Archive for the ‘International trade’ Category

DPRK promoting more cabinet involvement in economic affairs

Monday, March 18th, 2013

According to Yonhap (via Global Post):

North Korea revised its trade and customs laws last year to give its cabinet more power over the economy, a copy of the revised laws showed Monday.

The booklet on North Korea laws concerning external economic activities, secured by Yonhap News Agency, showed that the country revised its trade laws in April last year, a first since the previous revision in March 2007.

The revision newly requires trade institutions and other sub-trade groups to have their monthly plans reviewed and approved by the central trade supervision agency, according to the copy of the booklet.

The country’s customs law, also revised in April 2012, indicate that the government has increased its supervision of the customs sector compared with 2007 when the corresponding law was last modified.

The government is also said to be seeking to foster customs specialists and establish an ad hoc committee to review customs affairs.

Analysts said the latest law change suggests that the cabinet’s role in the economic sector has been enhanced compared to the military, which is known to have exerted a strong hold over state affairs reflecting late leader Kim Jong-il’s military-first ideology.

The timing of the revision coincides with incumbent leader Kim Jong-un’s emphasis on the importance of the cabinet in leading national policies. Kim Jong-un took power after the sudden death of his father in late 2011.

“North Korea’s trimming of the trade and customs laws indicates its intention to fasten up the central (government’s) previously loose supervision of trade and customs affairs,” said Im Eul-chul, a research professor of Far Eastern Studies at Kyungnam University. “It is also related with strengthening the role of the cabinet in the economic sector.”

The monthly management of trade performance, envisioned in the revision, reflects the leader’s plan to boost the trade sector as a means of earning more foreign currency, local experts also said. The military’s and the governing Workers’ Party of Korea’s tight hold on economic affairs are widely believed to have posed obstacles in the country’s economic performance.

The booklet, meanwhile, showed that the country rewrote its immigration law last April, doing away with the clause requiring state permission for foreign travelers wanting to travel outside of the capital of Pyongyang. Such a move could allow more freedom of movement by foreign tourists inside the communist country.

Read the full story here:
NK trade-cabinet
Yonhap (Via Global Post)
2013-3-18

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China signs first offshore processing agreement with North Korea

Saturday, March 16th, 2013

By Michael Rank

China has signed its first offshore processing agreement with North Korea, under which four companies in the border city of Hunchun will export textiles which will be made up into shirts in the DPRK, a Chinese website reports.

Under the two-year agreement from January 2013, the textiles will be made up into 8,000 shirts, the report said, adding that the companies will be relieved of some export and import taxes. It gave no further details.

The report said the deal reflected low labour costs in North Korea as well as severe labour shortages in Hunchun, where there is a deficit of 3,500 workers. It said it was the first such agreement not just for Jilin province but for China as a whole, and had the approval of customs headquarters in Beijing.

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Kiribati issued passports to North Korean

Wednesday, March 13th, 2013

According to the Choson Ilbo:

The tiny South Pacific island nation of Kiribati issued passports to North Korean businessmen until 2004 as a “means of generating revenue,” its president has admitted.

There had been speculation for some time that North Koreans engaged in illicit activities such as arms deals were illegally obtaining passports from small countries.

Appearing recently on Australian radio, Kiribati President Anote Tong said he was embarrassed that the passports were reportedly related to international crime. “I can assure you that we had corrected that situation in 2004 when we stopped issuing these passports,” he said.

Late last year, a Japanese activist group said two agents from North Korea, Han Chol [한철] and Ju Ok-hui [주억희), used passports issued by Kiribati and the Seychelles.

They are board members of North Korea’s Tongsin International Trading Corporation, an agency suspected of illegally exporting weapons to Burma and other countries, the group added.

Both Han and Ju were given passports by the Kiribati government in 1996 and by the Seychelles in 2007. The countries reportedly sold passports to foreign businessmen but abandoned the practice due to mounting worries about illicit activities.

A Foreign Ministry official in Seoul said, “Kiribati has been neutral since it won independence from the U.K. in 1979. “It would have been easier for the North Korean agents to travel with those passports rather than with North Korean ones.”

