Appendix 1 DMZ


제 목 : Fw: UNITED STATES: North Korea Sanctions. Oxford Analytica.
1 Oct 99

> EVENT: President Bill Clinton's decision to ease US economic
> and trade sanctions on North Korea will allow most non-
> sensitive trade and funds transfers between the two countries.
> SIGNIFICANCE: Sanctions imposed against North Korea as a
> state supporting terrorism remain in place, but there are
> indications that the administration may be preparing to lift
> them in the medium term. These developments mark important
> moves in the ongoing process of trade and aid normalisation.
> CONCLUSION: Domestic and international attention will now
> focus on counter-terrorism and drug sanctions. Removing North
> Korea from the list of states supporting terrorism would be
> politically risky for a Democratic administration in an
> election year. Moreover, the growing evidence of Pyongyang's
> involvement in the drugs trade will fuel demands for North
> Korea to be subject to the certification process and could
> cause tensions between the administration and Congress.
> ANALYSIS: US foreign aid to North Korea and bilateral
> commercial relations have been severely restricted by the
> broad economic and trade embargo imposed during the 1950-53
> Korean war and because North Korea has been designated by the
> US secretary of state as a country that has "repeatedly
> provided support for acts of international terrorism".
> However, on September 17, President Bill Clinton announced
> that many of the sanctions would now be lifted. Those imposed
> against North Korea as a state supporting terrorism will
> remain in place (and new sanctions may be imposed if North
> Korea is designated as a major illicit drug producing country)
> but the effect of Clinton's announcement should be to allow a
> wide range of commercial activity and personal and business
> financial transfers.
> The publicly announced reasons for the decision to ease
> sanctions were to pursue overall improved relations with North
> Korea and to support the 1994 Agreed Framework between the
> United States and Pyongyang. The decision came after
> discussions between US and North Korean officials in Berlin on
> September 7-12. In return for the easing of sanctions, US
> officials expect North Korea to refrain from testing long-
> range missiles (see OADB, August 10, 1999, I).
> The sanctions that the president has eased affect a broad
> range of commercial activity and were those administered under
> the Trading with the Enemy Act, the Defense Production Act,
> and the Commerce Department's Export Administration
> Regulations. The departments of Commerce, Transportation and
> the Treasury have now started to modify commercial regulations
> in order to implement the president's decision, but the
> process is complex, and it could be several months before the
> new regulations actually come into force.
> New trade regime. Under the anticipated new guidelines,
> foreign aid and trade restrictions based on Pyongyang's status
> on the list of states sponsoring terrorism will remain in
> place, as will restrictions on the transfer of military and
> dual-use technologies. However, a broad range of other
> commercial activities will now be allowed:
> 1. Permitted activities. The new guidelines are likely to
> permit most non-sensitive trade and funds transfers between
> the United States and North Korea:
> -- Firms and consumers will be allowed to import most
> types of goods and raw materials originating in North
> Korea into the United States.
> -- US companies and their subsidiaries will be allowed to
> export or re-export most non-sensitive goods and
> services to North Korean entities. This should allow
> the export of most consumer goods, financial services
> and non-sensitive inputs for investment in
> non-sensitive industrial sectors.
> -- US companies and their subsidiaries will be allowed to
> invest in sectors such as agriculture, mining,
> petroleum, timber, cement, transport, travel and
> tourism, and infrastructure (including roads, ports
> and airports).
> -- US nationals will be allowed to send remittances to
> North Korea.
> -- Commercial US ships and aircraft will be permitted to
> transport approved (ie non-sensitive) cargo to and
> from North Korea, subject to normal regulatory
> requirements.
> -- Commercial air services between the United States and
> North Korea will also be allowed, again subject to
> the normal regulatory requirements.
> 2. Terrorism list curbs. Other links will continue to be
> restricted while North Korea remains on the State Department's
> list of states supporting terrorism:
> -- The export of goods or technology on the US 'munitions
> list' (ie information or technology with a clear
> military application) will remain restricted.
> -- The export of dual-use goods or technology that do not
> have a predominant military application but which are
> on the Commerce Control List will continue to require
> a licence.
> -- The provision of foreign assistance under the Foreign
> Assistance Act, the Agricultural Trade and
> Development Act, the Peace Corps Act and the
> Export-Import Bank Act will also remain restricted
> (although many of these restrictions can be waived by
> the president).
