Items made in North Korea to be labeled South Korea-made

SEOUL, Feb. 26 (UPI) -- Items made in North Korea-based factories will be labeled as South Korea-made as part of the China-South Korea Free Trade Agreement, South Korea's trade ministry said Wednesday.

The products, 310 in total, manufactured in the North Korean city of Kaesong, are made in South Korea-owned factories that employ a North Korean labor force.

The move, the ministry said, will make the products more competitive in the Chinese marketplace. In China, products marked as South Korea-made are highly sought after, Yonhap reported.

In Kaesong, South Korean companies manufacture a wide range of products including rice cookers, clothing and electronics.

A South Korean unification ministry official also told Yonhap on Thursday that the relatively low cost of labor in the Kaesong factory park could help the Korean products to compete with rival items manufactured in China and attract budget-minded Chinese buyers.

The China-South Korea FTA is a bilateral trade deal that will eliminate 70 to 80 percent of tariffs on goods produced in both countries. According to South Korean trade officials in November, the deal could raise trade volume to more than $300 billion between the two countries in 2015.

There are currently 125 South Korean companies employing 54,000 North Koreans in Kaesong, according to Yonhap, but South Korean economic sanctions against North Korea are blocking expansion plans.

The sanctions were placed in May 2010 by the South Korean government in response to a North Korean torpedo attack on the South Korean ship Cheonan.

On Thursday, North Korea notified South Korea of their decision to increase the minimum wage in the Kaesong factories. North Korea wants to raise monthly wages for workers from $155 to $164 but South Korea is refusing the wage hike.

South Korean companies' salaries to North Korean workers represent 15 percent of their basic wages, the rest is subsidized by both governments.

North Korea also said it will collect 15 percent of North Korean workers' total wages, including their overtime payments.