GOVERNMENT CONTROL OF NORTH KOREAN FOREIGN TRADE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80-00809A000700090552-8
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 4
• Document Creation Date: December 22, 2016
• Document Release Date: August 11, 2011
• Sequence Number: 552
• Publication Date: December 10, 1952
• Content Type: REPORT

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CLASSIFICATION CONFIDENTIAL
CENTRgAL IgN I LLLIREPORT
INFORMATION FROM
FOREIGN DOCUMENTS OR RADIO BROADCASTS CD NO.
HOW
PUBLISHED Mimeographed business reports
WHERE
PUBLISHED Pyongyang
DATE
PUBLISHED Feb 1950
DATE DIST. /0 Dec 1952
THIS IS UNEVALUATED INFORMATION
1949 Nvond_o Savon polo (Business Reports for 1949) Vol I-VI, 1950.
GOVERNMENT CONTROL OF NORTH KOREAN FOREIGN TRADE
ih1s report presents some information on government control of
North Korean foreign trade, extracted from six volumes of mimeographed
business reports of the Korean Trading Company, Inc (Choson Sangsa
Chusik Hoesa). This is the government-controlled foreign trade mono-
poly in North Korea. The documents, stamped "Extremely Confidential,"
were prepared by Yi Won-hyon, president of the company, who presented
them at the company's annual meeting of overseas agents, branch managers,
and executive officers. The meeting was held at the main office of
the Korean Trading Company in P'yongyang, on 13 February 1950, to re-
view the company's business records for 1949.
According to the documents, government control over the Korean Train-
ing Company since February 1948 has had the following effects: (1) re-
organization to strengthen the company financially, to weed out profi-
teers, and to expand trade with Hong Kong; (2) increase the proportion
of "state-planned" imports and exports at the expense of private im-
ports, also changed the type of items imported and exported;
(3) crea-
tion of a multiplicity of import and export plans and frequent changes
of these plans coupled with "emergency import orders" and direct orders
placed with the Korean Trading Company by different government agencies,
all of which made the business very complicated and confusing;
ex-
cessive red tape, exemplified by too many (4) officials, and delays, which caused a slow cmovingnofsinwith
ventoryea decapi-
tal
Reorganization and Trade Expansion
On 13 February 1948, the Korean Trading Company was placed under direct con-
trol of the Ministry of Commerce of the Democratic People's Republic of Korea.
The company was reorganized to "strengthen the fina?,ia1 position of the company
and to weed out the profiteers and dishonest elements who have infested it." The
first important task of the company following the reorganization was to expand its
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trade with Hong Kong, North China, South Korea, and to open up trade with Japan.
During 1948 and 1949, the company slowly expanded trade with the above areas and
established a legitimate trade channel with Japan, in spite of adversities such
as loss of an uninsured cargo in a shipwreck of one of the transport vessels
chartered by the company. In 1949, about 77 percent of both import and export
trade was with Hong Kong; about 15 percent with North China, and the balance with
South Korea and Japan. be Korean Trading company does not handle trade with
the ISSR.
State-Planned Imports and Exports
One of the immediate results of government control was the increased pro-
portion of "state-planned" imports and exports and a change in the type of items
imported and exported. In 1948, the total value of exports handled by the company
was 916,336,000 won, of which approximately 64 percent represented the state-
planned exports, and 36 percent comprised private exports. However, in 1949, of
the total 1,362, 170,000 won of exports handled by the company approximately 71 per-
cent represented the state-planned and 29 percent private exports.
In 1948, chemical products including chemical fertilizers represented the
largest percentage, 37.8 percent, of the total exports the company handled in that
year. But in 1949 the amount dropped to 9.3 percent. In 1948, ammonium sulfate
was the largest single item the company exported to both Hong Kong and China pro-
per, but the amount to Hong Kong dropped from 35 percent of the total exports to
Hong Kong in 1948 to less than 4 percent in 1949, and that exported, to China from
47 percent in 1948 to 22 percent in 1949. In 1948, the company exported dynamite
worth 2,060,000 won to China, but in 1949 it exported none.
