Posts Tagged ‘Sanctions’

Seoul needs sanctions exemptions, official says

Monday, July 23rd, 2018

Benjamin Katzeff Silberstein

If anyone ever doubted that the US and South Korea are not in lockstep on sanctions…The question is how hard Seoul is pushing behind the scenes, and how hard it is prepared to push. Joongang:

A South Korean delegation that traveled to New York over the past weekend said Seoul needed to be exempted from some international sanctions against the North to implement the Panmunjom Declaration.

The remarks came on the same day that U.S. Secretary of State Mike Pompeo reiterated that sanctions against Pyongyang will remain in place until the North fully denuclearizes.

The rare show of discrepancy between the allies came at an unusually sensitive time between the South and North, after North Korean media excruciated South Korean authorities for what it said was kowtowing to the U.S. on inter-Korean issues.

A local official said Pyongyang appeared to be fed up with Seoul’s reluctance to help the regime wiggle out of sanctions.

South Korea’s official stance has been to support sanctions on the North until the country gives up its nuclear weapons, but from time to time officials have expressed a hope to seek exemptions, especially to work out the cross-border projects that South Korean President Moon Jae-in agreed to with North Korean leader Kim Jong-un during their first summit on April 27.

Last Friday in New York, a high-level South Korean official who spoke on the condition of anonymity decided to convey that hope to reporters – just as Pompeo highlighted in a different news conference that all UN member-states unanimously agreed to fully enforce sanctions on the North. The official was part of a delegation led by South Korean Foreign Affairs Minister Kang Kyung-wha, who traveled to New York to co-host a briefing session with Pompeo on peninsular issues for representatives of the UN Security Council.

Soon after the briefing, the official told South Korean correspondents in New York that the South Korean government “needed” some exemption from international sanctions on the North to implement the Panmunjom Declaration, adding that it was asking the international community to grant that exemption as it was leading the North through dialogue and cooperation.

Full article:
Seoul needs sanctions exemption, official says
Jung Hyo-Sik, Yoo Jee-Hye, and Lee Seung-Eun
Joongang Daily
2018-07-23

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US government issues North Korea sanctions advisory

Monday, July 23rd, 2018

Benjamin Katzeff Silberstein

A new advisory was issued today by several US government department, focusing on risks that companies run throughout their supply chains, where North Korean labor may have been involved without said companies knowing. NK News:

The publication of the advisory notice comes three days after U.S. Secretary of State Mike Pompeo visited the UN Security Council (UNSC), where he called for the strict maintenance of sanctions against the DPRK amid current diplomatic engagement.

The purpose of the advisory is to “highlight sanctions evasions tactics used by North Korea that could expose businesses – including manufacturers, buyers, and service providers – to sanctions compliance risks under U.S. and/or United Nations sanctions authorities,” it reads.

“Businesses should be aware of deceptive practices employed by North Korea in order to implement effective due diligence policies, procedures, and internal controls to ensure compliance with applicable legal requirements across their entire supply chains,” it added.

The U.S. Department of State, the Department of the Treasury’s Office of Foreign Assets Control (OFAC), and the Department of Homeland Security’s (DHS) co-authored the advisory.

The notice identifies what the government deemed as two primary risks to businesses, which are the “inadvertent sourcing of goods, services, or technology from North Korea” and “the presence of North Korean citizens or nationals in companies’ supply chains, whose labor generates revenue for the North Korean government.”

Full article:
U.S. government issues North Korea sanctions enforcement advisory
Hamish Macdonald
NK News
2018-07-23

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China investing in North Korean infrastructure, says Kyodo News

Friday, July 20th, 2018

Benjamin Katzeff Silberstein

Kyodo:

China has decided to invest 600 million yuan (about $88.4 million) in infrastructure such as roads in North Korea around a bridge connecting the two countries, bilateral sources said Friday, raising concerns that Beijing may violate U.N. resolutions.

Chinese President Xi Jinping’s leadership is scheduled to start the infrastructure investment by the end of this year, the sources said, as Beijing and Pyongyang have been strengthening their economic cooperation recently.

The effective economic aid would be regarded as a violation of U.N. resolutions aimed at preventing North Korea from producing nuclear weapons and ballistic missiles, U.N. diplomats said.

