problems in moving goods, factors of
production, and money between three national zones could greatly 
restrict what can be
accomplished.  Of course bilateral cooperation is a possibility 
but this would have to be without
UNDP assistance because its interest and funding is for a 
regional project.

  In sum, the Tumen Project has initial government approval and 
serves as an example of
the international free trade zone approach to cooperation.  It 
clearly needs further careful
evaluation, especially as to the advantages or disadvantages of a 
multi-country zone over national
zones.  The main advantages may be that an international 
agreement can be used to push through
otherwise politically difficult reforms, that the necessity of 
working together on a limited basis
may suggest the gains possible from and open the door to more 
general trade liberalization, and
that there may be efficiency gains outside the Zone from the 
increased competition and from the
diffusion of the technology transferred into the Zone.  
Considerable investment capital has already
moved into the area from south China, Hong Kong and South Korea.

  Regardless of the outcome of the Tumen River negotiations, 
North Korea is proceeding
unilaterally with the development of an economic trade zone in 
the Rajin-Sonbong area.  It
believes that the area is very important in the development of 
Northeast Asia and that it can
become an important gateway to Europe.  North Korea also wants to 
turn Wonsan and Nampo
into free port cities similar to Hong Kong, and a free trade zone 
at Rajin could compete with this
plan.  In considering the scale and expansion plans for the 
Rajin-Sonbong zone, North Korea is
taking account of the growing demand in Russia and Northeast 
China for port facilities.  North
Korea sees Russia expanding its trade with South Korea, Japan, 
and the United States and
believes that port facilities in Russia will expand slowly and 
not be able to meet demand.  Also,
Russia's ports are frozen for four months each year.  There will 
also be a growing demand for
a port for northeast China and the route via North Korea to Japan 
is the shortest and most
economical.  China and North Korea have signed an agreement that 
North Korea will develop
its east Chongjin Port and China may use it for 50 years.

  North Korea plans to develop Rajin and Sonbong as commercial 
ports, reaching 750,000
people, including a new city of 250,000 people.  Port capacity at 
Rajin and Chongjin is three
million tons and eight million tons, respectively.  The capacity 
of each port will be increased to
ten million tons with the introduction and modernization of 
cargo-handling equipment and the
expansion of warehouse space.  In the long run, total capacity of 
both ports will be increased to
fifty million tons and a new port of fifty million tons will be 
built at Sonbong, providing a total
port capacity in the area of one-hundred million tons.  Tourism 
will also be stressed as there are
many natural and scenic attractions in the area.  Indeed, North 
Korea hopes to host the 1995
Asian winter games at a site close by.

  The existing rail network has a surplus capacity of 12.2 
million tons:  6.4 million tons to
China and 5.8 million tons to Russia.  The rail expansion 
projects planned in the medium and
long term will increase the network carrying capacity to 158.9 
million tons. In the short term,
existing roads will be widened to nine meters and paved, thereby 
increasing capacity to northeast
China to twelve million tons.  In the longer term, 306 km of 
highways are planned, and cargo
volume on these highways is projected at sixty million tons 
annually.

  The plan foresees zone industries including oil, 
petrochemicals, chemicals, electronics,
food processing, textiles, and garments.  Laws, regulations, and 
facilities in the zone will be
designed to encourage investment by foreign governments and by 
companies and individuals from
foreign countries.  Investments can be made in equipment, goods, 
and technology.  Investors'
assets will be protected legally, as will income and proceeds 
from the operations.  The legal
status of the zone will be proclaimed by government decree.  In 
addition to the transport trade
and manufacturing sectors, the communications, banking, tourism, 
and service sectors will also
be developed.  Given North Korea's present economic problems and 
the dearth of foreign
investment implementation of these plans will certainly be 
difficult and most probably
significantly delayed.

C.   Sectoral Cooperation: Labor, Transportation/Communication, 
Shipping, Air Traffic

  Management, and Energy

  A Northeast Asia Labor Market

  Most models of regional economic development combine abundant 
natural resources such
as in the Russian Far East with cheap labor from China and North 
Korea.  With the economic
and political liberalization of the socialist economies and their 
improved relations with market
economies, there will be an increase in the movement of labor 
from areas of surplus and low
income to those with a labor deficit and better wages.  Internal 
conflict in China or North Korea
could result in massive outflows of population to neighboring 
countries as well as to the United
States.  Such migration to the relatively closed social systems 
of Japan and South Korea may
cause ethnic tension.  Such tension between Russia and immigrant 
North Korean laborers has
already erupted in violent incidents.  And the revelation of 
North Korean prison labor camps in
the Russian Far East has shocked the Russian populace.  
Multilateral arrangements may be
necessary to manage such population movements and to maximize the 
benefits to all concerned. 
The first step would be a network to monitor labor flows within 
the region.  A second step would
be to establish labor training centers and vocational schools 
with language courses and link them
to labor demand and to employment services.

Regional Transportation and Communication Planning

  Transportation and communication infrastructure in developing 
Northeast Asia are far
inferior to that of developed neighbors.  The existing 
transportation network and its concomitant
spatial structure were introduced during the pre-WWII era of 
colonial and territorial expansion. 
Only minor piecemeal improvements have been made since to meet 
immediate needs and to
complete some missing links.  Thus the system lacks a vision and 
the reality of integration.

  Without proper infrastructure in place, it will be difficult to 
attract investors.  If it is in
place in one locale and not in others, then one part of the 
region will be favored over the others
for investments.  This distribution is not likely to reflect 
regional long-run comparative
advantages and will tend to undermine the mutual confidence and 
good will needed for successful
intra-regional trade expansion.  Basically, the issues are how to 
internationalize existing
infrastructure, what new infrastructure to try to finance, how to 
finance it and how to avoid the
competitive or redundant development of infrastructure.

  Another question is how to proceed.  It can be argued that a 
minimally satisfactory
regional transportation and communication infrastructure and 
financial services must be in place
for economic cooperation to proceed.  Another view is that only 
once existing resources are fully
utilized, and participant countries have shown that they can 
cooperate in the management and use
of existing infrastructure, is there a need and justification for 
large new, cooperative investments. 
In this view it is better to let infrastructure development 
follow rather than lead demand. 
Research is necessary to resolve this issue of supply led or 
demand pull development.

  Feasibility studies are also needed for regional projects, such 
as a Trans-Korean Railway
(TKR) connecting North and South Korea.  The railway would start 
from the southern coastal
port cities of Pusan or Kwangyang and pass through the TKR to 
join the China Eastern Railway
or the Trans Siberian Railway.  This route might have a 
competitive edge as a new intermodal
transportation system to Europe.  An extension of this concept is 
to connect the Korean peninsula
and the Japanese archipelago across the Korean Strait by an 
undersea tunnel.  If realized, a
person or cargo could go from Tokyo to London by rail.

  Above all, transport investment in Northeast Asia will play a 
more prominent role than
in any other region in the world.  And more investment in 
transport is required here to achieve
a given development goal than elsewhere.  In particular, more 
attention needs to be given to the
role of transportation within the context of the emerging East 
Asia Development Corridor beyond
the Northeast Asian region.  A regional forum is needed to 
discuss, coordinate, and prioritize
national infrastructure plans.

Shipping:  Transnational Issues and Possible Cooperative 
Responses

  As trade and shipping increase, so will the need for 
cooperative action to address issues
such as freedom of navigation, safety of shipping, marine 
pollution control, vessel accident
contingency planning, coordination of vessel traffic, and 
combatting of piracy.  For the benefit
of all vessels operating within the region, a coordinated effort 
to regulate maritime traffic is
needed.

  The Northeast Asian countries have not participated in many 
international shipping
agreements.  Japan, Russia, North Korea and South Korea are all 
members of the International
Maritime Organization (IMO) and send representatives to the 
technical and legal working
meetings.  However, not many IMO conventions have been ratified 
by all of these nations (Table
4).  Of the 40 conventions, including the IMO convention itself, 
Russia has accepted 28
conventions; Japan, 22; South Korea, only 13; and North Korea, 
only 9.  For example, it is
significant that the International Convention on Maritime Search 
and Rescue has not been
accepted by either North Korea or South Korea.  There is a 1957 
Japan/Russia agreement which
provides for distress assistance at sea.  Yet the best method of 
improving safety at sea and
utilization of the marine highways is through cooperative 
regional arrangements.

  In addition to IMO, several other international organizations 
are active in the maritime
sector.  The International Labour Organization (ILO), an agency 
established to help promote basic
workers' rights, has developed specific conventions relating to 
seafarers.  Of the 36 Labour
Conventions concerning seafarers, Russia has ratified nine and 
Japan eleven.  Unfortunately,
neither North Korea nor South Korea has ratified any of these ILO 
conventions.

  The United Nations Conference on Trade and Development (UNCTAD) 
has also
developed several conventions relating to maritime matters.  
First, the Convention on a Code of
Conduct for Liner Conferences, the primary objective of which is 
the improvement of the liner
conference system, has been signed by South Korea and Russia but 
not Japan and North Korea. 
Second, UNCTAD's U.N. Convention on International Multimodal 
Transport of Goods, designed
to facilitate the continued expansion of international multimodal 
transport, has been signed by
Japan and Russia but not North Korea and South Korea.  Another 
important maritime
organization is the Comit‚ Maritime International (CMI).  The 
principal aims of this
nongovernmental international organization are the unification of 
maritime and commercial law
and the promotion of national associations of maritime law.  
Japan, South Korea and Russia are
members of this organization.

