North Korea: Legislative Basis for U.S. Economic Sanctions

North Korea: Legislative Basis for U.S. Economic Sanctions Dianne E. Rennack Specialist in Foreign Policy Legislation April 25, 2011January 6, 2015 Congressional Research Service 7-5700 www.crs.gov R41438 CRS Report for Congress Prepared for Members and Committees of Congress North Korea: Legislative Basis for U.S. Economic Sanctions Summary U.S. economic sanctions imposed on North Korea are instigated by that country’s activities related to weapons proliferation; regional disruptions; terrorism; narcotics trafficking; undemocratic governance; and illicit activities in international markets, including money laundering, counterfeiting of goods and currency, and bulk cash smuggling. The sanctions have the following consequences for U.S.-North Korea relations: • Trade is minimal and mostly limited to food, medicine, and other humanitarianrelated goods. North Korea has no advantageous trade status and is outright denied certain goods—including luxury goods—and trade financing, primarily due to its proliferation activities. The Department of Commerce places North Korea in the two most restricted country groups for exports; imports require a license from the Treasury Department’s Office of Foreign Assets Control; using a North Korea-flagged vessel for any transaction is prohibited. • Foreign aid is minimal and mostly limited to refugees fleeing North Korea; broadcasting into the country; nongovernmental organization programs dedicated to democracy promotion, human rights, and governance; emergency food aid; and aid related to disabling and dismantling the country’s nuclear weapons program. By law, U.S. representatives in the international financial institutions (IFI) are required to vote against any support for North Korea due to its nuclear weapons ambitions. Human rights and environmental activities would also likely result in U.S. objections to North Korea’s participation in the IFI. • Arms sales and arms transfers are fully denied. • Assets are blocked for certain individuals and entities, should such assets come under U.S. jurisdiction. Since the outbreak of the Korean War in 1950, the United States had imposed fairly comprehensive economic, diplomatic, and political restrictions on North Korea. In 1999, however, President Clinton announced he would lift many restrictions on U.S. exports to and imports from North Korea in areas other than those controlled for national security concerns; the Departments of Commerce, Treasury, and Transportation issued new regulations a year later that implemented the new policy. On June 26, 2008, President George W. Bush removed restrictions based on authorities in the Trading With the Enemy Act and the terrorism designation, replacing them with more circumscribed economic restrictions related to proliferation concerns. The U.S. sanctions in place are a result both of requirements incorporated into U.S. law by Congress and decisions made in the executive branch to exercise discretionary authorities. Though the President, in accordance with the Constitution, leads the way in conducting foreign policy, Congress holds substantial power to shape foreign policy by authorizing and funding programs, advising on appointments, and specifically defining the terms of engagement in accordance with U.S. political and strategic interests. This report presents the legislative basis for U.S. sanctions policy toward North Korea. These sanctions are a critical tenet of the larger bilateral relationship, and this report highlights Congress’s role and responsibility in determining the nature of U.S.-North Korea relations. This report focuses on U.S. law and does not address the impact or effectiveness of the sanctions; several other reports available from CRS address these matters. See Appendix A for a selected list of other CRS products relating to U.S.-North Korea relations. Congressional Research Service North Korea: Legislative Basis for U.S. Economic Sanctions Contents Background ...................................................................................................................................... 1 U.S. Economic Sanctions Currently in Place ...................................................................................3 4 Trade .......................................................................................................................................... 4 National Emergency Because of Threat to U.S. National Security ....................................4. 5 Terrorism ............................................................................................................................. 6 Nonmarket Economy .........................................................................................................6 Proliferator.. 7 Proliferator .......................................................................................................................... 7 Aid ............................................................................................................................................. 8 Nonmarket Economy ........................................................................................................... 9 Arms Sales and Arms Transfers............................................................................................... 10 Access to Assets ...................................................................................................................... 11 Declaration of National Emergency .................................................................................. 