Read the full story here:
South Pacific Island Admits Selling Passports to N.Koreans
Choson Ilbo
2013-3-13

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DPRK illicit trade activities

Monday, March 11th, 2013

Marcus Noland offers a new estimate of the DPRK’s illicit trade activities:

DPRK-Illicit-Trade-2013

According to Marcus Noland:

The chart above shows our estimates of illicit revenues (inclusive of arms sales) as a share of merchandise exports. These are admittedly highly speculative and as a consequence we include high and low estimates as well as a best guess. As one can see, this share has been drifting down for more than a decade as both legitimate trade has expanded, and intensified interdiction efforts have crimped criminal activities. We estimate that in 2011, the illicit share of exports was in the range of 5-20 percent, with our best guess at roughly 10 percent. During the hearings, one of the witnesses, Professor Sung-yoon Lee, claimed that illicit activities account for up to 40 percent of the country’s trade; that statement was probably true in the past, but on our calculation, probably no longer true—though again, all this is highly speculative and anyone who claims that they know the real answer is, in the words of former Vice President Mondale, “a liar or a fool.”

A related issue is the degree to which central authorities exercise control over these activities. Some activities are almost surely subject to central control; some are probably conducted by state entities but without direction from central authorities (or perhaps without even their specific knowledge); some of these activities may well be conducted by what amount to local criminal gangs (which may include state, military, or party officials as participants); some of these activities may be organized by Chinese or other foreign gangs with the acquiesence of North Korea officials. Several years ago, for instance, when their was a crackdown no intellectual property rights theft in China, some of the counterfeiting activity allegedly moved across the border into North Korea where control was more lax.

The message is not that we should slack off in our attempts to eradicate these activities. Even they account for a declining share of the North Korean economy, they are still objectionable. But by the same token, we should not make the analytical mistake of thinking that shutting down these activities will halt the North Korean nuclear program or bring down the regime. The real message here is that the expansion of legitimate trade in recent years has made North Korea less dependent on criminal activities and less vulnerable to their disruption.

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UNSC Resolution 2094: Response to DPRK’s third nuclear test

Thursday, March 7th, 2013

UPDATE 6 (2013-3-11): Here is the DPRK Ministry of Foreign Affairs response to the UNSC Resolution 2094. As you can imagine, they do not approve.

UPDATE 5 (2013-3-8): The full official resolution can be read here.  Here is the DPRK response to 2094. Here is some information on the Chinese response. Here is some more analysis/commentary from Scott Snyder in The Diplomat. Choson Ilbo reports that large North Korean bank accounts exempt from sanctions.

UPDATE 4 (2013-3-7): The resolution has passed 15-0.  Read more at the BBC, Washington Post, New York Times. Marcus Noland commentary here and here. Victor Cha hereNK Leadership Watch has more on the events in Pyongyang

UPDATE 3 (2013-3-7): Once made public, the resolution will be posted here. Steve Herman (via Adam Cathcart) tweeted a link to the draft resolution which has been uploaded to Scribed. It is dated yesterday (2013-3-6).

UPDATE 2 (2012-3-7): Here is a Press Release from the US mission to the UNSC that went out this morning on the new sanctions (Resolution 2094). Thanks to Aidan Foster-Carter.

For reasons of brevity, I have put the entire document into this PDF for download.

UPDATE 1 (2013-3-7): Yonhap offers details on the unpublished sanctions proposal put forth by the US and China:

The three North Korean arms dealers are: Yon Chong-nam, the chief representative for the Korea Mining Developing Trading Corp (KOMID); Ko Chol-chae, the deputy chief representative for the KOMID; and Mun Chong-chol, an official at Tanchon Central Bank, the resolution showed.

KOMID is described by the resolution as North Korea’s “primary arms dealer and main exporter of goods and equipment related to ballistic missiles and conventional weapons,” while the North Korean bank is the “main DPRK (North Korea) financial entity for sales of conventional arms, ballistic missiles, and goods related to the assembly and manufacturing of such weapons.”

The two North Korean entities are the Second Academy of Natural Sciences, which is responsible for research and development of the North’s advanced weapons systems, including “missiles and probably nuclear weapons,” and the Korea Complex Equipment Import Corp. linked to the North’s “military-related sales,” according to the draft.

The Security Council is set to vote on the draft resolution on Thursday in New York.

The new sanctions will also focus on the DPRKs shipping, air, and “financial” industries:

The Security Council “decides that all states shall inspect all cargo within or transiting through their territory that has originated in the DPRK, or that is destined for the DPRK,” the draft said.

It also “calls upon states to deny permission to any aircraft to take off from, land in or overfly their territory, if they have information that provides reasonable grounds to believe that the aircraft contains items” banned by previous U.N. resolutions, the document said.

It also makes it difficult for North Korea to move in and out “bulk cash,” in an effort to squeeze the North Korean elite’s access to hard currency.

The Security Council also calls on all states to “exercise enhanced vigilance over DPRK diplomatic personnel so as to prevent such individuals from contributing to the DPRK’s nuclear or ballistic missile programs,” it said.

The U.N.’s powerful body “expresses its determination to take further significant measures in the event of a further DPRK launch or nuclear test,” the draft warned.