On the import side, in 1948 the total value of imports handled by the company
was approximately 96,350,000 won. Of this, 95 percent represented private imports
and 5 percent the state-planned imports But in 1949, of the total of items im-
ported, amounting to 1,348,912,000 won about 70 percent comprised goods imported
under state-plans and while the remaining 30 percent included goods imported under
emergency government orders" and the goods imported privately.
r The relative percentage changes in the type of items imported during 1948 and
1945 were as follows;
Industrial materials
39.6
54,3
Basic necessities of life
(Example: cotton sheeting)
49.7
33.0
Cultural materials
(Example: printed matter)
2,2
5,0
Re-exports
8.5
4.7
Others
--
3.0
0 0 100.0
Of 33 shiploads totaling 103,332 short tons of import and export goods trans-
ported for this company by various marine transport companies in 1949, the govern-
ment-owned Korean-Soviet Marine Transport Company, generally known as "Mortrans,"
transported 21 shiploads totaling 59,637 short tons.
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Multiplicity of Plans
The government imposed a multitude of plans which made the business extremely
perplc.ing. Thus, the "State Critical Commodities Import-Export Plan," "State Non-
critical Commodities Import-Export Plan," "Corn Import-Export Plan," "Spinning
Machines Import-Export Plan," "Private Import-Export Plan," and hosts of other plans
were formulated and imposed in a rapid succession without any orderly relationship
between one plan with another, as a result of government needs which mounted "in a
dizzy tempo" during 1949.
The State Planning Commission, which formulated these plans, made an over-all
change in plans three times during the year. Thus, in 1949, there were "First Half-
Year Plan," "Second Half-Year Plan," and "After-November Plan." In addition to
these over-all changes in plan, the Foreign Trade Bureau frequently made last minute
modifications to the plans. Over and above these plans the Korean Trading Company
received in 1949 "emergency import orders" for 417 items totaling 1,171,583,000 won,
or 86.9 percent of the total amount actually imported by the company.
Aside from the government plans and emergency import orders channelled through
the Foreign Trade Bureau, various government agencies placed import orders directly
with the company. These orders totaled 26,170,000 won in 1949, classified by agen-
No of
Orders
Percentage
Amount in
1,000 Won
Percentage
Ministry of
National Defense
10.4
5,256
20.0
Ministry of
Internal Affairs
6.3
3,480
13.3
Ministry of
Industry
27.0
5,473
20.9
Special Products
Guidance Bureau
3
6.3
703
2.7
Forestry Bureau
2
4.2
95
0.4
Kiyop Ch'ongsa (State-
owned industrial com-
pany)
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The Korean Trading Company did not fulfill all of the import plans and orders
imposed in 1949. The total government import plans and orders in 1949 amounted
to 3,338,975.000 won, whereas the amount actuaL'j imported was 1,348,912,000 won,
or approximately 40 percent of the plans and orders.
The president of the Korean Trading Company believes that the company should
take the initiative in formulating foreign trade programs, based on foreign and
domestic market situations, and submit such programs to the government rather than
for government plane and orders. He believes that there was a lack of interest
and enthusiasm on the part of the company to formulate its own business plans.
Excessive Red Tape
Excessive official routines and delays accompanied the government control of
the Korean Trading Company. For example, when an excess of imports over exports
for 1948 did not show up in the records due to an accounting discrepancy between
the main office and the Hong Kong office, the company's officials were called in
twice by the chairman of the State Planning Commission; eight times by the vice-
minister of commerce; and "innumerable" times by the director of the Foreign
Trade Bureau' gor the purpose of etraigbtenirg out the record. The documents pre-
pared for these conferences reached several hundred pages.
The government control also resulted in a low inventory turnover of imported
goods and the consequent tying up of capital in the inventory because of the offi-
cial delays. It took an average of 29 days from the time the goods entered the
port to the time the company received disposal instructions from the Foreign Trade
Bureau, during which time the goods were held up in the storage and losses occurred
due to damages, deterioration, pilferage, etc.