11 Proliferation of Weapons of Mass Destruction .................................................................. 12 Counterfeiting and Money-Laundering ............................................................................. 13 Concluding Observations .......................................................................................................... 14 Appendixes Appendix A. Selected CRS Products Relating to North Korea ................................................... 15 15 Appendixes Appendix BA. North Korea—Economic Sanctions Currently Imposed in Furtherance of U.S. Foreign Policy or National Security Objectives ............................................................... 16 Appendix C. North Korean Entities Cited for Activities in Violation of U.S. Law ...................... 21 Appendix D. North Korean Individuals Cited for Prohibited Activities Under U.S. Law ............ 29 Contacts Author Contact Information .. 16 Contacts Author Contact Information............................................................................................................... 29 21 Congressional Research Service North Korea: Legislative Basis for U.S. Economic Sanctions Background The United States imposes economic sanctions on North Korea for activities related to weapons proliferation; regional disruptions; terrorism; narcotics trafficking; undemocratic governance; and illicit illicit activities in international markets, including money laundering, counterfeiting of goods and currency, and bulk cash smuggling. In addition, although President George W. Bush removed the government of North Korea from the list of state sponsors of acts of international terrorism in June 2008, the Department of Commerce continues to identify North Korea as a terrorismsupporter for purposes of export control policy. United States law has been applied to North Korea in the following ways in response to the North Korean government’s objectionable activities:1 • North Korea poses a threat to U.S. national security because of “the current existence and risk of the proliferation of weapons-usable fissile material on the Korean Peninsula”, as declared by President George W. Bush on June 26, 2008, under the terms of the National Emergencies Act (NEA) and the International Emergency Economic Powers Act,2 and expanded and adjusted by President Obama in 2010 and 2011;3 (IEEPA);2 • North Korea is cited by the United Nations Security Council4Council3 for its nuclear weapons and ballistic missiles pursuits, withdrawal from the Treaty on the NonProliferation of Nuclear Weapons, and contribution to regional tensions; the United States meets the requirements as a member state of the United Nations pursuant to the United Nations Participation Act of 1945 to implement sanctions adopted by the U.N. Security Council; • North Korea is a Marxist-Leninist state, with a Communist government, and stated as such in the Export-Import Bank Act of 1945, as amended, and further restricted under the Foreign Assistance Act of 1961; • North Korea has engaged in proliferation of weapons of mass destruction, the State Department finds pursuant to the Arms Export Control Act, Export Administration Act of 1979, Iran, North Korea, and Syria Nonproliferation Act of 1 Appendix Bcommitted an unprovoked attack that resulted in the sinking of a South Korean naval vessel, Cheonan; announced a new nuclear test and missile launches in 2009; engaged in money laundering, counterfeiting of goods and currency, bulk cash smuggling, and narcotics trafficking, all in violation of U.N. Security Council Resolutions, leading to President Obama to expand the national emergency in 2010 and 2011;4 1 Appendix A lists U.S. statutory authorities used to form the economic sanctions regime. Executive Order 13466, “Continuing Certain Restrictions With Respect to North Korea and North Korean Nationals,” 73 F.R. 36787, June 26, 2008; 31 CFR Part 510, November 4, 2010. The same day, the President found that continuing the national emergency first proclaimed under authority of the Trading With the Enemy Act (Presidential Proclamation 2914; December 16, 1950; 15 F.R. 9029) was “no longer in the national interest of the United States.” Presidential Proclamation 8271; June 26, 2008; 73 F.R. 36785. That day, he also certified that the Government of North Korea had met the requirements of U.S. law to be found to no longer support acts of international terrorism. Memorandum of June 26, 2008; 73 F.R. 37351. The Secretary of State, a few months later, issued a rescission of North Korea’s listing as a terrorist supporter, as required by law. Department of State Public Notice 6415; October 11, 2008; 73 F.R. 63540. CRS Report RL31696, North Korea: Economic Sanctions Prior to Removal from Terrorism Designation, provides details on the statutes relating to a terrorism designation. The President is required to continue annually any national emergency he issues under the National Emergencies Act, or it expires, along with the sanctions established under the International Emergency Economic Powers Act (IEEPA). President Obama renewed the national emergency declared in Executive Order 13466 in memoranda issued on June 24, 2009 (74 F.R. 30457), and again on June 14, 2010 (75 F.R. 34317). 3 Executive Order 13551, “Blocking Property of Certain Persons With Respect to North Korea,” 75 F.R. 53837, August 30, 2010; and Executive Order 13570, “Prohibiting Certain Transactions With Respect to North Korea,” 76 F.R. 22291, April 20, 2011.President Obama cited sec. 5 of the United Nations Participation Act of 1945 (P.L. 79-264; 22 U.S.C. 287c) authorities in addition to those provided in NEA and IEEPA. 