2013

Trade with Korea and Canada: 2. trade with the Democratic People’s Republic of Korea (aka. North Korea)

 

In my previous blog, I offered you a reason why I felt Korea-Canada trade relationship is worth a detailed study, and it is because I wanted to show you the partnership at work in the real-world.

That said, let us not forget that there is another Korea, Democratic People’s Republic of Korea (“DPRK”) or commonly known as North Korea. Unfortunately, DPRK-Canada relationship hardly fits under the discussion topic of “partnership”. At the same time, diplomatic relationship (or lack of one) with the DPRK is too important in the eyes of the public and politically explosive to ignore altogether. For that reason, I will deal with DPRK-Canada relationship as a separate matter in this blog.

As stated above, it is a stretch at the least to call the DPRK-Canada relationship a “partnership”. Rather, the relationship of DPRK with Canada, and the rest of the world, is better characterized by the word “sanction”. If you are a newspaper reader (which I’m not, I embarrassingly admit), you must have noticed the latest round of sanctions imposed against the DPRK on March 7, 2013. As such, I will introduce you to the UN sanctions against the DPRK. In recognition of the sensitivity of the issue, I intend to describe factual description of the sanctions.

In general, sanctions against the DPRK may be summarized as below:

(* Canadian sanctions against DPRK is different from and more strict than the UN resolutions described below. Please refer to the link provided at the bottom of this blog *)

  1. Export and import ban
    1. Export to or import from the DPRK of certain weapon-related goods and luxury goods are prohibited; and
    2. Export to or import from the DPRK of certain weapon-related technologies are prohibited;
  2. Restriction and inspection of vessels
    1. Cargo vessels to and from the DPRK are subject to inspection;
    2. Cargo vessels to and from the DPRK that refuse to be inspected are prohibited from entry into a port;
    3. Cargo vessels that are believed to be carrying prohibited goods cannot be serviced (ex: for fuel or maintenance); and
    4. States may prevent aircrafts to and from the DPRK from landing in, taking off or flying over territory of the State;
  3. Travel restriction
    1. Certain individuals and their family members are prohibited from entering into Member States; and
    2. Any individual believed to be working with or assisting the prohibited individuals or entities may be prohibited from entering into Member States;
  4. Financial restrictions
    1. Assets of certain individuals and entities in the territory of Member States are frozen;
    2. Financial institutions are prohibited from providing financial services or transfer to and from the DPRK;
    3. Member States are prohibited from providing public financial assistance for trade with the DPRK;
    4. Member States are called upon to prohibit financial institutions from doing certain businesses with the DPRK; and
    5. Member States are called upon to prohibit financial institutions of the DPRK to undertake certain businesses in their territories, and to prohibit their financial institutions from doing certain businesses in the DPRK;
    6. Exceptions from sanctions for humanitarian and certain other purposes.

The details of the sanctions are complicated and requires us to revisit two past sanctions imposed against North Korea in 2006 (“Resolution 1718”) and 2009 (“Resolution 1874”). Following paragraphs offer summaries of the relevant sanctions.

October 9, 2006 was the date when North Korea first conducted its nuclear test. In response, the UN Security Council adopted sanctions against North Korea in pursuant to Resolution 1718. Under Resolution 1718, the following rules are imposed:

  • Export and import ban
    • s. 8(a): ban on supply, sale or transfer of prohibited goods by all Member States to the DPRK (prohibited goods are certain weapons; related materiel, equipment and technology; and certain luxury goods);
    • s. 8(b): ban on exportation of prohibited goods by the DPRK;
    • s. 8(c): ban on transfer of prohibited technical assistance (including training, advice and services for the purpose of manufacturing, maintaining or using the prohibited goods);
  • Financial restrictions
    • s. 8(d): freeze assets owned or controlled (directly or indirectly) by designated individuals or entities;
    • Travel restrictions
      • s. 8(e): ban against designated persons and their families from entering (including entry-for-transit) a Member State;
  • Restriction and inspection of vessels
    • s. 8(f): to take any other cooperative actions, including inspection of cargo to and from the DPRK, as necessary (note that Member States are only “called upon” to take cooperative actions, which in its ordinary meaning falls short of legally binding obligation).