  The first task that might be taken up in establishing entente 
(in the sense of listening to
and comprehending others) is to compile an inventory of maritime 
issues in the region, singling
out those that are not divisive in themselves, but provide some 
advantage for the region and the
participants.  In semi-detente, the solution of some of these 
issues might not even require
goodwill among some of the participants in the process to realize 
the advantages of cooperative
action.  The countries might set aside those issues which raise 
the question of the legitimacy or
illegitimacy of precedent.

  Common interests in rescuing persons in distress at sea and in 
preserving an unpolluted
marine environment are strong inducements to act in concert, even 
if at "arm's length." 
Traditionally, states could agree also to suppress piracy and 
other lawless maritime acts, since
most states favor law and order.  Unfortunately, this area of 
noncontention seems as relevant to
the present as to the past.  Piracy in the East China Sea is on 
the rise and victims have included
North Korean vessels.  But in addition to piracy, modern 
enforcement agencies have to deal with
illicit traffic in narcotic drugs and psychotropic substances, 
maritime fraud, maritime refugees and
immigrants, and unauthorized broadcasting from ships. The states 
bordering the Japan Sea might
easily establish a standing mechanism of some kind between their 
marine law enforcement
agencies (if they have not already done so) or arrive at some 
practical method of collaboration
to detect and suppress such acts.

  Scholarly gatherings are of great value to the process of 
pragmatic cooperation in
maritime matters, as well as in the implementation of the new Law 
of the Sea.  Technical and
other coordinating mechanisms of an informal character, brought 
about by institutions of learning
and professional bodies, are powerful agents of beneficial 
change.  In the very process of
"lobbying," these nongovernmental groups are often influential in 
focusing on new solutions to
old problems and in raising public consciousness of issues that 
are sometimes more than even
governments can easily control (e.g., land-source pollution).

Air Traffic Management

  There are 27 international airports in the region, and 96 
scheduled international direct air
routes among the operating airports (Figure 1).  Airports in the 
region often link with central
cities but not across borders; missing are major conveniently 
located international airports. 
International air routes in operation are highly concentrated 
between 14 Japanese cities and 3
South Korean cities.  The destinations are separated by only two 
hours of air flight time, which
is not greatly different from many domestic routes.  Many lines 
have recently started operations
between Japan and Chinese cities like Beijing and Shanghai, and 
many more are waiting to be
opened.  Air route distances and the area to be served are 
rapidly expanding between Russian
cities, e.g., Khabarovsk and Irkutsk, and South Korean and 
Japanese cities, e.g., Seoul, Niigata,
and Nagoya.  There is no air link between North Korea and 
northeast China although there is
considerable demand.  When South Korean-North Korean relations 
and Japan-North Korean
relations improve, air transportation between them is expected to 
expand greatly.

  The scheduled international air traffic in Asia and the 
Pacific, already one-fourth of the
world's total, is expected to double within 15 years.  But the 
region's airports and navigation
systems are unprepared to cope with current needs as well as 
growing demand.  In particular, the
air traffic management system in Northeast Asia is greatly 
deficient.  The region's nations are
planning, expanding, and building airports to relieve 
overburdened facilities and to meet the
demand created by the region's 10 percent annual rate of air 
passenger traffic growth.  Examples
include the Kansai airport in Osaka, the new Seoul International 
Airport in Youngjongdo, and
the Chep Lap Kok airport in Hong Kong, which is located offshore 
and is trying to become an
international hub accommodating supersonic, intercontinental air 
services.  Regional air traffic
management will become more important and require cooperation.


  Energy Cooperation: Joint Ventures in Petroleum Exploration and 
a Northeast Asia

  Energy Consortium

  In Northeast Asia, a significant improvement in bilateral 
energy relationships has raised
the prospects for multilateral energy cooperation.  Indeed, some 
have called for a Northeast
Asian Energy Consortium (NAEC) to create a climate of confidence 
to provide a framework for
a secure energy supply.

  The uneven distribution of major production factors among the 
Northeast Asian countries
paradoxically indicates mutual benefits can be derived from 
energy cooperation among them. 
Improved relations, regional energy demand and new environmental 
concerns increase the
attractiveness of this mammoth and difficult project.  Russia and 
China with huge oil and gas
reserves need capital, technology and equipment for their 
exploration and development.  Japan,
Taiwan, and South Korea which have the necessary capital, 
technology and equipment need to
lessen their heavy dependence on Middle Eastern oil and diversify 
their energy supplies.  The
mutual benefits would not only be economic.  For example, a gas 
pipeline from its source in
Yakutiya through the Russian Far East and North Korea to South 
Korea and Japan could only
be undertaken through a pan-Northeast Asian agreement on energy 
which would clearly
contribute to better relations.

  An NAEC would be a vehicle for approaching the larger political 
objective of reducing
tension and misperception.  This consortium--possibly with World 
Bank or UNDP support--could
undertake a feasibility study of the proposed gas pipeline 
project examining the engineering
obstacles in sparsely inhabited permafrost terrain, overall costs 
and their comparison with
alternative energy sources, and relevant problems in internal 
Russia/Republic of Sakha and
international relations (Japan/Russia; North Korea/South Korea), 
progress and prospects of
ongoing financial and monetary reforms in the socialist 
economies, environmental impacts, and
allocation of costs and benefits.

  It might be useful to adapt two main ideas adopted by the 
European Energy Charter to
that which could be created in Northeast Asia.  One would be to 
promote a consensus in all
Northeast Asian countries on the central objectives of energy 
policy, such as energy saving,
diversification of supplies, integration of networks, nuclear 
safety, and environmental
conservation.  The other would be to create a political, legal, 
and if necessary, financial
instrument to include substantial transfers of capital, 
management ability, expertise and
technology necessary to rational development of the medium and 
long-term supply and
consumption of energy in Northeast Asia.

  Such an arrangement might be similar to the ASEAN Council on 
Petroleum (ASCOPE). 
ASCOPE was formed in 1975 to promote and extend cooperation among 
state oil
companies/agencies in each ASEAN country.  The Council consists 
of the heads of each national
companies/agencies.  Its impetus was the 1973 oil shock and thus 
an emergency petroleum
sharing scheme was its first priority.  Its major thrust was the 
priority provision of oil by
producers to consumers during times of worldwide shortage and the 
priority purchase of oil by
consumers from producers during a glut.  However, data and 
technology exchanges and joint
training programs soon followed, becoming more comprehensive 
every year.  ASCOPE sponsors
an annual Technical Conference which has become the nexus of oil 
and gas discussions in the
region.  And ASCOPE laid the groundwork for an ASEAN Committee on 
Energy comprised of
the Ministers of Energy of each country which pursues technical 
and policy cooperation.

  There are oil and gas complementarities in Northeast Asia which 
are similar to those in
ASEAN.  There are several potential suppliers in need of 
investment capital and technical
expertise which is in ready supply in other Northeast Asian 
countries.  These latter countries are
also potential markets for the resources and products.  Data and 
technology exchange in
petroleum exploration, development and utilization, joint 
training programs, policy discussions
and a major annual Conference could be a big boost to cooperation 
in this sector and lay the
foundation for more difficult areas of cooperation such as joint 
development in disputed maritime
areas, as well as broader cooperation in the entire energy 
sector.


  Joint Ventures

  Japan and South Korea have almost no hydrocarbon resources of 
their own while the
hydrocarbon potential of China, the Russian Far East and possibly 
North Korea is largely
untapped.  Japanese oil companies have successful joint ventures 
with China and are involved
in the Sakhalin gas project.  Given detente on the Korean 
Peninsula, North/South Korea joint
petroleum exploration and exploitation would be a striking 
possibility.

  Both Koreas need oil or gas to fuel their economies.  North 
Korea is particularly
desperate.  South Korea has the technology and equipment to 
explore and exploit offshore oil,
as well as surplus refining capacity, but has little or no 
petroleum resources.  Apparently oil has
been discovered off both North Korea's west and east coasts.  
North Korea thus has some
offshore oil and gas potential but has little or no capability to 
fully explore, exploit or refine it. 
Until the nuclear issue surfaced, North Korea was tentatively 
exploring joint ventures with South
Korea.  And the February 1992 nonaggression pact between the two 
provides for joint
development of resources and cooperation in science and 
technology.  The two should make a
deal:  South Korean expertise to develop North Korean natural 
resources.  This not only makes
economic sense, but would be a tangible expression of both sides' 
oft-expressed desire for closer
ties.

D.   Motivations for and Obstacles to Regional Economic 
Cooperation

  Japan might see support of developing Northeast Asian regional 
economic cooperation as
a way to helf defuse the North Korea problem.  Tapping a nearby 
source of resources is less
significant but still a factor.  Japan may also desire a nearby 
location for labor intensive
production, given Japan's rapidly changing demography.  And if 
Japan is truly intent on assuming
an international role, it may wish to begin with its own region.