4 United Nations Security Council Resolution 1718 (2006), October 14, 2006 (U.N. document S/Res/1718 (2006); United Nations Security Council Resolution 1874 (2009), June 12, 2009 (U.N. document S/Res/1874 (2009). 2 Congressional Research Service 1 North Korea: Legislative Basis for U.S. Economic Sanctions United Nations Security Council Resolution 1718 (2006), October 14, 2006 (U.N. document S/Res/1718 (2006); United Nations Security Council Resolution 1874 (2009), June 12, 2009 (U.N. document S/Res/1874 (2009). 4 Executive Order 13551, “Blocking Property of Certain Persons With Respect to North Korea,” 75 F.R. 53837, August (continued...) 2 Congressional Research Service 1 North Korea: Legislative Basis for U.S. Economic Sanctions • North Korea is a Marxist-Leninist state, with a Communist government, and stated as such in the Export-Import Bank Act of 1945, as amended, and further restricted under the Foreign Assistance Act of 1961; • North Korea has engaged in proliferation of weapons of mass destruction, the State Department finds pursuant to the Arms Export Control Act, Export Administration Act of 1979, Iran, North Korea, and Syria Nonproliferation Act of 2000, and a national emergency declared by President George H. W. Bush relating to the proliferation of such weapons; • North Korea is not cooperating fully with U.S. antiterrorism efforts, the State Department has determined, under terms of the Arms Export Control Act; and • North Korea has detonated a nuclear explosive device, President George W. Bush has determined, pursuant to the Arms Export Control Act, the Atomic Energy Act, and the Export-Import Bank Act of 1945.; and • North Korea engaged in “provocative, destabilizing, and repressive actions and policies,” including “destructive, coercive cyber-related actions during November and December 2014,” actions in violation of a multitude of U.N. Security Council resolutions, and commission of serious human rights abuses.5 At the President’s discretion, North Korea also could be subject to economic sanctions provided in three provisions of law addressing human rights conditions: the Foreign Assistance Act of 1961, the International Religious Freedom Act of 1998, and the Trafficking Victims Protection Act of 2000. The United States’ concerns about North Korea’s pursuit of nuclear weapons capability emerged in the 1980s when that country’s nuclear weapons program became apparent. In the 1990s, the two countries negotiated an Agreed Framework to freeze North Korea’s plutonium-based nuclear energy program and provide heavy fuel oil until light-water reactors could be brought on-line, all funded to varying degrees by the European Union, Japan, South Korea, and the United States. In October 2002, it came to light in negotiations between U.S. and North Korean government officials that North Korea was pursuing a uranium-based nuclear weapons capability. Diplomacy over North Korea’s nuclear weapons program then entered a new phase; the Agreed Framework was abandoned and the United States, North Korea, South Korea, China, Japan, and Russia convened a new forum—the Six Party Talks. Despite several steps forward, including the United States ending decades-long sanctions imposed at the outset of the 1950-1953 conflict and its delisting of North Korea as a supporter of international terrorism, the Six Party Talks collapsed in late 2008. (...continued) 30, 2010; and Executive Order 13570, “Prohibiting Certain Transactions With Respect to North Korea,” 76 F.R. 22291, April 20, 2011. President Obama cited Section 5 of the United Nations Participation Act of 1945 (P.L. 79-264; 22 U.S.C. 287c) authorities in addition to those provided in NEA and IEEPA. 5 Executive Order (as yet unnumbered), “Imposing Additional Sanctions With Respect to North Korea, January 2, 2015 (White House Press Release). The 2015 Executive Order also draws on authorities granted the President in the Immigration and Nationality Act (8 U.S.C. 1182(f)) to deny entry into the United States of any person designated pursuant to IEEPA authorities. See Presidential Proclamation 8693 of July 24, 2011, “Suspension of Aliens Subject to United Nations Security Council Travel Bans and International Emergency Economic Powers Act Sanctions,” 76 F.R. 44751. Congressional Research Service 2 North Korea: Legislative Basis for U.S. Economic Sanctions During this period and continuing today, North Korea engaged in a number of acts that the international community has deemed provocative. Over July 5-6, 2006, in April 2009, and again in April 2009, in December 12, 2012, North Korea tested short-range and long-range ballistic missiles with varying degrees of success, the first tests since 1998. On October 8, 2006, May 25, 2009 and and again on May 25, 2009February 12, 2013, North Korea reported that it had detonated a nuclear explosive device. The international community responded to the missile tests and nuclear detonations by taking the issue to the U.N. Security Council, which adopted resolutions that condemned the weapons tests and called on member states to impose economic sanctions. On March 26, 2010, a South Korean Navy ship, the Cheonan, was struck by a torpedo while sailing in the West Sea. The ship sank and 46 crew members were killed. The South Korean Ministry of National Defense formed a Civilian-Military Joint Investigation Group—with participants from five other nations including the United States—which found that the Cheonan was torpedoed by a North Korean submarine. North Korea denied involvement. The U.N. Security