North Korea on Friday unilaterally declared all existing contracts with South Korea on a joint industrial park at the border town of Kaesong invalid. "We declare the nullification of all incumbent regulations and contracts regarding the Kaesong industrial complex," the government agency in charge of the industrial park said in a statement carried by the official Korean Central News Agency.
At the same time, the state-run media said new contract conditions for the South Korean companies active at Kaesong were being introduced. Should those not be accepted "unconditionally," the companies had to leave, the reports said. The new regulations encompass wages, taxation and lease payments in the industrial park that has been financed by South Korea.
The Kaesong complex is the last remaining joint economic project of the two countries. Reacting to the announcement, the government in Seoul said it would not accept North Korea's nullification of the Kaesong contracts, the South Korean Yonhap news agency said.
South Korea "destroyed the foundation of the Kaesong industrial park with its extreme confrontational policy," Pyongyang said, accusing Seoul of an "insincere attitude" in talks regarding the complex. Seoul retaliated, calling Pyongyang's' actions "irresponsible."
"This poses a fundamental threat to the stability of the Kaesong park, and we make clear that it can never be accepted," a Defence Ministry spokesman said. Pyongyang's declaration came after negotations failed to reach agreement on a list of topics for a new round of inter-Korean talks, which were also to include discussing Kaesong. South Korea suggested a new round of talks for next week after an initial round in April, but its Defence Ministry stressed it also wanted to discuss the fate of a South Korean worker who has been detained at Kaesong since March.
The April talks, in which North Korea demanded higher wages and contract revisions, had been the first talks between government representatives of the two Koreas for more than one year. They lasted only 22 minutes, as Pyongyang refused to discuss the case of the detained worker. The man has been accused by the North of criticising the country's communist system.
More than 100 South Korean firms operate at Kaesong, employing more than 40,000 North Korean workers. Inter-Korean relations deteriorated after a conservative government took office in Seoul inn February 2008, taking a less lenient stance toward Pyongyang.