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Japan considers a squeeze on N.Korea's economy

Japan's business with N. Korea is getting closer scrutiny than ever- with talks opening in Beijing on Pyongyang's n-ambitions.

india Updated: Feb 23, 2004 16:46 IST

They come in charcoal and black, with checks and pinstripes, and carry the English-language designer labels that Japanese shoppers take for granted.

But some of the men's suits on the bargain rack at a Daiei department store in Tokyo are cut from a cloth that would surprise many people here _ they're made in North Korea.

"They're good quality for the money," said salesman Takashi Higuchi, standing near a sign announcing 10 percent off the usual 9,000 yen (US$85). "Most customers are looking at the price, not where the suits come from."

These days, however, Japan's business with North Korea is getting closer scrutiny than ever - and is a point of pressure on the Koreans in the six-nation talks opening this week in Beijing on Pyongyang's nuclear ambitions.

Despite decades of hostility that has kept Japan and North Korea from recognizing each other's governments, the Japanese are the North's third-largest trading partner.

The impoverished communist nation also counts on regular remittances of hard currency from North Koreans living in Japan, and authorities say drugs and parts for Kim Jong Il's military are stashed in cargos hauled from Japan by North Korean ships. Now Japan's government is under pressure to turn off the spigots. Negotiations have failed to end a 16-month tug-of-war over the families of five Japanese abducted by North Koreans in the 1970s. The five were freed in 2002, but North Korea has refused to permit their children and one spouse to join them.

The former abductees and their supporters have led a high-profile campaign demanding action. Pyongyang's nuclear ambitions have also hardened attitudes in a nation within striking distance of North Korean missiles.

Debate on economic sanctions moved to the top of the agenda this month, when Parliament overwhelmingly approved a bill authorizing the government to freeze North Korean assets and restrict trade without a U.N. resolution.

The ruling party is also discussing a bill that would allow the government to bar designated North Korean ships from entering Japanese ports.

Prime Minister Junichiro Koizumi is still pursuing diplomacy. Japanese officials went to Pyongyang earlier this month for talks on the abduction issue, though little progress was made. Koizumi's foreign minister suggested this week, however, that sanctions would be seriously considered if relations deteriorate.

The tough talk comes ahead of six-nation talks to push North Korea to abandon its nuclear weapons programs. Officials from Japan, the United States, South Korea, China, and Russia meet with North Korean representatives next week in Beijing. North Korea has threatened to exclude Japan if it brings up the abductees. Despite the hardening attitude, analysts say Japan is unlikely at this point to impose sanctions on its own. And some doubt they would have much of a sting without the cooperation of China and South Korea, North Korea's two largest trading partners. But government officials insist the law has added a powerful diplomatic card to their hand.

"Before, our hands were basically tied," said Kenichi Mizuno, a lawmaker in Koizumi's ruling Liberal Democratic Party. "Now we can cut North Korea's lifelines if we have to."

North Korea reacted to the sanctions bill with a belligerent outburst in its state media, warning that war was "imminent"- proof to Mizuno that Pyongyang is already feeling the squeeze. Trade between the two countries totaled US$369.5 million in 2002, according to the Seoul-based Korea Trade Investment Promotion Agency. Japan accounted for 13 percent of North Korea's total imports and exports, third behind China at US$738.2 million and South Korea, with US$641.7 million.

North Korean ships unload mostly seafood and cheap suits in Japanese ports and return with used cars, refrigerators and other castoffs from the world's second-largest economy. But the traffic is also a front for drug-running and smuggling parts needed to keep North Korea's military running, authorities say. Defectors claim North Korea's ballistic missile program is based on Japanese technology.

"Halting trade would make maintenance tough for the military," said Mitsuhiko Kimura, a North Korean specialist at Aoyama University. "With machinery you're stuck if you're missing just one part."

Remittances by Japan's large North Korean community have also come under scrutiny from policy-makers groping for economic leverage.

There are about 600,000 Koreans in Japan, and about a third are loyal to North Korea. Nobody knows exactly how much money they send home.

Declared remittances were about 4 billion yen (about US$40 million) in 2002, most carried aboard a North Korean ferry that is the only passenger vessel linking the nations. One lawmaker estimates the real figure is double that, a windfall for an impoverish regime.

Koreans in Japan deny they're subsidizing North Korea's military. "They're trying to help their relatives by sending money," said So Chung On, a spokesman for the Korean General Residents Association.

Mounting tensions have already taken a toll on trade between the nations. Imports of North Korean suits, for example, tumbled 46 percent last year.

Japan has also pressed ahead with a crackdown on contraband. Last year port authorities dramatically intensified surveillance of North Korean ships, increasing X-rays of cargos and detaining vessels that failed safety inspections. Port calls fell by a quarter.

Under regulations that restrict exports indirectly related to weapons of mass destruction, officials have seized cargos such as used trailers- which could be turned into launch platforms for missiles, according to the Trade Ministry.

First Published: Feb 23, 2004 16:46 IST