  However there is resistance in Japan's conservative bureaucracy 
to taking on new political
initiatives or committing funds to regional problem solving.  The 
poor relations with Russia
would be another major obstacle, but domestic opposition could 
perhaps be mitigated by the
argument that Japan is supporting a larger group that happens to 
include Russia.  Other reasons
for Japan's not supporting regional cooperation in Northeast Asia 
are the continued Japanese
focus on the "West" and regional stereotypes that may make 
working with Northeast Asia
unattractive to Japanese.

  South Korea could hope that regional economic cooperation will 
help in sharing the
coming burden of modernizing North Korea.  And South Korea's 
economic planners understand
the importance of China to South Korea's long-run economic 
performance and of Northeast China
as an entry point within China.  Regional cooperation could open 
a large market for South
Korea's move to higher technology, and one where South Korea has 
a special locational and
cultural advantage for "learning by doing."  Developing Northeast 
Asia can also provide a home
for South Korea's declining labor intensive production.  The 
major problems are somewhat similar
too Japan's--a negative image of Northeast Asia's capabilities, a 
relative focus on developed
country markets, and a conservative bureaucracy.

  For North Korea, regional cooperation may be seen as the means 
to break out of its
stagnating economic performance as well as help smooth the inter-
generational transfer of
leadership.  An opening that involves cooperating with its old 
"comrades"--China and Russia--
may seem the least threatening path to take.  However, North 
Korea's behavior is rather
unpredictable, which is really also at the core of the nuclear 
issue.

  Creating a financial system that can function at international 
levels either requires action
from Pyongyang or the creation of a regional central bank (like 
the regional Federal Reserve
Banks in the United States) with a certain degree of autonomy.  
North Korea lacks the banking
experience and skills needed for the most rudimentary financial 
activities.  Permitting foreign
banks to locate in North Korea and carry on a general banking 
business as allowed by recent law
is one way to achieve this skill transfer.  But the best option 
is regional cooperation under the
auspices of a regional development bank that would help train 
North Korean personnel needed
to operate regional as well as a domestic banking system.

  Regional trade cooperation could provide a ready market for 
North Korea's marine
products and the labor to process these products into worldwide 
exports with a brand name in
an international free trade zone.  Once underway, the growth 
involved in these activities and the
future opportunities presented could encourage internal migration 
to northern North Korea, adding
a layer of semi-skilled, resource based manufacturing production 
to the economy.  Growth in any
part of North Korea will have ripple effects on the rest of the 
country.  And growth that promises
to add to the hard currency earnings of the country is even more 
necessary and desirable.  Also,
the competitive experience and "learning by doing" in a 
relatively easy market will provide
externalities for the entire country.  North Korea is short of 
capital and a regional development
bank that succeeded in raising funds for infrastructure projects 
and for industrial development that
otherwise would not be available would obviously benefit it.  So 
would any direct foreign
investment attracted by trade cooperation and financial reforms.

  In sum, North Korea can gain from regional economic cooperation 
that fosters greater
international specialization, that generates demand for 
improvements in the physical, policy and
legal infrastructure and gives sometimes needed rationalizations 
for difficult political changes. 
North Korea can also gain from regional cooperation that allows 
inputs to be combined more
cheaply by accessing them throughout the region and that opens up 
economies of scale and
provides opportunities to develop products and technology prior 
to entering world markets. 
Entry, via any cooperative scheme, into even part of the world's 
third largest market, China,
promises present and future benefits.  Additional benefits would 
be capital inflows and
technology brought about directly by regional economic 
cooperation or indirectly through the
optimism for growth created by the fact of regional cooperation 
or even discussion of
cooperation.  Research is needed to identify North Korea's most 
critical needs and the most
efficient manner by which they may be met through foreign 
assistance.

  The benefits to the region from the minimal approaches to 
regional economic cooperation-
-NGOs, intergovernmental conferences on specific sectors or 
regional plans--would not be great,
but neither would the costs.  These forms of regional economic 
cooperation are relatively easy
to implement.  Given the estrangement in the region for so many 
years, any mechanism that
provides knowledge and builds trust will help in advancing 
economic activities that promise real
growth and development for the region.  Sister city programs such 
as Nakhodka-Oakland or even
Berkeley-Pyongyang would be a good start.

  An Association of Northeast Asian Provinces or Economies would 
be a step up in
complexity and commitment.  It would provide a multilateral means 
of building economic
relations in Asia and so help avoid the bilateral issues that 
will continue to cloud such activities. 
Regional cooperation can also contribute to essential domestic 
reforms.  Being exposed to
international competition and to the necessity of survival in 
international markets is one way of
making reforms palatable.  Since the costs of opening to the 
whole world at once may be too
great, a step-wise approach, with the initial competitive market 
limited to developing Northeast
Asia, could ease the way and bring substantial benefits at the 
same time.  An international
commitment to provide information and to establish common 
institutions and rules to govern
economic activities may seem more likely to remain stable than 
action by any one country and
thus also be more attractive to foreign investors.
IV.  Environment Cooperation: Emerging Trends
A.   Issues
1.   Regional Economic Cooperation, Trade and the Environment

  In the past, environmental quality has been balance and traded 
off against economic
growth.  New thinking holds that environment and development 
goals are compatible and should
be integrated whenever possible.  This concept is called 
economically sound and sustainable
development, and it underlies the fundamental consensus achieved 
at the 1992 Earth Summit,
especially in the Agenda 21 and Rio Declarations.

  Increasing intra-regional trade presents new issues for 
regional environmental regulation. 
On the one hand, cooperation tends to accelerate economic growth.  
But without environmental
controls, economic growth increases the rate of resource 
depletion and generates more and more
toxic industrial pollution.  However, nations may be reluctant to 
raise environmental standards
because they may think that rising standards will increase short-
term production or resource
extraction costs, undermining international competitiveness.  
Governments may even try to gain
competitive advantage by seeking foreign investment through low 
or lax environmental
regulations, creating so-called "pollution" or "resource 
extraction havens."  In Northeast Asia,
such as strategy may be especially attractive to nations seeking 
to lure Japanese or South Korean
companies facing increasingly stringent domestic environmental 
regulations or which need foreign
investment to harvest their timber, mineral and marine resources.  
But a patchwork of different
national environmental standards and regulations may impede 
regional economic cooperation by
increasing transaction costs.

  The "pollution/resource extraction haven" strategy has several 
negative implications.  First,
if pursued by all the developing countries of Northeast Asia, a 
"vicious cycle" of standards-
lowering competition could result in regional environmental 
degradation--particularly of air and
water.  Beyond high long-term social and health costs, rapid 
resource depletion and ecological
decline are likely to carry high opportunity costs.  Second, 
companies and industries attracted by
"pollution havens" are likely to be low-growth "sunset" 
industries which face a limited future. 
A development strategy based on non-dynamic companies is unlikely 
to bring technology transfer
and knowledge spillovers which are crucial to sustainable, self-
generating economic growth. 
Third, products manufactured or extracted from 
"pollution/resource extraction havens" may face
import barriers in the increasingly environment and health 
conscious markets of the OECD.  For
example, Northeast Asian timber resources may be especially 
vulnerable to global campaigns by
environmentalist groups such as Greenpeace.

  There are several avenues and benefits to regional cooperation 
in managing the links
between trade and the environment.  First, Northeast Asian 
nations could cooperate in setting and
enforcing a common environmental regulatory framework for 
products, production processes and
resource extraction methodologies.  The central aims of such a 
framework would be to develop
common approaches to the internalization of environmental costs 
into output prices; and to ensure
that the scale of economic activity remains within eco-system 
thresholds.

  Environmental standards could be developed for a range of trade 
and investment-
impacting environmental standards:  environmental impact 
assessments, air and water quality,
waste management, energy use, conservation of bio-diversity.  The 
draft Environmental Principles
articulated by the Third Program Management Committee of the 
Tumen River Area Development
Program could serve as the foundation for a common approach to 
national environmental
management of production.  The benefits of regional standards 
include economies of scale in
information, management and enforcement.  They also eliminate 
"free rider" problems associated
with national standards alone.  It would be crucial, however, to 
build in mechanisms by which
standards could change as new information became available or as 
citizen and consumer
preferences changed.

  Capacities for monitoring and enforcement of (regional) 
environmental standards could
be enhanced by regional cooperation.  Economies of scale could be 
gained in the regional
creation of inspection and certification systems.  A regional 
organizational infrastructure, such
as a Northeast Asian Commission on Trade and Environment, may be 
needed to use scientific
and citizen input both in the setting and the monitoring of 
environmental standards.

  Second, Northeast Asian nations could cooperate in promoting 
environmentally-friendly
"green" industries, including export-oriented industries.  Trade-
environment linkages, in other
words, offer not only new constraints but also new opportunities 
for industry growth. 
Environmental "sunrise" industries might be targeted with 
research and development support,
donor support, and/or domestic credit or other subsidies.  A 
regional eco-label could also be
developed to target "green consumers" in Japan and other OECD 
countries.  Regional cooperation
could also help to promote an international eco-labeling 
framework more conducive to promoting
developing country exports.  Targeted industries should be 
dynamic, high growth, and efficient. 
The additional environmental externalities justify additional 
support.  Further research is needed
to identify regional industry development projects with high 
technological, social, economic, and
environmental spin-offs.

