International Trade Law News

In a notification required by the National Defense Authorization Act for Fiscal Year 2010, President Obama today sent a letter to Congress stating that the Obama Administraition will not reinstate North Korea as a state sponsor of terrorism since it "does not meet the the statutory criteria to again be designated as a state sponsor of terrorism."

Former President George W. Bush announced in June 2008 that North Korea would be removed as a state sponsor of terrorism and in October 2008 Secretary of State Rice signed an order rescinding the designation of North Korea as a state sponsor of terrorism.

Currently, Cuba, Iran, Syria and Sudan are designated as state sponsors of terrorism by the U.S.

Although North Korea is no longer designated as a state sponsor of terrorism is rescinded, North Korea is still included in Country Group E:1 and an export license is required to export or reexport any item subject to the EAR to North Korea, except food and medicines classified as EAR99. While many products are subject to the policy of denial of export licenses, certain humanitarian and other products are subject to a licensing policy of approval.

North Korea also remains subject to a U.S. arms embargo and is subject to a variety of OFAC sanctions, including a prohibition on the import of North Korean products.

Labels: North Korea

• Crew of cargo plane from North Korea detained in Thailand denies knowledge that they were transporting Arms

• German authorities are investigating shipments of high technology to Iran to see if they may have violated export control laws
  

• Federal agents in Dallas have grounded a helicopter that they say Italian aircraft brokers were planning to ship from North Texas to Iran in violation of U.S. trade sanctions.
  
  
• Obama Administration intends to target 'dozens' of IRGC front companies in effort to squeeze Iran 

Labels: Export Controls, North Korea, Sanctions; Iran

The U.S. Department of State today designated two entities in North Korea under Executive Order 13382, which authorizes the blocking of property of persons engaged in proliferation activities and their support networks.

The following is a brief a summary of these entities:

• General Bureau of Atomic Energy (GBAE) -- located in Pyongyang, oversees the North Korean government's nuclear program and manages operations at the Yongbyon Nuclear Research Center.

• Korea Tangun Trading Corporation -- also located in Pyongyang, is subordinate to North Korea’s Second Academy of Natural Sciences and is primarily responsible for the procurement of commodities and technologies to support North Korea’s defense research and development programs and procurement, including materials that are controlled under the Missile Technology Control Regime or the Australia Group.

The two entities designated were also designated by the United Nations in July 2009 for their involvement in North Korea’s WMD and missile programs.

As a result of today's designations, these two entities have been added to OFAC's SDN List, assets of these entities that are within U.S. jurisdiction must be blocked and U.S. persons are prohibited from conducting any transactions with these entities.

Labels: North Korea, OFAC, State Department

The United Nations Security Council today passed a resolution condemning North Korea's May 25th nuclear test and imposing additional multilateral sanctions on North Korea.

Security Council resolution 1874 requires U.N. member states to impose a series of additional measures on North Korea, including tougher inspections of cargo suspected of containing banned items related to the country’s nuclear and ballistic missile activities, a tighter arms embargo (with the exception of light weapons) and new financial restrictions.

Resolution 1874 also condemned North Korea's recent nuclear test on grounds that it was conducted in “violation and flagrant disregard” of relevant Council resolutions, particularly 1695 (2006) and 1718 (2006). The resolution also demands that North Korea “not conduct any further nuclear test or any launch using ballistic missile technology.”

Security Council Resolution 1695, issued in July 2006, required U.N. member states to implement measures to prevent the procurement of missiles or missile related-items, materials, goods and technology from North Korea and the transfer of any financial resources in relation to North Korea's missile or WMD programs.

Among other things, Security Council Resolution 1718, issued in October 2006, required U.N. member states to prevent the transfer to North Korea of luxury goods, certain arms and related materiel, and items that could contribute to North Korea’s nuclear, ballistic missile, and other WMD programs. The resolution also called upon member states to prevent transfers to North Korea of technical training, advice, services or assistance related to the provision, manufacture, maintenance or use of the WMD programs.