Council, in a presidential statement, condemned the attack, and acknowledged both the findings of the Investigation Group and the disavowal by North Korea.5 5 Civilian-Military Joint Investigation Group, On the Attack Against the ROK Ship Cheonan, Ministry of National Defense, Republic of Korea, September 2010; U.N. Security Council, Presidential Statement (U.N. document, S/PRST/2010/13, July 9, 2010). Congressional Research Service 2 North Korea: Legislative Basis for U.S. Economic Sanctions 6 President Obama assigned responsibility to North Korea for the sinking of the Cheonan when, on August 30, 2010, he announced he was expanding the scope of the national emergency declared in 2008, and the United States was taking additional steps to curtail economic activity with North Korea: the continued actions and policies of the Government of North Korea, manifested most recently by its unprovoked attack that resulted in the sinking of the Republic of Korea Navy ship Cheonan and the deaths of 46 sailors in March 2010; its announced test of a nuclear device and its missile launches in 2009; its actions in violation of UNSCRs 1718 and 1874, including the procurement of luxury goods; and its illicit and deceptive activities in international markets through which it obtains financial and other support, including money laundering, the counterfeiting of goods and currency, bulk cash smuggling, and narcotics trafficking, destabilize the Korean peninsula and imperil U.S. Armed Forces, allies, and trading partners in the region, and thereby constitute an unusual and extraordinary threat to the national security, foreign policy, and economy of the United States.67 President Obama’s explicit identification of all features of North Korea’s objectionable behavior constituting the threat is unusual compared to other invocations of his IEEPA authorities.7 The statute 8 The statute requires only that the President find that a threat to U.S. national security, foreign policy, or or economy exists, and that its source is “in whole or substantial part outside the United States.” Justifying the declaration of the emergency based onThe President identified North Korea’s attack of the Cheonan and other acts of regional destabilization, pursuit of weapons of mass destruction and the means to deliver them, noncompliance with U.N. requirements, money laundering, counterfeiting, smuggling, and narcotics trafficking narcotics trafficking as compounding the threat. To this list, the President added, in January 2015, “cyber-related actions ... and commission of serious human rights abuses,” the latter a nod to ground-breaking efforts in December 2014 in the United Nations General Assembly to refer 6 Civilian-Military Joint Investigation Group, On the Attack Against the ROK Ship Cheonan, Ministry of National Defense, Republic of Korea, September 2010; U.N. Security Council, Presidential Statement (U.N. document, S/PRST/2010/13, July 9, 2010). 7 Executive Order 13551, “Blocking Property of Certain Persons With Respect to North Korea,” 75 F.R. 53837, September 1, 2010. 8 50 U.S.C. 1701 notes. Congressional Research Service 3 North Korea: Legislative Basis for U.S. Economic Sanctions reports of human rights atrocities in North Korea’s prison system to both the U.N. Security Council and the International Criminal Court. Justifying the declaration of the emergency based on these wide-ranging activities accomplishes a number of goals: • It confirms the United States’ full support of and participation in implementation of the U.N. Security Council resolutions. • It provides a clear list of concerns members of the U.S. diplomatic corps might raise and emphasize when speaking with North Korea’s trading partners and benefactors. • It states indisputable goals for North Korea to strive toward, meet, and surpass. It should be noted, however, that each of these forms of objectionable behavior likely would be grounds, under current law, for restricting trade, aid, arms sales, and access to assets even if the national emergency were to be revoked. U.S. Economic Sanctions Currently in Place Contrary to commonly expressed views, the United States does not maintain a comprehensive embargo against North Korea. The U.S. government does not prohibit travel to North Korea, for example, nor does it deny trade in basic goods. United States economic sanctions imposed on North Korea, as a result both of requirements in U.S. law and decisions made in the executive branch to exercise discretionary authorities, have the following impact: 6 Executive Order 13551, “Blocking Property of Certain Persons With Respect to North Korea,” 75 F.R. 53837, September 1, 2010. 7 50 U.S.C. 1701 notes. Congressional Research Service 3 North Korea: Legislative Basis for U.S. Economic Sanctions • Trade is minimal and mostly limited to food, medicine, and other humanitarianrelated goods. North Korea has no advantageous trade status and is outright denied certain goods—including luxury goods—and trade financing, primarily due to its proliferation activities. The Department of Commerce places North Korea in the two most restricted country groups for exports; imports require a license from the Treasury Department’s Office of Foreign Assets Control; using a North Korea-flagged vessel for any transaction is prohibited. • Aid is minimal and mostly limited to refugees fleeing North Korea; broadcasting into the country; nongovernmental organization programs dedicated to democracy promotion, human rights, and governance; emergency food aid; and aid related to disabling and dismantling the country’s nuclear weapons program. By