  Third, there is likely benefit in regional cooperation in 
developing common negotiation
postures and positions on environmental regulation within other 
trade organizations, including
GATT, PECC, APEC, and the ISO.  Common positions are likely to 
enhance the bargaining
power of Northeast Asian countries in shaping the environmental 
parameters of trade in the
coming decade.

2.   Transfrontier Air Pollution ("Acid Rain")

  Sulfur emitted from coal burning power plants and factories 
causes acid rain which can
decrease biomass productivity and degrade forests.  The main 
source appears to be China,
particularly Manchuria, and the main recipients are North Korea, 
South Korea and Japan.  Acid
conditions (low pH values) have been measured in Japan and China.  
North Korea may actually
be a source as well as a sink of acid rain.  The exact sources, 
sinks, scale and impact of
transfrontier acid rain is not known.  Ninety percent of sulphur 
emissions can be removed with
current technology, but the question is "who will pay?"  Some 
progress is being made in
monitoring--particularly by South Korea and Japan.  But needed 
urgently are a regional
monitoring system and common methodologies, and baseline and 
ecosystem impact studies.

3.   Marine Pollution

  Status of Marine Pollution in North Korea

  Industrial pollution remains the single most serious marine 
pollution problem of the
country.  North Korea had for many years invested in heavy 
industries along the coast and rivers
which discharge most of their untreated and inadequately treated 
effluent directly into the rivers
and coastal waters.  Major industries include steel mills, 
electronic power generation, fertilizer
plants, petrochemical plants, synthetic fiber and cement 
factories, most of which have been
operational for many years, some as long as 30-50 years.  The 
chemical effluent contains
mercury, cyanide, arsenic, pesticides and other organo-chlorine 
compounds.  The industrial
pollution problem is considerably worse on the east coast than on 
the west coast.  These
problems are caused by the lack of treatment facilities and 
obsolete or overused equipment. 
Major efforts must be made to help the nation to improve their 
treatment and production facilities
in the chemical complexes.  The lack of national financial and 
technical capability compounds
the situation.

  Although there are no data quantifying the amount of industrial 
effluent entering the marie
environment, and nor reliable information on the concentration of 
toxic substances, available
reports suggest that the long-term effects could seriously impair 
the quality of the coastal
environment and possibly cause human health problems, 
particularly in areas close to the
discharge points.  Indeed, given the large number of factories 
along the coast, the cumulative
effects of toxic substances could be high.  In addition there 
have been incidents of oil
contamination from tanker spills in the 1980s.

  After UNCED, the Government reorganized its administrative 
structure to strengthen its
planning and administrative organs so that they could be more 
responsive and effective in
addressing the environmental issues of the country.  The 
establishment of the State Environment
Commission is the result of such efforts.  The Commission is made 
up to 10 departments:  (1)
Environmental Monitoring and Development, (2) Environment 
Supervision, (3) Ecological
Conservation, (4) Meteorological, (5) Hydrological, (6) 
Oceanographic, (7) Science and
Technology, (8) Planning, (9) External Relations, and (10) 
Communication.  The functions of
each department are still being finalized.  The Commission 
reports to the Committee of
Environment which is made up of various cabinet ministers and is 
chaired by the Deputy Prime
Minister.  The Government has recently enacted "The Law of 
Environmental Protection of the
Democratic People's Republic of Korea."  Specific legislation 
regulating the discharge of oils,
solid and liquid wastes from vessels, port management, industrial 
waste treatment, and
agricultural waste has been drafted.  The Government has also 
recently developed an
Environmental Action Plan which is under review.  The action plan 
includes coastal and marine
pollution prevention, control and management.

  In many respects, most of Northeast Asian Seas are a "mare 
nulluis" in terms of
environmental protection.  Sensitive political relations and 
uncertain boundaries have not been
conducive to information-sharing and cooperation on many matters, 
let alone the environment. 
This situation has made it difficult to evaluate the nature and 
extent of support for international
marine environmental activities or even national positions 
thereon.

  Except in response to occasional tanker accidents that have 
destroyed coastal fisheries,
and severe public health effects from untreated industrial 
effluents, there has been only minimal
overt recognition by the Northeast Asian coastal states in recent 
years of the long-term effects
of land-source, vessel, and other pollution on people and the 
marine environment.  Limited
regional law drafting and policy development respond chiefly to 
the IMO and Law of the Sea-
related initiatives.  Scientific questions on factors affecting 
the health of marine species and
ecosystems are poorly articulated, and the relevance of national 
laws and policies to regional
environmental protection has not been seriously considered by the 
coastal states.

  Review of national legislation shows little evidence of laws 
and regulations being
developed with specific reference to natural features or 
processes that may affect pollutant
transport, circulation, transformation, and dispersion.  Laws and 
policies are couched in terms that
separate legal justification and intent from the reality of 
people, ecosystems, and place.  This is
not unique to this region but is more important here, because the 
apparent failure to relate law
more directly to nature through improved scientific understanding 
supports a general impression
of regional disinterest in marine environmental issues.

  In the region, there was, and still is, except in some coastal 
areas, little public awareness
of the importance of marine environmental protection, and central 
governments still tend to see
environmental problems as peripheral issues to be acknowledged 
but effectively ignored. 
Whatever attempts were made to draft regulations have been 
hindered by the need to balance the
interests of competing national and province-level sectors, such 
as coastal and offshore shipping
interests, fishing and fish processing enterprises, coastal 
inland development construction and
water conservancy bureaucracies, port and harbor administrations, 
and agriculture and industrial
ministries.

  Prospects for improved transnational cooperation in resource 
development and use may
depend upon better understanding of the potential for improved 
marine environmental protection
in both coastal and open-sea areas.  The most successful efforts 
to deal with marine
environmental problems are carefully nurtured with simultaneous 
institution-building, scientific,
and treaty-drafting activities at the regional level, but this 
can come about only with strong and
sustained littoral state support for international organizational 
leadership.

  Several generalizations can be made about marine pollution 
protection in Northeast Asia. 
First, the degree of concern with marine pollution is quite 
varied, and actual practice is even
more diverse.  Japan is clearly the leader in marine pollution 
policy and prevention in the
Northeast Asian region, but even it is now backsliding in policy 
and enforcement.  Marine
pollution awareness and prevention are much more recent phenomena 
in China, South Korea, and
Taiwan, and although their laws and regulations are strict, there 
is a wide gap between the law
and its implementation and enforcement.  Although marine 
pollution is becoming a critical
problem in these countries, industrial and economic growth 
remains the dominant national ethos. 
Russia is just developing an environmental awareness and a 
regulatory structure to protect its
environment.  And North Korea has included marine environmental 
protection in its recent Law
of Environmental Protection.

  Poor political relationships and environmental apathy have 
prevented these entities from
cooperating as a group in marine environmental protection 
endeavors--even research.  Bilateral
cooperation in this field is also sparse and sporadic.  Two 
trends are apparent:  increasing marine
pollution with concomitant damage to living resources in 
semienclosed seas, especially in the
Yellow Sea, and a growing environmental consciousness, which may 
spill over into the marine
sphere.  Perhaps Taiwan and China and North and South Korea could 
begin their first tentative
steps toward reconciliation via cooperation in marine 
environmental protection.  What is not clear
is whether the warming relations and environmental consciousness 
will overtake and mitigate an
environmentally damaging ethos before irreversible damage is 
done.

  The 1982 U.N Convention on the Law of the Sea (UNCLOS) creates 
an international
umbrella framework for developing coherent national marine 
pollution policies.  UNCLOS
addresses marine pollution issues in Part XII, Protection and 
Preservation of the Marine
Environment.  Section One calls for nations to "take all 
necessary measures consistent with this
Convention to prevent, reduce, and control pollution of the 
marine environment from any source." 
This is complemented by Section Five's call for the enactment of 
national legislation and
regulations controlling specific sources:  land-based, dumping, 
vessels, and seabed activity. 
Enforcement of marine pollution laws is dealt with in Section 
Six, which stipulates that coastal
states are to enforce their land-based pollution laws against 
their own polluters.  Moreover,
coastal states are given the responsibility to protect their 
marine environment out to the boundary
of their exclusive economic zones (EEZs), which can extend up to 
200 miles from baselines.

  UNEP experts subsequently fashioned the Montreal Guidelines on 
land-based pollution
(LBMP) in 1985 to help integrate the regional harmony called for 
in UNCLOS and the
responsibility for preventing transnational pollution.  The 
Guidelines' purpose is to serve as a
checklist for regional conventions and national legislation.  
When viewed as a checklist, the heart
of the Guidelines lies in Guideline no. 13 on the development of 
control strategies and no. 16
on adoption of national laws and procedures.  Although the body 
of the Guidelines appears
softened by compromise, the scientific recommendations contained 
in its annexes bolster its
credibility.  Despite its weaknesses, the Montreal Guidelines 
could be helpful to the nations of
Northeast Asia, which have yet to reach a regional agreement and 
which continue to look for
guidance in refining their LBMP laws and regulations.