Labels: North Korea, United Nations

Japan's Yomiuri Shimbun newspaper reports how North Korea acquired the controlled technology and products from Japan that was likely used in developing the missile launched on Sunday.

The article notes that at "a U.S. Senate hearing in May 2003, an engineer who had defected from North Korea testified that about 90 percent of the parts used for one type of North Korean missile originated in Japan, adding the components were brought into the country by a ferry every two to three weeks."

Labels: Export Controls, North Korea, Sanctions

The U.S. Government quickly reacted to North Korea's launch of a long-range Taep'o-dong 2 missile.

The U.S. Northern Command said that the stage one of the missile fell into the Sea of Japan and the remaining stages, along with the payload, landed in the Pacific Ocean. Despite North Korea's claims of launching a communications satellite into orbit, the Northern Command said no object entered orbit.

While in Prague, President Obama said that "North Korea broke the rules, once again, by testing a rocket that could be used for long-range missiles." He also said that such "provocation underscores the need for action - not just this afternoon at the UN Security Council, but in our determination to prevent the spread of these weapons. Rules must be binding" and "violations must be punished."

Representative Howard Berman (D-CA), Chairman of the House Foreign Affairs Committee issued the following statement:

It is alarming that North Korea carried out this missile launch in direct defiance of the international community. The test is an unnecessary provocation that raises tensions in the region, and I urge the North Koreans to stop using their missile and WMD programs to threaten their neighbors and the rest of the world. Since the launch violates UN Security Council resolution 1718, I urge the Security Council to take strong and concerted action to demonstrate that Pyongyang’s actions are unacceptable. I especially call on both China and Russia to work constructively with other members of the Security Council to show that the world is united in condemning North Korea’s disturbing behavior.

Representative Ileana Ros-Lehtinen (R-FL), the Ranking Republican on the House Foreign Affairs Committee, said North Korea's "launch and its growing partnership with Iran, as well as its reported assistance to Syria's nuclear program, clearly show that Pyongyang's behavior threatens our interests, our forces in northeast Asia, our allies, and global peace and security." As a result, she announced she will soon introduce legislation that requires U.S. economic sanctions and diplomatic isolation to remain in place "until North Korea abandons its illegal nuclear, missile and weapons programs, and resolves the glaring human rights abuses which it has been causing and perpetuating."

Despite the Bush Administration's decision last year to remove North Korea's designation as a State Sponsor of Terrorism, the U.S. still imposes comprehensive restrictions on trade with North Korea under the International Emergency Economics Power Act (IEEPA). For example, an export license must be obtained from the Bureau of Industry and Security (BIS) to export or reexport any item subject to the Export Administration Regulations to North Korea except food and medicine classified as EAR99.

In addition, the Treasury Department's Office of Foreign Assets Control (OFAC) maintains controls on certain transactions involving persons subject to U.S. jurisdiction and North Korean entities or any specially designated North Korean national and prohibits the importation of North Korean goods without prior notification to and approval from OFAC.

The U.N. Security Council will meet at 3 p.m. EDT today to discuss its options, including the possible imposition of additional sanctions.

Labels: North Korea, Sanctions

Secretary of State Rice yesterday signed an order rescinding the designation of North Korea (officially the Democratic People’s Republic of Korea as a State Sponsor of Terrorism, effective immediately.

Even though North Korea’s designation as a state sponsor of terrorism is rescinded, certain U.S. export control requirements related to North Korea’s detonation of a nuclear device in October 2006, proliferation activities and human rights violations, will continue to apply on the basis of other laws and regulations, and in accordance with United Nations Security Council Resolution 1718.

While North Korea's change in status will require a number of changes to the Export Administration Regulations (EAR), such as removing North Korea from Country Group E:1, North Korea is still likely to remain in the four “D” Country Groups and thus subject to national security and/or conventional military; nuclear; chemical and biological; and missile technology controls.