While preparing to dispense the aid, China is expected to begin negotiations with U.N. Security Council member states with an eye on easing economic sanctions against North Korea, now that Pyongyang has pledged to work toward denuclearization, the sources added.

The new bridge over the Yalu River from the Chinese border city of Dandong, Liaoning Province, to the North Korean county of Ryongchon was completed in 2014 after four years of construction.

But roads connecting to the bridge have yet to be developed on the North Korean side, preventing it from going into operation.

Earlier this month, Liaoning authorities decided to set up a project to support the construction of the roads and the Chinese central government has already approved it, the sources said.

Since March, relations between Beijing and Pyongyang have been markedly improving, with North Korean leader Kim Jong Un visiting China for summit talks with Xi no less than three times.

The two leaders apparently exchanged views on denuclearization on the Korean Peninsula and economic aid, with Kim vowing to build a “powerful socialist economy.” The North Korean leader has often visited the border near China recently.

Full article:
China to invest in infrastructure in N. Korea, may violate sanctions
Kyodo News
2018-07-20

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North Korean-Chinese efforts at scaling back sanctions

Tuesday, July 3rd, 2018

Benjamin Katzeff Silberstein

The following is from Mainichi Shimbun on a North Korean economic delegation trip to China, where it supposedly met with Chinese foreign ministry officials to discuss economic cooperation. Since I don’t read Japanese, I’ve pasted what google translate generated, mostly for my own record-keeping…

[Beijing / Urushima Koji] China has activated diplomatic offensives toward easing sanctions against North Korea. At the end of June, at the end of June, a draft statement for the media to seek relief of sanctions on the UN Security Council was distributed to the Security Council with Russia. At the working-level level in the mid-day and the morning, North Korea’s Kim Bong-tae and foreign minister of foreign affairs have accepted the visit and it seems that they are discussing economic support with a view to easing sanctions due to denuclearization.

According to a source in the middle of the morning, Mr. Kim arrived at Pyongyang airport from Pyongyang this morning. Mr. Kim is said to have been in China, who has led the economic delegation to visit. China’s Ministry of Foreign Affairs Mr. Rikuo avoided confirming the visiting information at a regular press conference the same afternoon, but on the other hand, “While the middle morning is a friendly neighboring country, each level, normal in each field We are maintaining a regular visit. ”

Following the US-North Korea summit meeting in Singapore, China is expected to ease sanctions ahead of the United States and it is believed that it is aimed at advancing negotiations with the US with trade friction etc. advantageously by placing North Korea on the side.

 In the mid-day border zone, there were projects that could support economic assistance to North Korea in the form of technical cooperation even before the easing of sanctions, and negotiation at the worker level was necessary. The Chinese government will maintain normal interaction and cooperation with Korea (North Korea) on the premise that it does not violate international obligations (such as the Security Council sanctions) “(Mr. Shuo Qi · so = = Deputy Press Bureau Director of the Ministry of Foreign Affairs) and It’s a posture.

North Korea’s Kim Jung-eun, the chairman of the Korean Workers’ Party, visited a cosmetic factory in Shinwigu, North Pyongan Province, which borders the mid-day border. Prior to this, he is showing a willingness to emphasize the redevelopment of the mid-North Korean border, such as visiting the area around the economic zones in the same way that it had jointly developed with China.

Source:
North Korea seeks easing sanctions Economic support consultation?
Mainichi Shimbun
2018-07-03

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North Korea’s state-run firms creating smaller firms to evade sanctions

Monday, August 21st, 2017

Benjamin Katzeff Silberstein

Radio Free Asia reports:

Authorities in North Korea are engaging in a new round of changing the composition and names of state-run commercial enterprises to circumvent new sanctions imposed by the United Nations earlier this year as punishment for missile launches and nuclear tests, sources inside the country said.

Since July, authorities have been dividing up state-run trade organizations cited on international sanctions blacklists, giving them new names, and putting them under the nominal ownership of individuals, they said.

Trade enterprises that engage in business activities abroad and generate much-needed foreign currency for the isolated regime are being broken down into smaller firms, a source in the country’s capital Pyongyang said, citing an executive officer at a trade group as the source.

“The main reason the state has decided to enforce the system is to avoid sanctions against it,” the source, who requested anonymity, told RFA’s Korean Service.