law, U.S. representatives in the international financial institutions (IFI) are required to vote against any support for North Korea due to its nuclear weapons ambitions. Human rights and environmental activities would also likely result in U.S. objections to participation in the IFI. • Arms sales and arms transfers are fully denied. • Access to assets of certain individuals and entities, should such assets come under U.S. jurisdiction, is blocked. Trade The United States curtails trade with North Korea for reasons of regional stability, that country’s support for acts of international terrorism (though North Korea is no longer designated as a state Congressional Research Service 4 North Korea: Legislative Basis for U.S. Economic Sanctions sponsor of terrorism), lack of cooperation with U.S. antiterrorism efforts, proliferation, and its status as a Communist country and a nonmarket economy. The United States also prohibits transactions relating to trade with certain North Korean entities identified as those who procure luxury goods, launder money, smuggle bulk cash, engage in counterfeiting goods and currency, and traffic in illicit narcotics. National Emergency Because of Threat to U.S. National Security Trade with North Korea is significantly restricted because of that country’s demonstrated pursuit of nuclear weapons and the means to deliver them. Though President Bush, in June 2008, determined that North Korea had cleared the bar and would no longer be characterized as a state sponsor of acts of international terrorism, and Secretary of State Rice, in October 2008, removed the terrorism designation, the Department of Commerce continues to restrict exports to North Korea for anti-terrorism reasons.9 Commerce’s primary means of controlling exports is through the administration of Export Administration Regulations (EAR), in which goods to be controlled for a variety of reasons— national security, foreign policy, short supply, compliance with international agreements, to name a few—are categorized. Recipient countries are also characterized, from allies for which little licensing is required, to rogue states for which export licensing is all but completely denied. Commerce identifies North Korea among the most restricted trade destinations—Country Group E:1, Terrorist Supporting Countries—which severely limits its access to computers, software, Congressional Research Service 4 North Korea: Legislative Basis for U.S. Economic Sanctions national security-controlled items, items on the Commerce Control List (CCL),810 and service or repair of such items. A U.S. exporter intending to ship any goods subject to the Export Administration Regulations (EAR), except for food and medicine not on the CCL, is required to obtain an export license. Commerce also identifies North Korea in the second most restrictive country group—Country Group D. U.S. exports to countries in Group D are restricted for reasons of national security [D:1], nuclear activities [D:2], chemical and biological weapons activities [D:3], and missile technology activities [D:4]., and countries subject to arms embargoes as identified by the State Department [D:5].11 As a result, U.S. exporters are likely to be denied licenses to export any any controlled item if North Korea is the destination. In June 2007, Commerce eased licensing requirements so that food, medicine, and humanitarian assistance items could be made available, but at the same time imposed new licensing prohibitions on the export and reexport of luxury goods to implement the terms of U.N. Security Council Resolution 1718.9 12 9 See, especially, 15 CFR Part 742.19, “Anti-terrorism: North Korea.” The Secretary of Commerce establishes and administers the Commerce Control List (CCL), goods controlled for national security reasons, pursuant to Section 5(c) of the Export Administration Act of 1979 (P.L. 96-72; 50 U.S.C. App. 2404(c)). 11 For arms embargoed [D:5] country designations, see 22 CFR Part 126.1. See also 15 CFR Part 740 Supp. 1 for Country Group Lists. 12 Department of Commerce. Bureau of Industry and Security. 15 CFR Parts 732, 738, 740, 742, 746, 772, and 774. “North Korea: Imposition of New Foreign Policy Controls.” January 26, 2007; 72 F.R. 3722-3730. The notice identifies luxury goods to include, in part: …luxury automobiles; yachts; gems; jewelry; other fashion accessories; cosmetics; perfumes; furs; designer clothing; luxury watches; rugs and tapestries; electronic entertainment software and equipment; recreational sports equipment; tobacco; wine and other alcoholic beverages; musical instruments; art; and antiques and collectible items, including but not limited to rare coins and (continued...) 10 Congressional Research Service 5 North Korea: Legislative Basis for U.S. Economic Sanctions Thus, a U.S. company may apply for a license to export to North Korea, but for nearly all items other than food and medicine, there is a presumption of denial. The EAR identify license exceptions; those wishing to export to North Korea, however, are not eligible for these exceptions except in highly circumscribed instances.1013 The Office of Foreign Assets Control, within the Department of the Treasury, must approve any U.S. importation from North Korea, and weighs all requests in the context of proliferation and , money laundering, counterfeiting, bulk cash smuggling, narcotics trafficking, or other illicit economic activity, and who in North Korea might profit. Generally, anyAny transfer frominvolving the government of North Korea to Korea, any senior DPRK government official, or a DPRK person or entity designated as a Specially Designated National pursuant to any of the series of executive orders relating to North Korea, to a person under U.S. jurisdiction is prohibited.1114 The President, in Executive Order 13570 of April 18, 2011, stated: Except to the extent provided in statutes or in licenses, regulations, orders, or directives that may be issued pursuant to this order, and notwithstanding any contract entered into or any 8 The Secretary of Commerce establishes and administers the Commerce Control List (CCL), goods controlled for national security reasons, pursuant to sec. 5(c) of the Export Administration Act of 1979 (P.L. 96-72; 50 U.S.C. App. 2404(c)). 