On May 25, 2009, DPRK conducted another nuclear test. As a response, the Security Council implemented Resolution 1874, which in many aspects reaffirmed the framework of the previous Resolution 1718 and expanded its scope in a number of aspects. In particular, the Resolution 1874:

  • Export and import ban
    • expands s. 8(b) of the Resolution 1718 (s. 9 of the Resolution 1874);
      • ban on DPRK’s exports of prohibited goods is expanded to all arms and related materiel, as well as to financial transactions and technical assistance (including training, advice, and services)
      • expands s. 8(a) of the Resolution 1718 (s. 10 of the Resolution 1874):
      • ban on exports by all Member States to the DPRK of prohibited goods is expanded to all arms (except for small arms or light weapons) and related materiel, as well as to financial transactions and technical assistance (including training, advice, and services);
  • Restriction and inspection of vessels
    • specifically calls upon all States to inspect cargo to and from the DPRK as contemplated by the Resolution 1718 s. 8(f) (ss. 11-17 of the Resolution 1874):
      • all Member States are called upon to inspect cargo to and from the DPRK, if there are reasonable grounds to believe that the cargo contains prohibited good (the cargo may be in the State’s territory or on a vessel on the high-sea; and if the cargo is on the high-sea, the permission from the flag-State is necessary before the inspection);
      • all Member States are authorized to seize and dispose of prohibited goods found during the inspection; and
      • all Member States are prohibited from servicing vessels to and from the DPRK, if they are believed to carry prohibited goods;
  • Financial restrictions
    • expands financial sanction under s. 8(d) of the Resolution 1718 (ss. 18-20 of the Resolution 1874):
      • Member States are called upon to prevent provision of financial services or transfer;
      • Member States and international financial and credit institutions are called upon to not enter into new commitment that confers financial resources to the DPRK; and
      • Member States are called upon to not provide public financial support for trade with the DPRK; and
  • Other
    • calls upon all Member States to prevent teaching or training of DPRK nationals of disciplines which could contribute to the proliferation sensitive nuclear activities and the development of nuclear weapon delivery system (s. 28 of the Resolution 1874).

And of course, on February 12, 2013, the DPRK conducted its latest round of the nuclear test and Security Council implemented Resolution 2094. In this Resolution, the following changes have been made:

  • Travel restrictions and Financial restrictions
    • expands the list of individuals and entities subject to asset freeze and entry ban  (ss. 8-9 of the Resolution 2094);
    • authorizes Member States to ban entry of any individual if determined to be working with or assisting prohibited individuals or entities (s. 10 of the Resolution 2094);
  • Export and import ban
    • expands the list of prohibited luxury goods (s. 23 of the Resolution 2094);
    • calls upon the States to prevent export of any items to the DPRK (s. 18 of the Resolution 2094);
  • Financial restrictions
    • further strengthens and expands financial sanctions (ss. 11-15 of the Resolution 2094):
      • requires Member States to prevent provision of financial services or transfer (transforming what has merely been called upon in the Resolution 1874 into an obligation);
      • prohibits Member States from providing public financial support for trade with the DPRK (as with above, transforming what has been called upon into an obligation);
      • specifically directs Member States to look out for cash transfers in contravention  of the sanctions;
      • additionally calls upon States to prohibit DPRK financial institutions from taking on certain businesses in their territories, and also to prohibit financial institutions from States from doing certain business in the DPRK;
  • Restriction and inspection of vessels
    • requires Member States to inspect vessels to and from the DPRK, and prohibits entry to their ports if the inspection is refused (ss. 16-17 of the Resolution 2094, transforming what had been called upon into an obligation);
    • calls upon the States to deny any aircraft to take off from, land in or fly over their territory, if the aircraft is believed to carry prohibited goods (s. 18 of the Resolution 2094);
  • Other
    • calls upon the States to “exercise enhanced vigilance” over DPRK diplomatic personnel (s. 24 of the Resolution 2094).

There are exceptions in each of the sanction for humanitarian aid and other related purposes.

And “materiel” is the correct spelling – I checked too!

__________CORRECTION________________

In addition to my earlier blog above, I would like to apologize and add that Canadian sanctions against the DPRK is different from and more strict than the UN resolutions described above.

Canadian sanctions against DPRK is provided in the Special Economic Measures (Democratic People’s Republic of Korea) Regulations (SOR/2011-167). Notably, the products within the scope of the sanction are not limited to the “prohibited goods” as in the UN resolutions. It bans any import/export dealings with North Korea for any product. For all other details of the Canadian sanction, please see the link provided above.

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