Large trading firms, such as the Daeheung General Bureau, Geumgang General Bureau, and Kyonghung Guidance Bureau under Office No. 39 of the ruling Korean Workers’ Party, have been divided into small “private” companies, he said.

The U.S. Treasury Department has described Office No. 39, which is believed to be under the direct control of North Korea’s leader Kim Jong Un, as “a secretive branch of the government … that provides critical support to [the] North Korean leadership in part through engaging in illicit economic activities and managing slush funds and generating revenues for the leadership.”

In a statement issued in November 2010, the U.S. government cited Korea Daesong Bank and Korea Daesong General Trading Corporation as “key components of Office 39’s financial network supporting North Korea’s illicit and dangerous activities.”

Daesong General Bureau’s crude steel firm, for instance, has been split into many private companies, he said. But the companies that operate in China’s special administrative region Macau, where the bureau’s crude steel company is located, continues to do business in the name of the parent firm, the source said.

The Kyonghung Guidance Bureau has a business partner in Guangzhou, a sprawling Chinese port city northwest of Hong Kong on the Pearl River, and runs a port-themed restaurant and store to generate foreign currency for the North Korean government, he said.

The organization also operates the Daedonggang Store and Kyonghung Store in Pyongyang that mainly carry products imported from China, North Korea’s most important trade partner, he said.

“I wonder how they will conduct business if they are split into ‘private’ companies,” the source said.

‘Sneaky’ business

Another source in Pyongyang called the move by state-run trade enterprises to transform themselves into small private firms “sneaky.”

“It is their sneaky plan to avoid strict sanctions against North Korea by disguising state organizations as private firms,” he told RFA.

He said the firms have been trading products with China, Thailand, Malaysia, and other countries under the auspices of state-run organizations in the name of the Democratic People’s Republic of Korea, the formal name of North Korea.

“This has been an important element for their credibility, but using the name of the country has also led them to experience negative consequences while North Korea sanctions are in place against them,” said the source, who declined to be named.

If the state-run organizations violate international sanctions against North Korea, they are not allowed to do business with their partner companies in other countries, he said.

“So, disguising the organizations by turning them into private firms will help them avoid the sanctions,” the source said.

Same old tricks

North Korea has resorted to such tactics in the past by disguising the regime’s commercial activities abroad to lessen the blow of international sanctions imposed in response to nuclear tests in 2006, 2009, and 2013.

The European Union has said that Office 39 is “among the most important organizations assigned with currency and merchandise acquisition” and “engages in illicit economic activity to support the North Korean government” such as the production, smuggling, and distribution of narcotics.

The EU said the office also oversees several trading companies, some of which are active in illicit activities, including the Daesong General Bureau, which is part of Daesong group, the country’s largest company group.

Previous sanctions imposed on the country’s individuals, entities, and firms by the U.S. and the EU have included an arms embargo to try to stop the regime from obtaining weapons and nuclear technology, a freeze on North Korean assets and economic resources held abroad, and a ban on luxury goods sought by senior regime figures.

On Aug. 5, the U.N. adopted a resolution with the most severe sanctions to date against the autocratic regime in response to two tests of intercontinental ballistic missiles in July, which appeared capable of reaching the U.S. mainland.

The U.N. resolution, which bans all exports of North Korean coal, iron, iron ore, lead, lead ore, and seafood, could cut the country’s annual export revenue by a third, reducing it to U.S. $1 billion.

It also imposes new restrictions on North Korea’s Foreign Trade Bank, forbids the country from increasing the numbers of workers it sends abroad to earn money for Pyongyang, and bans the formation of new joint ventures with the regime and new investment in current joint ventures.

Full article:
North Korea’s State-Run Firms Create ‘New’ Smaller Entities to Evade UN Sanctions
Jieun Kim
Radio Free Asia
2017-08-21

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The November 2016 North Korea sanctions: some perspective

Thursday, December 1st, 2016

By Benjamin Katzeff Silberstein

Responding to North Korea’s second nuclear test within one year in September, the United Nations adopted a new sanctions package yesterday, Wednesday November 30th. These are some of the main points:

  • By far, the most significant measure is a “cap” on imports of North Korean coal at $400 million or 7.5 million metric tons in a year, cutting its revenues by about $700 million per year. This is to supplement the current provision that coal can be imported when the proceeds go to livelihood purposes in North Korea, a provision that has proven to be a massive loophole (shocker!).
  • Four more minerals have been added to the sanctions list: copper, nickel, silver and zinc.
  • Exports of statues have been banned, targeting the somewhat peculiar North Korean practice of building statues in various African countries.
  • The resolution also limits the number of staff allowed at North Korean diplomatic missions, and forbids them from opening more than one bank account per person.