The DPRK’s Uranium enrichment program also gets a mention:

Apparently mindful of the North’s uranium concerns, the draft resolution includes Pyongyang’s uranium enrichment program for the first time, condemning “all the DPRK’s ongoing nuclear activities, including its “uranium enrichment.”

The North claims its uranium enrichment program is for peaceful energy development, but outside experts believe that it would give the country a new source of fission material to make atomic bombs, in addition to its widely known plutonium-based nuclear weapons program.

The DPRK, has of course, issued a response

In response to the proposed U.N. sanctions and ongoing Seoul-Washington joint military drills, the North’s military threatened to scrap the Korean War cease-fire.

Kim Yong-chol, a hard-line North Korean general suspected of involvement in a series of provocations against the South, read the statement on state TV, saying the North “will completely declare invalid” the Armistice Agreement that ended the 1950-53 Korean War.

The North also said it will cut off a military phone line at the truce village of Panmunjom.

South Korea’s military responded to the North’s bellicose threats with a verbal salvo, warning it would strike back at the North and destroy its “command leadership,” if provoked by Pyongyang.

ORIGINAL POST (2013-3-5): According to the New York Times:

The United Nations Security Council moved closer on Tuesday to expanding sanctions on North Korea for its nuclear and ballistic missile activities. The United States and China introduced a resolution that would target North Korean bankers and overseas cash couriers, tighten inspections of suspect ship and air cargo, and subject the country’s diplomats to invasive scrutiny and increased risk of expulsion.

Passage of the measure, drafted in response to the third North Korean underground nuclear test three weeks ago, seemed all but assured, in part because China — North Korea’s major benefactor — participated in drafting the language. It would be the fourth Security Council sanctions resolution on North Korea, which has defied the previous measures with increasing belligerence. A vote was expected on Thursday.

Infuriated, North Korea vowed to scrap the 1953 armistice that halted the Korean War and threatened to attack the United States with what the North Korean government news agency called an arsenal of diverse “lighter and smaller nukes.”

American officials played down the North Korean warning, which echoed bombastic admonitions that have become part of the standard fare from the North. Still, the threat of a North Korean nuclear attack seemed all the more provocative, coming two days after North Korea conveyed a message of friendship to a visiting American group that included Dennis Rodman, the former basketball star.

Susan E. Rice, the United States ambassador to the United Nations, who introduced the resolution in a closed session of the 15-member Security Council, told reporters afterward that it “builds upon, strengthens and significantly expands the scope of the strong U.N. sanctions already in place.”

For the first time, she said, the resolution would target “the illicit activities of North Korean diplomatic personnel, North Korean banking relationships, illicit transfers of bulk cash and new travel restrictions.” In the past, North Korea has been accused of running extensive counterfeiting and illegal drug enterprises, to raise much-needed hard currency.

Ms. Rice declined to predict whether the North would respond with another nuclear test or other retaliation. “All I can tell you is that the international community is united and very firm in its opposition to North Korea’s illicit nuclear and missile programs,” she said. “And the more provocations that occur, the more isolated and impoverished, sadly, North Korea will become.”

The Americans did not publicly release the resolution text. But a Security Council diplomat familiar with the measure, who spoke on the condition of anonymity because the language may still be subject to revision, said it broke new ground with restrictions and prohibitions on North Korean banking transactions, new travel restrictions and increased monitoring of North Korean ship and air cargo.

The diplomat also said that the resolution added a special lubricant and valve, needed for uranium enrichment, to items that North Korea cannot import.

The resolution would also place greater scrutiny on North Korean diplomatic personnel who are suspected of carrying proscribed goods and cash under the guise of official business, exposing them to possible deportation. “We know there are diplomats out there cooking up deals and moving funds around,” the Security Council diplomat said.

Among the other provisions, the diplomat said the resolution also included new language aimed at enforcement that had been absent from the earlier resolutions. It requires, for example, that if a North Korean cargo vessel crew refuses a host country’s request for inspection, the host is under a legal obligation to deny the vessel port access.

If a cargo plane is suspected of carrying prohibited goods to or from North Korea, the resolution would urge, but not require, that it be denied permission to fly over any other country — a new provision that could affect China, which routinely permits North Korean flights over its territory.

Previous rounds of sanctions have blacklisted trading and financial firms believed to be directly involved with nuclear and missile work. The sanctions have also restricted the importation of luxury goods, an effort directed at the country’s ruling elite.

American officials said privately that the latest resolution did not go as far as they would have liked, reflecting China’s insistence that the punitive measures remain focused on discouraging North Korea’s nuclear and missile behavior and avoid actions that could destabilize the country and lead to an economic collapse.