  The need to accommodate various domestic economic interests is 
reflected in the extent
and level of the coastal states' participation in multilateral 
treaties for regulating vessel-source
pollution and ocean dumping.  Thirteen IMO treaties focus 
specifically on pollution prevention
from ships (Table 5).  Russia and Japan have subscribed to the 
most pollution treaties, ten and
eight, respectively.  China has ratified five treaties.  South 
Korea has ratified only two treaties--
the original Civil Liability Convention and the Convention for 
the Prevention of Pollution from
Ships.  North Korea has acceded to Annexes 3, 4, and 5 of the 
Prevention Convention, and all
but South Korea have signed the Civil Liability Convention.  Only 
Russia has joined the 1973
Intervention Convention.  China, Japan, and Russia are parties to 
the 1972 London Dumping
Convention, whereas all six have acceded to the International 
Convention for the Prevention of
Pollution from Ships, 1973, as modified by the Protocol of 1978 
(MARPOL 73/78).  This perhaps
reflects the dominance of shipping and shipbuilding interests in 
the Koreas, whereas in China,
accession to both Conventions signals a desire to identify with 
international environmental and
shipping interests.  However, implementation is lacking, or 
lagging.


  Transnational Issues and Possible Cooperative Responses

         Harmonizing National Policies, Laws, and Regulations

         UNCLOS provides that states should endeavor to harmonize 
their policies
regarding protection of the marine environment.  The countries in 
the region have similar wastes
and other than Japan, a similar level of technology for disposing 
of the wastes.  Theoretically,
they might adopt similar or uniform standards.  The fact that 
they do not reflects both a lack of
communication and real differences in national priorities for 
environmental protection in general
and for specific pollutants and pollutant sources in particular 
(see Tables 6 and 7).  For example,
Russia's water quality and effluent standards are generally much 
stricter--on paper--than those of
its neighbors.  South Korea has just promulgated effluent 
standards.  Taiwan's effluent standards
are considerably less than those of Japan, and China's water 
quality standards are the most
relaxed of all.  Of course, enforcement of these standards is 
another matter.

  These differences are consistent with UNCLOS, since it provides 
that states "shall use the
best practicable means at their disposal and within their 
capabilities to prevent, reduce and control
pollution."  Yet, a mosaic of different pollution regulations 
could inhibit transnational activities
such as the shipping of oil and control of transnational 
pollution and encourage "pollution
havens."

  In few other semienclosed seas are multilateral measures for 
marine pollution control as
deficient as those in Northeast Asia.  However, there might now 
be opportunities for
improvement, at least in subregions.  For example, South Korea 
and China both acknowledge that
threats to the commons from pollution and overexploitation of 
living resources could have
serious, perhaps irreversible, economic consequences.  The 
region's countries must now decide
how to adjust national initiatives to be compatible with emerging 
international legal and technical
obligations or, conversely, the extent to which each state wishes 
to ignore or deviate from
international practice.  There is a basic need to draft national 
regulations that reflect and
incorporate the vaguely defined intent of UNCLOS Articles 192 and 
194.  These articles charge
states with the "duty to protect and preserve the environment" 
and obligate them "to take all
measures necessary to prevent, reduce, and control marine 
pollution and to ensure that activities
under their jurisdiction or control do not cause pollution damage 
to other states or otherwise
spread beyond the seas where they exercise sovereign rights."  
Yet, there are no agreed upon
scientific criteria to determine the precise meaning of such 
terms as "prevent, reduce, and
control."  It is also difficult to determine how to justify and 
enforce legal prescriptions, given the
limitations of scientific and technical knowledge.  There is a 
large gap between acceptance of a
vaguely defined legal framework, which moves from "obligations of 
responsibility" to
"obligations of regulation and control," and the willingness and 
ability of states to establish and
enforce standards and rules.  Thus the states of Northeast Asia 
should work through these
interpretations and implement them collectively.


  Transboundary Oil Spill

  Modeling of hypothetical oil spills from point sources in areas 
of active exploration in
Northeast Asia shows that such spills could easily cross claimed 
maritime boundaries and
eventually impact valuable and vulnerable marine resources--
fisheries, coastal aquaculture, fragile
wetlands, fish spawning grounds, and endangered species such as 
seabirds, whales, seals and
porpoises.  Such a spill could bring into focus questions of 
jurisdiction and responsibility for
response.  If jurisdiction is uncertain, so may be the 
responsibility for cleanup and compensation. 
Worse, uncertain jurisdiction and bad relations may combine to 
prevent cooperation and a
coordinated effort to clean up such a spill.  In an atmosphere of 
tension, moving of personnel and
equipment across a hypothetical median line without prior 
permission--even for the express
purpose of combating marine pollution--could be considered 
dangerous or provocative.

  Consideration should be given to a number of possible measures 
to enhance overall
maritime safety and environmental protection beyond the IMO-
coordinated international
conventions.  Mitigating or precautionary actions might include 
the establishment of tanker
exclusion zones to protect coastal environments, or moving safety 
zones, with escorts, around
LPG/LNG tankers.  Another could be the formation of regional 
pollution response teams,
multinational in composition and authorized to act immediately, 
regardless of the national
jurisdiction of the waters affected.  Such regional pollution 
response teams might initially be
established for the Sea of Japan and for the Yellow Sea, but also 
be available for deployment,
upon request, for incidents in the Bo Hai and Japan's Inland Sea.


  Nuclear Waste Dumping

  The revelations of nuclear waste dumping by both Russia and 
Japan in the Sea of Japan
may be the necessary trigger for Northeast Asian regional 
cooperation on marine environmental
protection.  The news that the former Soviet navy dumped 18 
decommissioned nuclear reactors
and 13,150 containers of radioactive waste from 1978 to the 
present, most of it in the Sea of
Japan, created an uproar in the world environmental community.  
It particularly jolted nuclear-
sensitive Japan and South Korea, and even drew a rare comment 
from North Korea.  Adding fuel
to the fire, a Russian naval vessel dumped nearly a thousand tons 
of low-level waste in the Sea
of Japan shortly after Russian President Boris Yeltsin's visit to 
Japan.

  And despite Japanese, North and South Korean protests, Russia 
subsequently announced
that it will have to continue to dump such waste at least until 
next year because it has no place
to store the liquid waste on land.  Then in a stunning case of 
the "pot calling the kettle black,"
Japanese Science and Technology Agency Chief Satsuki Eda admitted 
that Tokyo Electric Power
Co. dumps 10 times more radioactive waste each year into the Sea 
of Japan than the 900 tons
dumped by the Russian navy.  This revelation also caused 
demonstrations in South Korea.

  The possible silver lining in this very dark cloud is that the 
revelations of dumping of
radioactive waste and the resultant alarm may be the critical 
spur needed to forge cooperation in
marine environmental protection among the coastal countries.  
Although most scientists agree that
the dumped waste provides no immediate threat to the environment 
or humans, the longer term
effects are unknown, particularly after the containers corrode.  
The initial report of Russian
dumping has prompted cooperation to deal with this specific issue 
at hastily arranged bilateral
Japan/Russia meetings of relevant ministers and experts, 
proposals for joint South
Korea/Japan/Russia surveys at specific dump sites, and a call by 
Japan for an international
cooperative fund to help Russia treat its nuclear waste.  North 
Korea even offered to host an
international seminar on regimes for pollution control.  North 
Korea might even be interested in
joining South Korea, Japan, Russia and "others" in investigating 
the dumped waste.  More
recently, it has been revealed that chemical munitions were also 
dumped up until the mid-1980s
in the Seas of Japan and Okhotsk.  Obviously broader cooperative 
initiatives on environmental
protection are needed and may be stimulated by these 
developments.

4.   Fisheries

  The Issues

         Yellow/East China Seas

         Although total fish catch from the Yellow/East China 
Seas has been steady or
increasing, that of particularly valued species has declined.  
Almost all species are overfished and
some larger, higher trophic level species have been replaced by 
smaller, lower trophic level
species.  Thus the catch-per-unit-effort has declined in both 
quantity and quality.  The stocks are
fished by China (2.5 MMT), South Korea (1.32 MMT), Japan (0.474 
MMT), and North Korea
(amount unknown).  The demersal catch by Japan has been 
decreasing while that by Korea and
China has been steady or increasing but with changing species 
composition.

  Data on Yellow Sea fisheries are scattered and fragmentary.  
Needed is a single
comprehensive view of the fisheries of the Yellow Sea, East China 
Sea, and the Bo Hai.  Data
needed include catch statistics by species, effort, and country; 
yield-independent surveys of major
resource populations on mesoscale spatial and temporal sampling 
frequencies; and process-
oriented studies of ecosystem structure and function.  
Cooperative research is particularly needed
for the migratory species, concentrating on life history, stock 
assessment, and biological
dynamics.

  Multilateral fisheries management would be complicated by the 
multiplicity of actual
claims or hypothetical boundaries and the fact that fish migrate 
freely across boundaries and that
spawning and wintering grounds straddle various jurisdictional 
lines.  The current international
regime for fisheries management is a delicate balance of multiple 
interests within national
fisheries sectors as well as of tenuous regional relationships.  
Large areas are not covered by any
formal agreement, while agreements overlap in some areas.  Also, 
distribution of many of the
species extend far beyond the Yellow Sea.  Pending issues include 
the appropriate role of North
Korea in Yellow Sea fisheries and their management; and the 
possible declaration by China and
South Korea of EEZs and the resultant eventual exclusion of Japan 
from fishing in the Yellow
Sea.  Needed cooperative approaches include data standardization, 
collection, and exchange to
provide a comparable statistical basis for decisions; the 
regulation of shared stocks within the
Yellow Sea/East China Sea; and the regulation of overfishing in 
this multispecies fishery and the
allocation of the resources.