So what does this mean for the North Korean economy? Obviously, one shouldn’t speculate too much in advance. As always, China’s enforcement will be the main determinant. Here are some things worth noting:

First, while $400 million cap would certainly be a significant income loss for the North Korean regime, it might not be disastrous. It is worth remembering that North Korean government revenue from minerals exports already fluctuates heavily, since market prices do. Just for a sense of perspective, in 2015, North Korea’s export income stood at about $3 billion, and this was a decrease by 16.4 percent from the preceding year. In 2014, textile exports to China brought in around $800 million. Moreover, the $700 million revenue cut claim does not take into account the extent to which North Korea could make up for the loss through other sectors.

Second, the likelihood of full and consistent Chinese sanctions enforcement remains fairly low at best. Historically, we have seen a pattern where China will increase enforcement during certain time periods, or take single measures that receive a lot of attention (such as the Hongxiang inquiry) but where things return to normal pretty quickly. Case-in-point: the unusually strong sanctions from earlier this year, and the promises of Chinese enforcement, ending with record trade in coal. Obviously the “livelihoods” exemption provided a large enough loophole, particularly after the announcement by the US and ROK that THAAD will be deployed in South Korea. It is difficult to see why this cap would be impossible to circumvent. After all, China is (presumably) responsible for gather the data and for ringing the alarm bells when said cap is reached. (See also Adam Cathcart’s essay on the recent Sino-North Korean rapprochement at Sino-NK).

Third, and relatedly, history tells us that many, many factors other than the international sanctions regime determine Chinese imports of North Korean coal. Domestic demand is arguably far more important as a determinant than sanctions, as evident by the fact that declines in imports of North Korean coal often fluctuate much more with demand than with sanctions.

As always, we can only wait and see, but at the face of it, these new sanctions seem far from revolutionary.

(Update 2016-12-02)

Japan, South Korea and the United States have announced additional, multilateral sanctions independent from those by the U.N. Joshua Stanton over at One Free Korea argues that some of the measures potentially carry some real impact power. For example, they include North Korea’s national carrier Air Koryo. Moreover, they sanction China’s Hongxiang Industrial Development, making it the first time that a single Chinese company is directly targeted by South Korean sanctions. Yonhap:

“We have expanded the number of those subject to sanctions by adding to the list 35 entities and 36 individuals that are playing a critical role in developing weapons of mass destruction and contributing to the North Korean regime’s efforts to secure foreign currency,” Lee Suk-joon, the top official in charge of government policy coordination at the Prime Minister’s Office, told reporters.

Included in the blacklist were Choe Ryong-hae, a vice chairman of the Central Committee of the ruling Workers’ Party, and Vice Marshal Hwang Pyong-so, director of the military’s general political bureau, both of whom are regarded as close aides for North Korean leader Kim Jong-un.

The Workers’ Party and the State Affairs Commission were also added along with other entities suspected of supporting the regime’s efforts to export its coal and generate earnings.

In particular, Dandong Hongxiang Industrial Development and four of its executives were included on the list, marking the first time that a Chinese firm is facing South Korea’s unilateral sanctions.

The company is under investigation on suspicions that it exported aluminum oxide — a nuclear bomb ingredient — to the North at least twice in recent years. In September, the U.S. blacklisted it along with its owner and other company officials.

With the latest action by Seoul, a total of 79 individuals and 69 entities will be subject to sanctions in connection with the North’s nuclear programs. The government announced a blacklist in March as a follow-up move to the UNSC’s Resolution 2270 adopted in the wake of the North’s fourth nuclear test in January.

Any financial transactions with them will be prohibited, while their assets in South Korea will be frozen. The blacklisted people will also be banned from entering the country, which is seen as a symbolic action given that there are no exchanges between the two Koreas.

Other prohibitive measures include blacklisting the North’s state-owned airline Air Koryo on suspicions that it helps its regime transfer workers abroad, and move cash and other embargoed materials into the isolated country.