9 Department of Commerce. Bureau of Industry and Security. 15 CFR Parts 732, 738, 740, 742, 746, 772, and 774. “North Korea: Imposition of New Foreign Policy Controls.” January 26, 2007; 72 F.R. 3722-3730. The notice identifies luxury goods to include, in part: …luxury automobiles; yachts; gems; jewelry; other fashion accessories; cosmetics; perfumes; furs; designer clothing; luxury watches; rugs and tapestries; electronic entertainment software and equipment; recreational sports equipment; tobacco; wine and other alcoholic beverages; musical instruments; art; and antiques and collectible items, including but not limited to rare coins and license or permit granted prior to the date of this order, the important into the United States, directly or indirectly, of any goods, services, or technology from North Korea is prohibited.15 United States persons are also prohibited from registering a vessel in North Korea; obtaining authorization to fly the North Korean flag on a vessel; or owning, leasing, operating, or insuring any vessel so flagged.16 Terrorism North Korea is among those countries listed as being in violation of section 40A of the Arms Export Control Act, which prohibits the selling or licensing of defense articles or defense services to any country that the President finds “is not cooperating fully with United States antiterrorism efforts.” The President is required to make such a determination annually, and the prohibition may be waived on grounds that it is in the national interest to do so.17 (...continued) stamps. These and similar items have been imported by North Korea for the use and benefit of government officials and their families, rather than for the good of the North Korean people. This language generally is stated at 15 CFR Part 746.4(b)(1). See also Supplement No. 1 to 15 CFR Part 746— Examples of Luxury Goods following 15 CFR Part 746. 1013 15 CFR Part 746.4(b)(4) provides that licenses “are subject to a general policy of approval” if the intended export is a humanitarian item “(e.g., blankets, basic footware, heating oil, and other items meeting subsistence needs) intended for the benefit of the North Korean people; items in support of United Nations humanitarian efforts; and agricultural commodities or medical devices items that are determined by BIS [Bureau of Industry and Security].” 15 CFR Part 746.4(c) provides that some licensing is possible for items used by news media, U.S. government, International Atomic Energy Agency (IAEA), the European Atomic Energy Community (Euratom), safe operation of civil aircraft, operation technology related to other legally exported commodities, and some gift parcels if no luxury goods are included. 11 31 CFR Part 500.586. Congressional Research Service 5 North Korea: Legislative Basis for U.S. Economic Sanctions license or permit granted prior to the date of this order, the important into the United States, directly or indirectly, of any goods, services, or technology from North Korea is prohibited.12 United States persons seeking to import a product from North Korea must determine, and inform OFAC, whether the product to be imported is produced by • “a foreign person whose actions triggered” import sanctions for certain missile proliferation activities; • “an activity of the government of North Korea relating to the development or production of any missile equipment or technology; or” • “an activity of the government of North Korea affecting the development or production of electronics, space systems or equipment, and military aircraft.”13 The regulations do not define what might be related to the development or production of materials used in missiles, electronics, space systems, military aircraft, and related technology. United States persons are also prohibited from registering a vessel in North Korea; obtaining authorization to fly the North Korean flag on a vessel; or owning, leasing, operating, or insuring any vessel so flagged. 14 Terrorism North Korea is among those countries listed as being in violation of section 40A of the Arms Export Control Act, which prohibits the selling or licensing of defense articles or defense services to any country that the President finds “is not cooperating fully with United States antiterrorism efforts.” The President is required to make such a determination annually, and the prohibition may be waived on grounds that it is in the national interest to do so. 1514 31 CFR Part 510.201. 15 Section1, Executive Order 13570, 76 F.R. 22291, April 18, 2011. 16 Executive Order 13466, “Continuing Certain Restrictions With Respect to North Korea and North Korean Nationals,” 73 F.R. 36787, June 26, 2008. See also 31 CFR Part 510, issued November 4, 2010. 