  Sea of Japan

  There is also little information on catch and status of stocks 
in the western part of the Sea. 
Scanty information indicates that North Korean catch is very high 
almost as high as that of
Japan.  Total production has increased from about 9 million tons 
in 1982 to 12 million tons in
1985.  Most conventional species are fully exploited, but the 
total catch might be increased to
about 13 million tons.  The species composition of both the 
demersal and pelagic fish catch has
changed, implying changes in the ecosystem.  Coastal fisheries 
stocks are in reasonably good
shape, but there is concern about the stocks of flying fish, 
Pacific herring, sandfish, halibut,
Alaska pollack, and Japanese sardine.  Exchange of information 
and cooperation in fisheries
research and management are necessary and urgent.

  Transnational issues center mainly around jurisdictional 
questions and thus ownership of
the stocks.  In the northern Sea of Japan, demersal spawning 
grounds are shared by Japan and
Russia, and both demersal and pelagic stocks migrate across an 
equidistance line between the
two.  In the southern Sea of Japan, the pattern is more complex.  
Pelagic spawning grounds
occupy the southern part of the overlapping claims area around 
Tok Do/Takeshima (South
Korea/Japan) and are also divided by the South Korea/Japan 
continental shelf boundary.  Pelagic
species migrate through the disputed area and across the 
boundary.  An extensive demersal
spawning area reaches north and south of North Korea's claimed 
EEZ, and both demersal and
pelagic stocks migrate in and out of this zone as well as its 
Military Warning Zone.  The Korea
Strait is a confluence of demersal and pelagic spawning and 
wintering grounds and their
migration routes, and the South Korea/Japan boundary artificially 
divides these natural fisheries
distributions.


  Existing International Regimes

  There are now eight bilateral fisheries agreements in force--
Japan/Russia (2); Japan/North
Korea; Japan/South Korea; Japan/China; North Korea/Russia; and 
North Korea/China (2).  Japan
is by tradition and mastery of techniques the most important 
fishing nation in most of the region
in extent of deployment and size of catch and has bilateral 
agreements with each country.  But
because of the tenuous relations between Japan and Russia and 
Japan and North Korea, these
agreements are largely among the fishermen and their 
organizations, rather than between
governments.  These agreements apply more to bottom fisheries 
than to pelagic fisheries, which
migrate and occupy different areas for spawning and feeding.

  Despite some advantages notably the lack of overt conflict the 
present regime is
fundamentally flawed.  Theoretically this system an interlocking 
web of bilateral agreements
dominated by Japan although inequitable could successfully manage 
the region's fisheries. 
The fact that many species are overfished indicates that the 
system is not working and
underscores the need for multinational monitoring and regulation 
of this multispecies fishery, and
ultimately, of equitable allocation of the resource.


  Cooperative Approaches

  Possible options that move incrementally from the status quo 
and do not require extension
of jurisdiction include (1) modification of the existing 
arrangements, (2) creation of a quadra-
partite nongovernmental arrangement, and (3) establishment of a 
scientific organization.  The
present bilateral agreements could be used as a basis for 
discussing coastal state/distant-water
fishing concerns as well as for developing a coordinated approach 
to improving the scientific
basis for regulation.  The key element in this arrangement would 
be the extent to which Japan
would be willing to accept the role of a "hinge" state on what 
may be a "closing door" for its
fisheries.  In this scenario, Japan would assume the role of 
information broker and analyst in
coordinating international scientific studies in exchange for 
continued access to the fisheries. 
This arrangement could stave off coastal state demands for EEZs.  
And it would also permit
communication on fisheries regulation matters to be systematic 
and predictable regarding
standardization of statistics, coordination of scientific 
research, delineation of shared stocks, or
evaluation of overfishing.  Japan could perform a similar hinge-
state function for
nongovernmental arrangements with a willing North Korea.

  Japan sees fish as an element of its food security and as a 
distant-water fishing nation,
Japan should also be concerned about the level of protection 
coastal states give to spawning
populations of fish and to juvenile fish in nursery areas.  
Further, many fish stocks upon which
the Japanese fleet depends are being overfished or are in danger 
of becoming so by a
combination of its own fishing and expanding fishing pressure 
from the host country.  Japan
should also be interested in ensuring the stability of the 
system, and of maintaining or gaining
access to neighbor's waters for fishing and scientific research.  
Japan's growing interest in playing
a more prominent role in international politics may be an added 
stimulus to being an
intermediary.  Japan clearly understands the need to cooperate 
with its neighbors and, once
decided, has considerable experience with such institutional 
relationships.  The need to coordinate
fishery policies could facilitate improvement of overall 
relations, just as Japanese-Russian and
Japanese-Republic of Korea fisheries agreements positively 
influenced the two bilateral
relationships in general in the 1950s and 1960s.

  Nevertheless, this arrangement may be difficult for the 
fisheries hegemon Japan to
accept, if its objective is to maintain its dominant advantages 
in fisheries.  And truly regional
cooperation in fisheries matters clearly depends on Japan.  The 
various countries do not share
data and Japan probably has a virtual monopoly of knowledge 
regarding regional fisheries.  And
Japan already has access arrangements with every nation in the 
region.

  Japanese fishing interests thus face a classic dilemma.  Should 
its fleet continue to fish
these stocks as fast and as intensely as it can before the stocks 
collapse or other fishing nations,
e.g., South Korea or Taiwan move in or should it participate in a 
regime designed to manage
and limit the catch in order to be able to fish longer but at a 
reduced level, hoping that
competitors will join and abide by the rules.  In the event that 
Japan is unwilling to perform this
role, or this arrangement is unacceptable to either China or 
South Korea, another third-party state
or entity (e.g., the Indo-Pacific Fisheries Commission, FAO or 
IOC/WESTPAC) could be asked
to play this role.

  Because of the history of conflict in Northeast Asia, the first 
stage of regional fishery
cooperation might not be expected to emerge directly from 
collective governmental initiatives,
such as treaty negotiations, but rather from a common willingness 
to participate in regular
informal meetings and training programs, which would be, at least 
initially, the responsibility of
a coalition of respected nongovernmental institutions.  Regular 
activities of this kind could
facilitate the establishment of a network of government 
officials, scientists, and other experts, and
eventually provide the opportunity for the governments of the 
region to proceed to the negotiation
of more formal cooperative arrangements.  Given the socio-
economic dimensions of fishery
policy and management, it might be wise to extend the suggested 
regional network to
representatives of the various sectors of the fishing industry, 
the relevant trade unions, and the
fishing communities, as well as to academic specialists in the 
field of ocean development and
management, including the law of the sea.  Possible specific 
cooperative approaches include
modification of existing arrangements towards a coordinated 
approach to improving the scientific
basis for regulation, with Japan serving as the go-between; or 
establishment of a scientific
organization, for joint training, monitoring and research on 
stock status, either de nouveau or as
a working group of existing international organizations such as 
IOC/WESTPAC.

  Because of its lack of experience of regional institutions, 
Northeast Asian countries might
be expected to tread carefully before committing themselves to 
the building of a massive
superstructure.  Opening these topics at the wrong time could 
lead to chaos in the existing
fisheries arrangements or to a strong redistribution of current 
allocations away from Japan. 
Indeed, it might be wise for the governments of the region to 
begin experimentally with a variety
of relatively low-risk initiatives with decentralized power and 
authority.  These might include
some of the following options:
1.   government participation in an ongoing fisheries policy 
dialogue for the North Pacific,

  which would be developed through cooperation among the East-
West Center, relevant

  universities, and other nongovernmental institutions with a 
special interest in the ocean

  affairs of that region;
2.   expansion of _ _ _ _ _ (PICES) to become a fully 
representative forum for the ocean

  scientists of the North Pacific;
3.   organization of a research project to evaluate the 
effectiveness and applicability of

  existing regional fishery commissions in various parts of the 
world, with special reference

  to their roles, structure, and financial arrangements in light 
of new conditions of the law

  of the sea and of the recommendations of the UNCED and Agenda 
21;
4.   establishment of intergovernmental task forces to study the 
case for and against the

  establishment of formal fishery management or consultation 
mechanisms for Northeast

  Asia;
5.   organization of a workshop to discuss the design of a 
proposed fishery conflict/dispute

  settlement system for Northeast Asia;
6.   an informal intergovernmental meeting to compare public 
participation policies and

  practices and to review alternative modes of consultation with 
nongovernmental bodies

  in the context of fishery policy and management and related 
sectors; and
7.   establishment of an informal intergovernmental forum 
designed to facilitate the

  harmonization of national fishery development and management 
policies and practices

  within Northeast Asia (and eventually, the North Pacific).

5.   Protection of Shared Vulnerable Marine Animals and Habitat 
(Figure 2)

  Vulnerable marine animals in Northeast Asia include sea 
turtles, dugong, seabirds,
shorebirds and other birds associated with the coastal wetlands, 
sea otters, seals, and some
threatened species.  Cetaceans--whales, dolphins, and porpoises 
are found along North Korean
shores and in its waters.  Conservation interests have generally 
been subordinated to economic
and social priorities.  As a consequence, many valuable and 
vulnerable resources have been lost
to development, and many more will be unless environmental 
integrity and conservation
awareness become national priorities.