The Seoul government has also toughened its maritime sanctions by banning any ships that have traveled to the North within the past one year, an extension from the previous 180 days, from entering South Korean ports.

In addition, a watch list “tailored” to enhance the monitoring on activities related to the North’s submarine-launched ballistic missile capability will be prepared and shared with the international community, it said.

Full article:
S. Korea blacklists scores of N. Koreans, entities linked to nuke, missile program
Yonhap News
2016-12-02

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China shuts down part of Dandong-Sinuiju bridge [UPDATE: Delayed]

Wednesday, August 17th, 2016

UPDATE 1 (2016-8-23): Whether true or not, the Daily NK now reports that the bridge closing has been delayed. According to the article:

Necessary repair work on the North Korean side of the bridge connecting the country with China over the Amrok (Yalu) River has been delayed following a last-minute plea by the North Korean authorities, Daily NK has learned.

A source in North Pyongan Province close to the issue told Daily NK on August 22 that Pyongyang cited pressing foreign-currency shortages in its request to the Chinese authorities to put off the month-long maintenance period, scheduled to commence on August 20.

“The Chinese Railway Ministry warned of ‘imminent and severe accidents’ if the bridge [on the North Korean side] remains in its current state of disrepair, ” the source said, “but the North Korean side refused to give in [and begin the repairs] and so customs is still operating normally.”

It is not yet known when the repair work will get underway. “Trading companies were told to operate normally, and affiliated vehicles are increasingly ignoring imposed freight loads limits in a bid to transport the greatest volume of goods possible, the source said.

According to a source close to the issue in China, notwithstanding the maintenance delay, China will continue to exert pressure on North Korea to carry out the repairs on its end. As such, trading companies are overloading vehicles with goods to hedge against the economic losses expected during the repair period.

“Trading companies interpret the ambiguous start date for repairs as an ominous sign. They know that the ax could drop at any time, and that obviously makes it difficult to plan. This notion has ushered in a flurry of trade activity, which in turn evokes a very different environment to the restrictive one palpable following the sanctions implementation,” the North Pyongan-based source concluded.

ORIGINAL POST (2016-8-17): by Benjamin Katzeff Silberstein

A small reminder that border traffic flows can be impacted by other factors than sanctions and policies:

On the heels of a fleeting reopening, China has suspended road traffic and customs operations on the Sino-North Korean Friendship Bridge until critical risks are mitigated on the North Korean side. The move will greatly challenge North Korea’s foreign-currency operations, which lean heavily on Sino-North Korean trade, 70 percent of which flows through the connecting overpass.

“China ordered the repairs after discovering additional risk factors on the North’s side despite the construction work carried out from July to earlier this month,” a source from North Pyongan Province said, adding that construction will begin August 20.
“China’s railway officials detected these dangers, and, in no uncertain terms, demanded the cessation of vehicular transport and the commencement of large-scale restorations.”
This news was corroborated by additional sources in North Pyongan Province.
Saddled with rigid foreign-currency quotas, this is most distressing for North Korean trading companies, she added. And with the prohibitive costs involved in sea transport, these entities are left with little in the way of viable transport alternatives; the railway connection adjacent to the road will remain operational for the duration of the repairs but only for small loads.
The looming trouble Pyongyang faces is, in many respects, self-inflicted– the culmination of securing leadership funds at the expense of vital safety regulations. The recent decision to haphazardly patch over problem areas, rather than administering thorough repairs, despite compelling precedent, being a case in point.
When a truck overturned last year, weight limitations were introduced but remain rarely enforced, particularly for mineral-laden trucks, the most frequently overloaded vehicles.
“Overloading is of little concern the North Korean leadership,” the source asserted. “Their focus is solely on securing enough money, and because they don’t bat an eye about violating customs regulations, trade companies load on as much as they can.”
By unilaterally calling for a traffic block on the bridge, China may be hoping to wrangle North Korea into finally upholding its end of a mutually-beneficial deal sitting just downstream. China invested 340 mil. USD for the new bridge, completed in 2014, but North Korea has yet to build the necessary connecting infrastructure on its side.
Full article:
China shuts down road traffic on Sino-NK bridge
Seol Song Ah
Daily NK
2016-08-17
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China’s enforcement of sanctions on North Korea: a bit of perspective

Thursday, June 2nd, 2016

By Benjamin Katzeff Silberstein

To what extent is China enforcing the latest round of UNSC sanctions on North Korea? This question is as important and interesting as it is nebulously complicated and difficult to answer. For the fact is, like Curtis points out here, that lower coal imports by China from North Korea does not necessarily give evidence to sanctions enforcement. Some of the figures reported in the news concern the value of the imports, which fluctuates with world market prices.