But the text was stronger than what some North Korean experts had anticipated, particularly the measures that could slow or frustrate the country’s banking activities and extensive dependence on cash payments in its trade with other countries.

“Going after the banking system in a broad brush way is arguably the strongest thing on this list,” said Evans J. R. Revere, a former State Department specialist in East Asian and Pacific affairs, and now senior director at the Albright Stonebridge Group, a Washington-based consulting company. “It does begin to eat into the ability of North Korea to finance many things.”

Mr. Revere attributed North Korea’s reaction on Tuesday to an accumulation of perceived affronts: China’s cooperation in drafting the sanctions, the annual military exercises under way between the United States and South Korea, and a hardened attitude by the South’s newly elected president, Park Geun-hye.

“This is North Korea’s way of saying, ‘We know you guys are doing several things, and here is our response,’ ” Mr. Revere said.

Here is coverage in The Guardian.

Here is coverage in the Washington Post.

Here is coverage of the DPRK’s response in CNN.

Here is my archive post on the DPRK’s third nuclear test.

Here is a statement (in Korean) by the North Korean military.

Read the full story here:
U.N. Resolution to Aim at North Korean Banks and Diplomats
New York Times
Rick Gladstone
2013-3-5

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Rason – China – USA sea food trade

Tuesday, March 5th, 2013

According to the New York Times:

At the Red Sun restaurant, a short-order joint on Crab and Beer Streets, live crabs with plump legs wriggle in a cooled tank, fresh from the North Korean coast just two and a half hours away by road.

The cook and owner, Jin Yuansheng, douses the prized crabs in boiling water and adds them to the steaming platters of sea cucumbers, shrimp and squid, also from North Korean waters, that he brings to the table.

This border town in China’s cold and poor northeast abuts North Korea along the icy Tumen River, where a bridge serves as the gateway for a lively commerce in shellfish plumbed from the Sea of Japan off North Korea. It is an exotic niche business in the more than $11 billion annual trade between North Korea and China, which is dominated by China’s purchases of cheap North Korean iron ore and coal.

By encouraging trade with North Korea, China aims to prevent North Korea’s government from collapsing, an outcome that could result in a Korean Peninsula allied to the United States. And business with North Korea serves a domestic goal: it helps employment and incomes in needy Jilin Province, where an estimated two million ethnic Koreans live.

That is where the crabs come in. Scooped from 3,000-foot-deep waters by trawlers crewed by North Korea workers, they are first taken to the North Korean port of Rason, a special enterprise zone serving foreign investors and largely financed by China. The crabs are trucked in ice to the Chinese border town of Quanhe, and then brought to the market in Yanji, or flown to cities across China as a delicacy for the affluent.

“Getting the crabs here is a delicate operation,” said Mr. Jin. “If they are too hot en route, they can die, and if they are too cold, they can freeze to death.”

For Chinese traders, importing crab is a lucrative business. They sell not only to upscale restaurants around China, but also to banquet organizers. The sales pitch stresses what is called the purity of the waters around impoverished North Korea compared with the more polluted seas around industrialized Japan and South Korea.

“The fishermen capture the crab deep down, so it is high quality,” said Qu Baojie, whose company imports crab from Rason. “South Korea and Japan can’t compete.”

His crab, branded as Crab Earth, Crab Heaven, is featured at the buffet of the Golden Jaguar, a fashionable Beijing restaurant, and is sold in red boxes suitable for business gifts, he said.

The fishing operations in Rason, an ice-free port that gives year-round sea access to China’s northeastern provinces, work fairly smoothly, Mr. Qu said. Fishing trawlers equipped with South Korean gear ply the waters at night, returning to shore about 4 a.m.

Their catches are then transferred to a state-owned plant where some crabs are packed live and others are processed, he said. About 300 North Korean workers are employed during the peak September to December fishing season. Fishing during the breeding season of June to September is banned, he said.

His crab business flourishing, he recently bought a new processing factory in Yanji, Mr. Qu said.

Some of the crab meat was vacuum packed in clear plastic, and sold to other Chinese traders, who in turn dispatched it to the United States, he said. The brand name of North Korean crab meat sold in the United States? “They slap on their own brands,” he said of the American buyers.

Read the full story here:
Caught in North Korea, Sold in China, Crabs Knit Two Economies
New York Times
Jane Perlez
2013-3-4

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Grain imports from China fall in January

Monday, March 4th, 2013

According to Yonhap:

North Korea’s grain and fertilizer imports from China nosedived in January, Seoul’s Korea Rural Economic Institute said Sunday, citing data from the Korea International Trade Association.