The Department of Commerce's Bureau of Industry and Security (BIS) may also continue to require a license to export or reexport items subject to the EAR to North Korea, except food and medicine classified as EAR99.

In addition, North Korea still remains subject to an arms embargo. A complete list of current sanctions on North Korea can be found here.

Exporters and reexporters of U.S. products should be aware that the changes to U.S. export control laws and regulations will not take effect until published in the Federal Register and thus the status quo will remain until further notice.

Labels: North Korea

From today's Washington Post:

Angry that the United States has not removed it from a list of states that sponsor terrorism, North Korea said Tuesday that it has stopped disabling its nuclear reactor at Yongbyon and will consider rebuilding it.

The announcement comes two months after the communist state released long-awaited details of its plutonium program and dynamited the cooling tower at the reactor -- moves that prompted the Bush administration to say it would drop North Korea from the U.S. terror list and lift some trade sanctions.

Since then, though, the United States has declined to take North Korea off the list, citing lack of progress in the North's promise to allow outside experts to verify the scope its nuclear program.

Labels: North Korea

The Bureau of Industry and Security today published a list of questions and answers for exporters on the recent decision by the President to remove North Korea from the State Sponsor of Terrorism List.

The bottom line is that the decision to remove North Korea from the State Sponsor of Terrorism list will result in virtually no changes for U.S. exporters. The document notes that "Pursuant to Section 746.4 of the EAR, the U.S. Government will continue to require a license for all items subject to the EAR (except food and medicine) and destined for North Korea. 'Items' means 'commodities, software and technology.'"

In addition, the document states that "Once the rescission takes effect, the Department of Commerce plans to amend the EAR to remove North Korea from Country Group E:1 and make other conforming changes to implement the rescission. Removing North Korea from Country Group E:1 will raise the threshold value for calculating the de minimis level of foreign goods destined to North Korea to 25% controlled U.S. content. Currently as a member of Country Group E:1 the threshold value for North Korea is 10%."

Labels: BIS, North Korea

Japan's Daily Yomiuri reports that the Japan-made vacuum pumps found at a North Korean nuclear facility by the International Atomic Energy Agency (IAEA) were exported from Japan to Taiwan and then reexported to a North Korean trading company. The article states that the North Korean trading company, known as Namchongang, is "headed" by a former North Korean diplomat who served as North Korea's representative for purposes of the IAEA inspection of the nuclear complex at Yongbyon, North Korea.

The article also notes that a separate investigation conducted in Germany that found that Namchongang also purchased products from Germany for use in nuclear facilities and exported them to North Korea via Syria.

Japanese police have apparently charged the president of the Japanese trading company with violating Japan's Foreign Exchange and Foreign Trade Law by exporting eight items, including the pumps, without obtaining permission from the Ministry of Economy, Trade and Industry (METI).

Labels: Germany, Japan, North Korea

As a result of North Korea's declaration of its nuclear programs, facilities and materials, today President Bush issued a Proclamation lifting the application of the Trading With the Enemies Act (TWEA) on North Korea. At the same time, the President issued an Executive Order continuing certain restrictions with respect to North Korea that would otherwise be lifted pursuant to the Proclamation terminating the TWEA restrictions on North Korea. As a result, nearly all restrictions that might be lifted by ceasing application of the TWEA on North Korea will remain in place under other U.S. laws and regulations (namely IEEPA) and will not be modified until North Korea cooperates in verifying the accuracy and completeness of its declaration.

In addition, the President today issued a memorandum to to Secretary of State that will authorize the removal of North Korea from the list of State Sponsors of Terrorism in 45 days. North Korea has been considered to be a State Sponsor of Terrorism since January 1988.

Until further changes are announced by Office of Foreign Assets Control (OFAC), the current restrictions on the import of goods of North Korean origin will remain in place. In addition, North Korean blocked funds held by U.S. financial institutions will continue to be blocked until further notice. Exports to North Korea continue to be regulated by the Commerce Department's Bureau of Industry and Security.

Labels: North Korea, OFAC