Moreover, as the old saying goes, correlation does not imply causality. In other words, the mere fact that trade in coal and other goods is decreasing does not necessarily mean that it is going down because of sanctions alone. It is worth to remember that Chinese imports of North Korean coal has decreased in the past too, before the latest sanctions round, due to decreased domestic demand and other factors. A whole host of variables other than sanctions may well be at play too.

Looking back at some previous trade data gives some context to the latest reports of decreasing trade. Even though volumes may be down, to fully understand how this impacts the North Korean economy, dollar value terms may be more relevant.

To recap:

  • According to recent data, Chinese imports of North Korean coal have decreased by 20.5 year-on-year for April 2016 (in tonne numbers).
  • According to Yonhap figures, cited here, this translates into a drop from $116.6 a year ago, to $72.27 now. This represents a 37 percent drop.
  • In the pre-sanctions quarter of the year, North Korean exports to China increased by 12 percent.

To put this in perspective, consider the following changes in the past:

  • Between January and November 2014, North Korean exports to China dropped by 12.3 percent in dollar terms.
  • Between 2013 and 2015, the value of coal exports to China dropped by 24.6 percent.
  • Between January and February 2014, total trade between North Korea and China dropped by 46 percent.

The point of citing these numbers is not to show that sanctions are not being implemented by China. Rather, such flows tend to fluctuate quite heavily for other reasons as well, and it is too early to conclude that sanctions are the only reason behind the contraction. As a New York Times story from late March this year showed, Chinese border agents tend to be fairly lax in controlling goods crossing the border – NYT cited a figure of about five percent of all goods being inspected. In sum, it is too early to draw any major conclusions about Chinese sanctions enforcement, and only future data will be able to give a more conclusive picture.

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Nw York Times reports on sanctions enforcement, at Sino-DPRK border

Thursday, March 31st, 2016

By Benjamin Katzeff Silberstein

Just as before, China’s controls over goods flowing across the border with North Korea is spotty at best. According to a New York Times dispatch from the border, Chinese customs authorities only control a small percentage of the goods (particularly relevant parts in bold):

If recent trade here is any indication, that cooperation has been spotty at best.

Cross-border trade, legal and illegal, flows pretty much as usual, and seems to be largely unhindered by the new rules, traders and local officials said.

One of the toughest components, a requirement that countries inspect all cargo entering or leaving North Korea for banned goods, is not enforced here.

On many days, Mr. Qin’s secondhand taxis cross the bridge in a convoy of more than 100 vehicles, including trucks loaded with containers draped in shabby tarpaulins and secondhand minibuses for North Korea’s rickety transportation system. Few are ever inspected by the Chinese authorities.

China accounts for about 90 percent of North Korea’s trade. Half of that business is estimated to flow through Dandong, a boom-and-bust city whose fortunes are tied to trade with North Korea.

Virtually everything that keeps the North Korean economy afloat passes through here: Coal and iron ore come in, violating the sanctions, and crude oil flows out, exempted from them.

Smuggling is rampant. The export of North Korean rare earth minerals and gold, banned under the new rule, is one of the more lucrative revenue sources for the North Korean government, traders said. That business continues on privately owned 200-ton ships belonging to Chinese smugglers based here, they said.

The United Nations rules put the onus on customs inspectors here to judge which goods may help the nuclear program or the military, which are banned, and which are intended for civilians, which are allowed.

On a recent day, the customs checkpoint, a large outdoor parking area adjacent to the bridge, held a collection of China’s castoffs: cheap four-wheel-drive Haval passenger vehicles, discount medicines for hepatitis and tuberculosis, old solar panels to brighten dark houses.

But the customs office here lacks the staff to open all the containers, a local government official said. Like most people interviewed for this article, he spoke on condition of anonymity since there are risks to speaking candidly to foreign media about trade with North Korea.

At peak times, up to 200 trucks a day cross the Yalu River to Sinuiju, North Korea. Before departing, only about 5 percent of the containers they carry are inspected, the official said.