17 22 U.S.C. 2781. The most recent certification, Department of State Public Notice 8754 of May 12, 2014 (79 F.R. 32357; June 4, 2014), includes Cuba, Eritrea, Iran, North Korea, Syria, and Venezuela. This section of law was added to the Arms Export Control Act in late 1996; North Korea has been included on the list each year since its inception. Congressional Research Service 6 North Korea: Legislative Basis for U.S. Economic Sanctions Nonmarket Economy The Trade Agreement Extension Act of 1951 required the suspension of Most-Favored-Nation trade status (MFN, which is now known as Normal Trade Relations (NTR)[NTR]) for all Communist Communist countries except Yugoslavia. As a result, North Korea was denied MFN trade status on September 1, 1951. North Korea remains listed in the headnotes of the Harmonized Tariff Schedule of the United States (HTSUS) as a Rate of Duty Column 2 country (along with Cuba). As a result, while trade is not prohibited with North Korea under the relevant trade laws, tariffs are set at the highest rates for imports from that country. 16 A side result of being denied MFN or NTR status is that any such 12 Section1, Executive Order 13570, 76 F.R. 22291, April 18, 2011. 31 CFR Part 500.586(b)(2)(i). 14 Executive Order 13466, “Continuing Certain Restrictions With Respect to North Korea and North Korean Nationals,” 73 F.R. 36787, June 26, 2008; 31 CFR Part 500.586. See also 31 CFR Part 510, issued November 4, 2010. 15 22 U.S.C. 2781. The most recent certification, issued by the Secretary of State on May 5, 2010 (75 F.R. 28848), includes Cuba, Eritrea, Iran, North Korea, Syria, and Venezuela. This section of law was added to the Arms Export Control Act in late 1996; North Korea has been included on the list each year since its inception. 16 Harmonized Tariff Schedule of the United States, general note 3(b). 13 Congressional Research Service 6 North Korea: Legislative Basis for U.S. Economic Sanctions 18 A side result of being denied MFN or NTR status is that any such country is also denied preferential trade treatment under the Generalized System of Preferences (GSP), pursuant to the Trade Act of 1974.1719 As a nonmarket economy found to deny its citizens the right or opportunity to emigrate, North Korea is not eligible to participate in any U.S. government program that makes credit, credit guarantees, or investment guarantees available, nor may the President enter into any commercial agreement with the country.1820 Proliferator On several occasions, North Korean entities have been found to be in violation of U.S. missile nonproliferation laws. 1921 Once a finding is made, the imposition of sanctions is mandatory, though sanctions may be waived if the President finds it “essential to the national security of the United States” to do so. The severity of the sanction depends on the type of material or technology transferred. The duration of the sanction also depends on the material or technology involved; generally sanctions are imposed for two years or more. Sanctions include, at a minimum, a denial of contracts with agencies of the U.S. government, denial of licenses for items on the U.S. Munitions List (USML),2022 and, at a maximum, a denial of all licenses for importing into the United States for the foreign person or entity. Because North Korea is a nonmarket economy, 2123 all relevant activities of the government of North Korea are also sanctioned when entities in North Korea are found to have engaged in proliferation under U.S. law. With the nuclear weapons test of October 8, 2006, President Bush exercised the authority granted his office to cut off all foreign aid except humanitarian and food aid, deny sales or transfers of defense articles and defense services, deny export licenses for items on the USML, deny foreign military financing, deny credit underwritten or provided by government coffers, withhold U.S. support in the international financial institutions, deny export licenses for dual-use items, and 17 18 Harmonized Tariff Schedule of the United States, general note 3(b). Section 502(b)(1) of P.L. 93-618 (19 U.S.C. 2461). 20 Section 402 of the Trade Act of 1974, popularly referred to as the Jackson-Vanik amendment (19 U.S.C. 2432), and sec.Section 409 of that Act (19 U.S.C. 2439). 1921 Section 73 of the Arms Export Control Act (P.L. 90-629; 22 U.S.C. 2797b), sec.Section 11B of the Export Administration Administration Act (P.L. 96-72; 50 U.S.C. App. 2410b), and secs. 2 and 3 of the Iran, North Korea, and Syria Nonproliferation Act of 2000 (P.L. 106-178; 50 U.S.C. 1701 note), as amended. North Korea was added to the latter Act on October 13, 2006, with the signing into law of the North Korea Nonproliferation Act of 2006 (P.L. 109-353; 120 Stat. 2015). See Appendices C and D for lists of North Korean entities and individuals, respectively, cited for proliferation activities, and the country in which the trading partner was likely based (when available). 2022 “In furtherance of world peace and the security and foreign policy of the United States, the President is authorized to control the import and export of defense articles and defense services and to provide foreign policy guidance to persons of the United States involved in the export and import of such articles and services.” To accomplish this, the President is authorized to designate items to be controlled—the United States Munitions List (USML). Section 38(a)(1) of the Arms Export Control Act (P.L. 90-629; 22 U.S.C. 2778(a)(1)). The USML may be found at 22 CFR Part 121.1. 