North Korea’s Credit Rating to Go Up

After its declaration of nuclear programs, North Korea will be freed from two sorts of sanctions. First, it will be removed from the list of terrorism supporting countries. Second, the U.S. government will put an end to its application to the Trading with the Enemy Act. Such conditions were agreed by Washington and Pyongyang when they announced an agreement on Feb. 13 and a joint statement on Oct. 3 last year. North Korea has a high expectation for the fact that it will be removed from the list of terrorism supporting countries since it can then be freed from a variety of regulations such as the Export Administration Act, the Arms Export Control Act and the Foreign Assistance Act. Accordingly, it is expected that North Korea’s sovereign credit rating will increase and its economic conditions will improve.

Most of all, North Korea can wipe out the disgrace of being a state sponsor of terrorism. A senior official of the Ministry of Foreign Affairs and Trade said, “While participating in the talks, North Korea has a greater interest in freeing itself from the political dishonor of being called a state sponsor of terrorism than in economic issues.”

In order to remove North Korea from the list, the U.S. administration should present its report explaining its decision to remove North Korea from the list of terrorism supporting countries to the Congress 45 days before the date when it hopes North Korea will be effectively cleared from the list. Unless the Congress opposes, the decision takes effect in 45 days. That means North Korea may be off the list in mid August.

Since North Korean operatives apparently exploded Korea Airlines Flight 858 in 1987, North Korea was put on the list of state sponsors of terrorism in January 1988, following Cuba and Iran.

Given that the U.S. administration has the right of decision to put an end to North Korea’s application to the Trading with the Enemy Act, the communist state can be freed from the act immediately. If the act is lifted, North Korean asset frozen in the United States can be released and most regulations on North Korea’s international trade will be lifted. Also, international financial institutions can provide emergency financial support for North Korea. However, even when the two regulations are lifted, North Korea is expected to be put under other regulations over the long term. Under the U.S. regulations on communist states, North Korea will be excluded from the Normal Trade Relations and General System of Preferences. Also, it cannot get aid from Washington based on the Foreign Assistance Act.

A diplomatic source said, “The fact that some sanctions on North Korea will be lifted does not mean the communist state can be totally freed from U.S. regulations immediately. But, it is meaningful in that North Korea can have a chance to restore international confidence.”