  Article 65 of UNCLOS allows a coastal state or a competent 
international organization
to regulate and limit exploitation of marine mammals more 
strictly than provided for within Part
V of the Convention.  States are to cooperate with a view to 
conservation, and "in the case of
cetaceans shall in particular work through the appropriate 
international organizations for their
conservation, management and study," i.e., the International 
Whaling Commission.  However,
Japan has not ratified the Convention and believes that small 
cetaceans are not under the
jurisdiction of the IWC.  It would seem time for the Northeast 
Asian countries to take the long-
term view and work together to protect the threatened species and 
habitat that is their heritage.

B.   Regional Environmental Initiatives
1.   Recent Developments

  Despite the relatively poor record of the region's entities, in 
joining or adhering to
international conventions protecting the marine environment, the 
muting of the Cold War in
Northeast Asia has stimulated a proliferation of multilateral 
discussions and program proposals
for environmental protection.  However the motives and rationale 
for these new initiatives may
be broader than concern for the environment.  By calling 
attention to politically benign but
mutually threatening environmental issues, states sometimes can 
achieve broader objectives. 
Indeed, although marine environmental protection is a minor 
peripheral issue in relations among
the Northeast Asian coastal states, negotiations on environmental 
questions may permit parties
to avoid more controversial issues such as delimitation or 
fisheries disputes.  Provisional
agreement on environmental issues can also improve the atmosphere 
for further discussion of
more difficult questions.


  The North-West Pacific Region Action Plan (NOWPAP)

  Of the several ongoing multilateral cooperative efforts in the 
region focused on or
including marine environmental protection, the most advanced is 
the United Nations Environment
Programme's (UNEP) NOWPAP as part of UNEP's Regional Seas 
Programme.  Globally, UNEP
has almost two decades of experience.  Its Programme presently 
encompasses 13 regional seas
and involves the participation of some 140 coastal countries and 
island states and territories. 
Nine "action plans" are operational; nine conventions and twenty 
eight protocols have been
signed and seven conventions are in force.

  On the initiative of states bordering the semi-enclosed seas of 
the Northwest Pacific,
UNEP's Governing Council decided in May 1989 to prepare NOWPAP 
and the littoral states
nominated National Focal Points to develop it.  Officials from 
the six concerned states met
informally in Nairobi in May 1991 and reaffirmed their 
governments' willingness to initiate the
NOWPAP.  Due to the wide range of early suggestions for the 
content of the Action Plan, UNDP
convened an early formal consultative meeting in Vladivostok in 
October 1991 which experts
from five national delegations (except North Korea) attended.

  Establishment of the following structures were suggested in the 
national reports submitted
to UNEP.
    A regional coordinating center (China);
    A regional center on the monitoring and assessment of the 
state of marine environment

  (Russia);
    A regional center for information and data exchange (South 
Korea);
    A permanent task-force or group of experts from the riparian 
countries (China and South

  Korea).

  The participants agreed that National Focal Points henceforth 
would prepare national
reports for future meeting which would cover the status of the 
marine environment and coastal
areas; national policies and measures to deal with marine 
pollution; and proposals for steps to
be taken in a Regional Action Plan.  They noted that regional 
cooperation in response to a
pollution emergency would be appropriate for joint activities in 
the future.

  At the second meeting of experts and National Focal Points, 
held again in Beijing in
October 1992, all six countries were represented, including North 
Korea's General Bureau of
Environmental Protection and Land Administration.  At this 
meeting, a draft Regional Action
Plan was reviewed, and in some important respects, modified (at 
the insistence of Japan, for
example, the section on Biodiversity and Ecological Resources was 
deleted, except for the section
on wetland reserves and genetic resources.  The geographical area 
to be covered by the Action
Plan is still not entirely clear.  At the first meeting, the 
majority view was that it should cover
initially the marine environment and coastal areas of the Japan 
and Yellow Seas, without
prejudice to its possible future extension to cover additional 
marine environment and coastal areas
of participating states.  The Third Meeting of Experts and 
National Focal Points on Development
of the NOWPAP was held in Bangkok in October 1993 and agreed on a 
final draft Action Plan. 
The overall goal of the NOWPAP is "the wise use, development and 
management of the coastal
and marine environment so as to obtain the utmost long-term 
benefits for the human populations
of the region, while protecting human health, ecological 
integrity and the region's sustainability
for future generations."  Subsidiary and complementary goals are 
include:

         the control, halting and prevention of any further 
degradation and deterioration of

         the coastal and marine environment and its resources;

         the recovery and rehabilitation of coastal and marine 
environments that have been

         degraded and which still have the potential for such a 
recovery; and

         the long term sustainability of coastal and marine 
environmental quality and

         resources as assets for the present and future human 
populations of the region.
Objectives include assessment of the state of the regional marine 
environment; establishment of
an efficient and effective information base; development of 
integrated coastal area planning and
management; and development of a collaborative and cooperative 
legal framework.

  The first projects have been approved for implementation.  A 
NOWPAP
Intergovernmental Forum is to be established to provide policy 
guidance and decisionmaking for
the Action Plan and will include representatives of relevant 
regional and international
organizations.  The NOWPAP states will work towards the 
development of a regional convention
for the protection and management of the coastal and marine 
environment and resources.  A
Regional Coordinating Unit (RCU) will be established with the 
assistance of UNEP to ensure the
integrated and managed execution from within the region of Action 
Plan projects.  Until the RCU
is established UNEP will coordinate projects and prepare a 
program based on regional
government priorities.  And most important, the regional 
governments must agree to establish a
NOWPAP Trust Fund to finance the implementation of the Action 
Plan with contributions based
on the United Nations formula.


  UNDP/GEF Program on Prevention and Management of Marine 
Pollution in East Asian

  Seas

  In response to a number of requests from East Asian nations 
regarding management of
the marine environment, the United Nations Development Programme, 
Regional Bureau for Asia
and Pacific, Regional Programme Division with support provided 
from the pilot phase of the
Global Environment Facility is formulating a program entitled 
Prevention and Management of
Marine Pollution in  East Asian Seas.  The countries to be 
included in this regional program are
ASEAN (Philippines, Malaysia, Indonesia, Brunei Darussalam, 
Singapore, Thailand), China,
North Korea, Vietnam, and Cambodia.  The approved budget totals 
US$8 million with additional
cost sharing contribution from the Government of Australia of A$5 
million.

  The long-term objective of the program is to support the 
efforts of the participating
Governments in the prevention, control and management of marine 
pollution, at both the national
and regional levels, on a long-term and self-reliant basis.  The 
program concept at the moment
includes four main project areas, defined by the following 
objectives:

  to assist in the prevention, control and management of marine 
pollution problems through

  proper assessment of the state of marine pollution, including 
the effects of marine, coastal

  and other land-based activities on biodiversity and 
environmental quality;

  to assist in the development of policies, plans, and programs 
on prevention, control and

  management of marine pollution including measures for their 
support and implementation

  at both the national and subregional levels;

  to strengthen national and subregional institutional 
infrastructures and implementing

  mechanisms and upgrade technical skills and management 
capabilities on

  prevention/control of pollution, management and enhancement of 
the marine environment;

  and

  to establish appropriate financial arrangements and/or 
mechanisms for the long-term

  sustainability and self-reliance of national and subregional 
efforts at protection of the

  marine environments.

  North Korea intends to participate in the East Asian Seas 
Marine Pollution Program and
subscribes to its objectives.  It is particularly interested in 
participation in the proposed network
of information management and marine pollution monitoring centers 
and wants assistance to
upgrade the equipment and facilities of the West Oceanographic 
Research Institute to enable its
participation.


  Intergovernmental Oceanographic Commission (IOC/WESTPAC)

  The IOC was established in 1960 as a functionally autonomous 
body within UNESCO and
is mandated to organize basic oceanographic research.  The IOC's 
Subcommission for the
Western Pacific (WESTPAC) was established in 1989.  The 
Secretariat is to be established in
Bangkok which hosted the second session of the Commission in 
January 1993.  The next session
is planned for 1996 and will probably be in Tokyo.