North Korea imported 2,174 tons of grain and 2 tons of fertilizer from China in the first month of this year, the institute said. By product, flour imports totaled 1,172 tons and corn imports reached 540 tons.

The volume of imported grain marked a mere 9.2 percent of the North’s imports of Chinese grain in the previous month, while the corresponding figure for fertilizer amounted to 20 percent, the institute said.

Compared with the same month of last year, the figures reached 25.9 percent and 0.03 percent, respectively.

“The steep decline in the North’s grain imports from China is very unusual, even considering the past trend of grain imports decreasing every January,” said Kwon Tae-jin, a researcher at the institute.

Read the full story here:
N. Korea’s grain imports from China plunge in Jan.
Yonhap
2013-3-3

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Inter-Korean trade hits record high in 2012

Saturday, February 9th, 2013

According to Yonhap:

Despite rising cross-border tension, the trade between South and North Korea reached a record high last year, government data showed Saturday.

The volume of trade between the two Koreas reached US$1.97 billion in 2012, inching up from the previous record of $1.91 billion in 2010, according to the data by the Korea Customs Service.

South Korean products worth $896.26 million were shipped to North Korea, up 13.4 percent from the previous year.

The amount of products that came here from the North jumped 19.3 percent on-year to $1.07 billion, according to the data.

A total of 99 percent of the volume was shipped through a land route linked to the inter-Korean industrial complex in the North’s border town of Kaesong.

Read the full story here:
Inter-Korean trade hits record high in 2012
Yonhap
2013-2-9

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Chinese company to invest in gold mine, luxury hotel in North Korea

Sunday, February 3rd, 2013

koryo-seven-star-under construction

Pictured Above: New hotel under construction. See more here. I am still not sure about the gold mine.

By Michael Rank

A Chinese company has announced plans to invest $20 million in a gold mine in North Korea as well as in the country’s first five-star hotel, a Chinese-language website reports (http://www.#removed-for-malware-warning-external-site#idprkorea.com/news/news/view.asp?id=2599).

The mine, with deposits of 50 tonnes of gold, is in Unsan county 운산군 in North Phyongan province 평안북도 in northwestern North Korea near the Chinese border.

The report said Weijin Investment Group is the first Chinese company from Hunan province to invest in North Korea.

It quoted Weijin chairman Xia Juhua as saying, “North Korea is backward in infrastructure construction, so we can fulfill the requirements of mineral resources exploitation by offering technology and management support to the country’s key projects like highways and hotels”.

He said Wejin plans to construct a 30-storey, five-star hotel to be completed this year but did not give a location. Xia also mentioned plans to invest in the rare earth sector in North Korea but gave no details.

The report said about 200 Chinese companies were investing in North Korea and that over 70% were focusing on the mining sector. But at least one of these ventures went spectacularly sour last year, when the Chinese partner launched an extraordinarily bitter attack on its North Korean counterpart, accusing the North Koreans of tearing up a multi-million-dollar deal, intimidating its staff, imposing outrageous extra charges and cutting off its power and water, as well as of corruption and demanding prostitutes whenever their North Korean colleagues visited China.

UPDATE (2013-3-13): NK News has published that the hotel will be named “Yonggwang Hotel (영광호텔)”…which is the name of the closest metro stop.

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Taepung International Investment Group allegedly dissolved

Friday, February 1st, 2013

According to Yonhap:

North Korea dissolved a well-known state-run company in charge of attracting foreign investment due to its unsatisfactory performance, South Korea’s Unification Ministry said Friday.

“Daepung International Investment Group seems to have been disbanded, probably due to poor performance,” a ministry official said in a briefing on governmental and personnel changes taken under the Kim Jong-un regime over the past year.

The country also broke up another extra-governmental organization in charge of trade promotion and foreign investment with its work believed to have been reassigned to the government’s Commission for Joint Venture and Investment, according to the official.

Daepung Group was established at the instruction of the North’s highest political body, the National Defense Commission, in January 2010 as a means to attract foreign investment.

The group oversaw the now-suspended joint tourist program in Mount Kumgang on the eastern coast of North Korea.

The cross-border program had served as a cash cow for the North before Seoul halted it in 2008 following the shooting death of a South Korean tourist at the resort.

Additional Information:

1. Previous posts on the Taepung Investment Group can be found here.

2. NK Leadership Watch has an excellend review of the organization here.

3. The “Commission for Joint Venture and Investment” is also known as the Joint Venture Investment Committee (JVIC). See JVIC posts here.

Read the full story here:
N. Korea dissolves state-run firm in charge of attracting foreign investment: gov’t
Yonhap
2013-2-1

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