[…]

Virtually everything that keeps the North Korean economy afloat passes through here: Coal and iron ore come in, violating the sanctions, and crude oil flows out, exempted from them.

Smuggling is rampant. The export of North Korean rare earth minerals and gold, banned under the new rule, is one of the more lucrative revenue sources for the North Korean government, traders said. That business continues on privately owned 200-ton ships belonging to Chinese smugglers based here, they said.

The United Nations rules put the onus on customs inspectors here to judge which goods may help the nuclear program or the military, which are banned, and which are intended for civilians, which are allowed.

On a recent day, the customs checkpoint, a large outdoor parking area adjacent to the bridge, held a collection of China’s castoffs: cheap four-wheel-drive Haval passenger vehicles, discount medicines for hepatitis and tuberculosis, old solar panels to brighten dark houses.

But the customs office here lacks the staff to open all the containers, a local government official said. Like most people interviewed for this article, he spoke on condition of anonymity since there are risks to speaking candidly to foreign media about trade with North Korea.

At peak times, up to 200 trucks a day cross the Yalu River to Sinuiju, North Korea. Before departing, only about 5 percent of the containers they carry are inspected, the official said.

[…]

There is, however, evidence of some enforcement in one important area: North Korea’s sale of coal and iron ore, two of its most important exports.

Port authorities here have been fairly vigilant in enforcing the new ban on North Korea’s ragged fleet of more than two dozen cargo ships, two local officials said. The coal they carry earns North Korea as much as $1 billion a year, according to the United States Treasury.

But that ban has been circumvented by smuggling ships and by the transfer of 12 North Korean ships to Chinese ownership, allowing them to dock at Chinese and other ports, a longtime trader, Mr. Yu, said.

A few traders interviewed here said the new rules had crimped their business.

Mr. Zhang, a trader who does tens of millions of dollars a year in business with North Korea, said customs officials had just impounded a big secondhand excavator he had bought from a coal mine in Shanxi Province and sold to a North Korean coal mine for more than $60,000.

Customs inspectors asked how he knew the equipment would not be transferred to the North Korean military. “We didn’t know how to answer,” he said.

But traders and officials expect that after some initial minor squeezing, whatever enforcement there is will be relaxed. Liaoning Province, where Dandong is a prominent city, ranked at the bottom of China’s 31 provinces for economic growth last year, and there was political pressure not to weaken the economy further.

Full article here:

A Hole in North Korean Sanctions Big Enough for Coal, Oil and Used Pianos

Jane Perlez and Yufang Huang

New York Times

03/01/2016

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Chinese local governments formally notified of sanctions against North Korea

Monday, March 21st, 2016

By Benjamin Katzeff Silberstein

I’m not sure if this is anything out of the ordinary or if this is the formal routine every time sanctions have been passed. Nevertheless, it’s an interesting development. If sanctions against North Korea are ever to hit the economy where it hurts, Chinese local governments are perhaps the most important implementers since much (or most) of North Korea’s external trade occurs with them. Korea Herald:

China has notified its local governments on how to implement new U.N. sanctions on North Korea, including specific measures on imports from North Korea, a diplomatic source with knowledge of the matter said Monday.

Kim Hong-kyun, South Korea’s chief nuclear envoy, held talks with his Chinese counterpart, Wu Dawei, last Friday as the two nations vowed to fully implement the new U.N. sanctions against North Korea’s fourth nuclear test and rocket launch.

During the talks, Wu told Kim that China has been “in the process of implementing the new U.N. resolution on North Korea,” said the source, who attended the Friday meeting.

“The Chinese side also believes that strong sanctions are needed to show its sincerity on denuclearization,” the source said.

Earlier this month, the U.N. Security Council levied tougher sanctions against North Korea’s fourth nuclear test on Jan. 6 and the Feb. 7 launch of a long-range rocket, both of which violated previous U.N. resolutions.

The new U.N. sanctions require countries to limit or ban imports of North Korean coal, iron ore and other mineral resources if the proceeds are used for the North’s nuclear and missile programs.

One of the potential loopholes is a provision that allows North Korea to continue exports of coal and iron ore if such transactions are for “livelihood purposes.”

Full article here:
China notifies local gov’ts of new U.N. sanctions on N. Korea
Yonhap News/Korea Herald
2016-03-21

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