  The goals of an IOC regional subcommission are to:

  --     define regional problems and develop marine scientific 
research programs

  --     implement IOC global marine scientific research programs 
at a regional level

  --     facilitate the regional exchange of scientific data, 
especially to developing

         countries; and

  --     identify training, education and mutual assistance 
needs.
To achieve these general objectives WESTPAC identified nine 
projects at its first meeting in
Hangzhou, China in February 1990, and adopted a Medium Term Plan 
(1991-1995).  These nine
projects are:
    Ocean Science in Relation to Living Resources:

         Toxic and anoxic phenomena associated with algal blooms 
(red tides)

         Recruitment of Penaeid Prawns in the Indo-Western 
Pacific

    Marine Pollution Research and Monitoring:

            Monitoring heavy metals and organochlorine pesticides 
using the Musselwatch program

         Assessment of river inputs to seas in the WESTPAC Region

    Ocean Dynamics and Climate

         Banding in Porites coral as a component of ocean climate 
studies

         Ocean dynamics in the northwest Pacific

         Continental shelf circulation in the western Pacific

    Ocean science in relation to non-living resources

         WESTPAC palaeogeographic map

         Margins of active plates

  There is some overlap as well as complementarities of 
activities envisaged under the
auspices of WESTPAC, UNDP/GEF and NOWPAP.  WESTPAC anticipates 
conducting training
in the modeling of coastal circulation in order to predict and 
control accidental oil spills.  It is
also developing a WESTPAC Action Plan as a follow-up to UNCED, 
both of which appear to
be similar to concerns raised at NOWPAP.  WESTPAC activities can 
complement the strong
national marine scientific and technological capabilities in 
Northeast Asian states.  Moreover,
WESTPAC's SEAWATCH program may be helpful in the implementation 
of the NOWPAP. 
Also, work by Northeast Asian WESTPAC members (which includes all 
six states that participate
in the NOWPAP) on continental shelf circulation, ocean dynamics, 
paleogeographic mapping,
tectonics and coastal zones, and on musselwatch and harmful algal 
blooms, are all either more
active in Northeast Asia than in East or Southeast Asia, or are 
implemented on a western Pacific-
wide basis without subregional focus.  The objectives of the 
UNDP/GEF Program seem to greatly
overlap those of the NOWPAP and the Program also includes North 
Korea and China in its terms
of reference.

  Japan is slowly beginning to take the initiative in 
environmental protection activities in
the region.  It has signed bilateral agreements with both Russia 
and South Korea.  Under these
pacts, Japan and South Korea would set up a committee of experts 
to choose joint projects for
improvement of the environment, exchange scientists and research 
and promote seminars.  Japan
and the United States have a similar agreement with a focus on 
protection of the environment in
developing nations as a means of enhancing bilateral cooperation 
under the concept of global
partnership.  These agreements could be put to good use in the 
region.

  Despite the plethora of regional efforts in the marine sphere, 
there is still a general lack
of a formal infrastructure to bring about international 
collaboration and cooperation in monitoring
and research activities that would delineate the spatial 
distribution of a containment and its
subsequent effects and, in particular, whether it would cross 
national boundaries.  The lack of a
formal structure prevents the development of well-coordinated 
cooperative baseline studies and
coordination in emergencies (such as a spill of oil or other 
toxic and hazardous materials). 
Monitoring and research programs are not as effective as they 
should be, because they stop at
some politically determined border, rather than at some physical 
or chemical border.  And there
is a wide discrepancy among the countries in the level and 
effectiveness of marine pollution
monitoring and research in support of regulation.

  It is far easier to implement environmental assessment, 
legislation and institutional
arrangements than the management and financial structure.  
Existing problems and the initial
effects of new ones, are most likely to arise in waters close to 
land, and national attention is
therefore concentrated on protecting the health of the coastal 
waters rather than the offshore,
especially in enclosed and semi-enclosed seas.  Despite efforts 
at national, regional and
international levels, the current sectoral and monodisciplinary 
approach to the multiple use of
marine and coastal resources will not provide an effective 
framework for achieving sustainability. 
Aside from physical and ecological degradation of the coastal and 
near-shore zones, and of
course, nuclear waste dumping, pollution from land-based sources 
is at present the single most
important threat to the Northeast Asian marine environment, 
contributing some 70 percent of the
pollution load of the oceans.  Intensified human activities in 
the coastal zone of the world ocean
cannot be supported if the marine environment is considered as an 
"infinite sink" or receptacle
for wastes and an endless free supply of resources.

  Most appropriate for cooperation in the region are 
environmental monitoring and
assessment; development and harmonization of upgrading 
environmental legislation; the
technology involved in marine pollution control; and combating 
marine pollution, especially in
the case of pollution emergencies stemming from incidents 
involving vessels or offshore drilling. 
Education and training should be an integral part of all areas of 
cooperation.  Environmental
monitoring and assessment should be decision-oriented and should 
receive high priority. 
Research priorities might include a synthesis of information on 
the state of marine pollution and
of dumping in Northeast Asian seas.  Needed is the harmonization 
of national legislation and
preparation and adoption of an umbrella convention on the 
protection of the marine environment. 
Supporting efforts might include joint assessment of priorities 
for marine resource management
and areas most at risk.  Recommendations for integrated coastal 
zone and marine environment
management might be developed at the regional level.  Cooperative 
projects on training in
environmental impact assessment, coordinated creation of marine 
parks, management of wetlands,
and control of industrial, agricultural, and domestic wastes are 
also priorities.

  A mechanism may be needed to coordinate WESTPAC and UNDP/GEF 
activities with
NOWPAP, similar to the Coordinating Body on the Seas of East Asia 
(COBSEA) operative in
Southeast Asia.


  Northeast Asian Environment Programme (ESCAP/UNDP)

  The first Northeast Asian Conference on Environment was held in 
Niigata, Japan the
following October, and was organized jointly by the Japanese 
Environment Agency and the
Ministry of Foreign Affairs.  Delegations from China, Russia, and 
South Korea attended.  This
was primarily a meeting of the representatives of environmental 
ministries and aimed at
developing cooperation among them.  The Conference sought to 
promote a frank policy dialogue
on environmental problems "of common concern to the region as a 
whole."  To this end, the
participants agreed to convene the Conference to be hosted by 
different countries of the region. 
In addition to emphasizing the role of local government in 
regional cooperation, the participants
suggested the following possible priority areas for regional 
cooperation:  information sharing and
exchange network; joint surveys and monitoring on acid rain, 
marine pollution, biodiversity;
collaborative research and planning; and case studies of economic 
instruments for environmental
management.  A second meeting was held in September 1993 in 
Seoul.

  A Meeting of Senior Officials on Environment Cooperation in 
Northeast Asia, organized
by ESCAP in cooperation with UNEP and UNDP took place in Seoul in 
February 1993 and was
attended by representatives of foreign ministries and 
environmental ministries of China, Japan,
Mongolia, South Korea and Russia.  Its objective is to develop 
formal cooperation among states
in the region.  The participants considered a consultant's report 
which gave an indicative list of
possible areas of collaboration, and emphasized energy-related 
air pollution and capacity building
as important cross sectoral themes.  They also suggested that 
only one or two substantive issues
be concentrated upon at the outset in order to demonstrate the 
utility of cooperation, and that
these activities be expanded incrementally.  Although they 
cautioned against an overly ambitious
program, they also recognized that identifying priority areas 
also necessitated the adoption of an
overall strategy for regional environmental cooperation and a 
support arrangement.

  The following priority areas within which specific projects for 
regional cooperation could
be developed were adopted:  energy and air pollution; capacity 
building; ecosystem management,
in particular deforestation and desertification; and 
intercalibration of pollution measurement
equipment.  The meeting also concluded that coastal and marine 
pollution issues should be
addressed within the UNEP NOWPAP framework.


  Asia Foundation/NGO Environmental Cooperation

  The Northeast Asian Environment Programme arose out of a 
symposium held in Seoul
in September 1992 which supported the development of an informal 
environmental network; and
was preceded by an earlier joint memorandum of understanding 
between Russia and South Korea
calling for the creation of a regional environmental forum.

  The meeting of the Second International Symposium on 
Environmental
Cooperation near Irkutsk, August 17-20, 1993 created the 
Northeast Asia
and North Pacific Environmental Forum.  This forum is aimed at 
developing
cooperation among NGOs.  The Forum will provide a mechanism 
whereby people
in the region can exchange ideas and information, enhance the 
public's
awareness of environmental issues, promote dialogue and 
cooperation among
governments and NGOs, support surveys and joint projects and 
develop a
method for fostering the work of the Forum.  The Forum will meet
tentatively again in July in Alaska to exchange ideas on 
ecosystem
management and the public's role in protecting our environment. 


  Environmental Components of the UNDP-supported Tumen River 
Project

  The environmental component of UNDP's Tumen River Area 
Development
Program is perhaps the most advanced of its several regional 
environmental
activities and may establish important legal and political 
precedents that
will bear on other regional environmental agreements.  This 
mammoth
undertaking would involve heavily polluting industries-- 
preprocessing of
minerals and timber using coal-fired energy.  If the project 
hopes to
receive seed financing from the ADB or the World Bank, it must 
undertake
extensive environmental impact assessments and be designed to 
mitigate
significant impacts. 

  In October 1992, a preliminary environmental assessment was 
presented
to the Program Management Committee's second meeting.  The report 
stated
that the hinterland, deltaic and adjacent coastal areas were 
ecologically
fragile, and noted the paucity of environmental and resource data 
for the
area. 

  In May 1993, the third meeting of the Program Management 
Committee
reviewed a draft set of "Environmental Principles" with the 
following
objectives: 

        to achieve "environmentally sound and sustainable 
development"
in accordance

         with UNCED, international environmental law and 
agreements,
and multilateral

         donor requirements. 

        cooperation and coordination of the relevant governments 
on
environmental

         concerns and their preparation of impact assessments of
projects on national

         territory.  Coordination of environmental protection of
projects developed within

         the zone by the Tumen River Development Corporation will 
be
the responsibility

         of institutions responsible for implementing the scheme. 

        Member states will allow nongovernmental organizations to
participate in

         environmental assessment procedures.
 NOTES


 


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