> -- US officials will be required to oppose lending to
> North Korea by the international financial
> institutions.
> -- Financial transactions between US persons and the
> North Korean government will be allowed, unless they
> are prohibited by a regulation issued by the
> secretary of the Treasury.
> -- Attempts to claim foreign tax credits on corporate or
> individual income earned in North Korea will remain
> restricted.
> 3. Technology transfer. In addition to the counter-terrorism
> sanctions, a broad range of restrictions on technology
> transfer will remain in place. These include statutory
> restrictions on the export of US missile technology,
> restrictions based on multilateral arrangements (such as the
> Wassenaar arrangement to control the proliferation of military
> and dual-use technology) and other US non-proliferation
> controls:
> -- New export licences for the export to state-controlled
> trading firms of sensitive items controlled by the
> Export Administration regulations or the Arms Export
> Control Act will continue to be banned.
> -- Contracts between the US government and certain North
> Korean entities will remain prohibited.
> -- Importing products made by certain North Korean
> entities into the United States will continue to be
> prohibited.
> -- The export of items for proliferation activities will
> remain banned.
> -- Prohibitions will remain in place on granting new
> licences for US companies or individuals to export
> items controlled by the Arms Export Control Act
> involving any activity of the North Korean government
> related to the development or production of missile
> equipment or technology, or affecting the development
> or production of electronics, military aircraft, or
> space systems and equipment. Similar restrictions
> will be applied on imports to the United States.
> -- Prohibitions will also remain on contracts between
> the US government and any activity of the North
> Korean government relating to the development or
> production of missile equipment or technology and all
> activities affecting the development or production of
> electronics, military aircraft, or space systems and
> equipment.
> In addition, North Korean assets currently frozen under the
> provisions of the Trading with the Enemy Act will remain
> blocked. Clinton's announcement does not address the
> settlement of claims between Pyongyang and the United States,
> leaving open the option to explore these issues at a later
> date.
> Normalisation hurdles. Clinton's announcement continues
> earlier moves to facilitate the development of more normal
> relations between Washington and Pyongyang. In effect, the
> easing of sanctions will allow most US consumer goods to be
> exported to North Korea and permit the importation of most
> categories of goods produced there. Moreover, most personal
> and commercial funds transfers will be allowed, as will
> commercial air and sea transportation for passengers and
> cargo.
> The sanctions easing is a significant step in the
> normalisation process. However, attempts to achieve a full
> normalisation of trade and aid relations will need not only to
> survive the unpredictable behaviour of the Pyongyang regime,
> but also to overcome two key hurdles:
> 1. Terrorism statutes. Removing a country from the list of
> states supporting terrorism involves highly cumbersome
> legislative certification and notification procedures. It is
> generally considered a politically risky move, particularly in
> the run-up to presidential and congressional elections, when
> political opponents are likely to characterise a Democratic
> administration as weak on national security issues. Officials
> were deeply embarrassed when Iraq, the only country to date to
> be removed from the terrorism list (in 1982), was placed back
> on it in 1990.
> The State Department's annual report on 'Patterns of Global
> Terrorism' has used progressively weaker language in recent
> years to describe North Korea's level of support for
> international terrorism. The April 1999 report states that
> North Korea "has not been linked solidly to the planning or
> execution of an international terrorist act since 1987". The
> dilution of the State Department's criticism could pave the
> way for North Korea eventually to be removed from the list.
> 2. Drug certification. Although the trade embargo is being
> eased, and counter-terrorism sanctions may eventually be
> ended, North Korea could find itself subject to sanctions as a
> major illicit drug producing country. There is mounting
> evidence to suggest that North Korea is actively promoting the
> production and trafficking of multiple narcotics as a matter
> of state policy. If the administration is presented with hard
> evidence to substantiate this proposition, it will be
> difficult for US officials not to put North Korea on the lists
> of major illicit drug producing and transit countries. This
> would make Pyongyang subject to the full drug certification
> process and potentially liable to discretionary trade
> sanctions and restrictions on non-humanitarian aid (see OADB,
> September 1, 1999, IV; and OADB, August 31, 1999, IV).
> Keywords: NA, United States, North Korea,
> international relations, industry, economy,
> politics, sanctions, arms control, security,
> narcotics, trade, terrorism
>
>
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>
> Copyright (c) 1999 Oxford Analytica Ltd.
> Received by NewsEDGE/LAN: 01-10-99 5:02 PM