2123 Section 74(a)(8)(B) of the Arms Export Control Act (P.L. 90-629; 22 U.S.C. 2797c(a)(8)(B)) applies restrictions to a government of a country deemed to be a nonmarket economy when an entity under the jurisdiction of that government engages in missile proliferation activities, because the separation between government and commerce is not distinct. Section 74 provides, in part: “…in the case of countries with non-market economies … the term ‘person’ means … all activities of that government relating to the development or production of any missile equipment or technology; and … all activities of that government affecting the development or production of electronics, space systems or equipment, and military aircraft….” 18 Congressional Research Service 7 North Korea: Legislative Basis for U.S. Economic Sanctions withhold Export-Import Bank support.22(continued...) 19 Congressional Research Service 7 North Korea: Legislative Basis for U.S. Economic Sanctions With the nuclear weapons test of October 8, 2006, President Bush exercised the authority granted his office to cut off all foreign aid except humanitarian and food aid, deny sales or transfers of defense articles and defense services, deny export licenses for items on the USML, deny foreign military financing, deny credit underwritten or provided by government coffers, withhold U.S. support in the international financial institutions, deny export licenses for dual-use items, and withhold Export-Import Bank support.24 At the time, the United States already maintained a fairly comprehensive sanctions regime on North Korea, thus most of these relationships were already broken or limited. Aid North Korea’s access to U.S. foreign assistance is limited in annual foreign operations appropriations measures.2325 Under the Department of State, Foreign Operations, and Related Programs Appropriations Act, 24 North Korea is generally denied direct foreign aid, economic support funds (ESF) for energy-related programs, and direct loans, credits, insurance and guarantees of the Export-Import Bank. The prohibitions on direct foreign aid to North Korea also make that country ineligible for Millennium Challenge Account programs.25 At the President’s discretion, North Korea is also subject to the economic sanctions provided in three provisions of law addressing human rights conditions: the Foreign Assistance Act of 1961,26 under which North Korea is annually castigated for its human rights record; the International 22 26 North Korea is generally denied direct foreign aid, economic (...continued) government of a country deemed to be a nonmarket economy when an entity under the jurisdiction of that government engages in missile proliferation activities, because the separation between government and commerce is not distinct. Section 74 provides, in part: “…in the case of countries with non-market economies … the term ‘person’ means … all activities of that government relating to the development or production of any missile equipment or technology; and … all activities of that government affecting the development or production of electronics, space systems or equipment, and military aircraft….” 24 Section 102 of the Arms Export Control Act (P.L. 90-629; 22 U.S.C. 2799aa-1), popularly referred to as the Glenn amendment; sec.Section 2(b)(4) of the Export-Import Bank Act of 1945 (P.L. 79-173; 12 U.S.C. 635(b)(4)); and the current Department of State, Foreign Operations, and Related Programs Appropriations Act, 2010 (division F of the Consolidated Appropriations Act, 2010; P.L. 111-117; 123 Stat. 3034 at 3312), relating to Export-Import Bank funding. On December 7, 2006, President Bush determined that North Korea, a non-nuclear-weapon state, had detonated a nuclear explosive device, citing sec.Section 102(b) of the Arms Export Control Act and sec.Section 129 of the Atomic Atomic Energy Act. Presidential Determination No. 2007-07. Public Papers of the President. December 18, 2006. 2325 When appropriations law prohibits the availability of foreign aid, however, numerous exceptions to the law allow aid to be made available for targeted programs. Thus, programs in nonproliferation, demining, child survival, conservation and biodiversity, food aid, debt buybacks, health and disease prevention, unanticipated contingencies, international disaster assistance, and antiterrorism, may be funded or supported in spite of country-specific restrictions. The President also is authorized, under sec.Section 614 of the Foreign Assistance Act of 1961 (22 U.S.C. 2364) to furnish foreign foreign aid “without regard to any provision of this Act, the Arms Export Control Act, any law relating to receipts and credits credits accruing to the United States, and any Act authorizing or appropriating funds for use under this Act….” 2426 Division FJ of the Consolidated and Further Continuing Appropriations Act, 20102015 (P.L. 111-117; 123 Stat. 3034 at 3312), as continued by sec. 1101(a)(6) of the Department of Defense and Full-Year Continuing Appropriations Act, 2011 (P.L. 112-10; 125 Stat. 38). See particularly sec. 7007—Prohibition Against Direct Funding for Certain Countries (123 Stat. 3345); and sec. 7071(f)—Asia/North Korea (123 Stat. 3390). Section 2120(d)(6) of P.L. 112-10 removes a discretionary restriction 113-2325; 128 Stat. 2130 at 2573), See particularly Section 7007—Prohibition Against Direct Funding for Certain Countries (128 Stat. 2603); and Section 7043(d)— East Asia and the Pacific (128 Stat. 2649). Sec, 7032(h)—Democracy Programs (128 Stat. 2621) also continues funding the State Department’s database of North Korea’s gulags and prisons, begun the previous appropriations cycle by Section 7032(i) of P.L. 113-76 (128 Stat. 513). Previously, Section 2120(d)(6) of P.L. 112-10 removed a discretionary restriction on food aid for FY2011 stated in the FY2010 Act, which read, in part: “(6) … the Secretary of State shall report to the Committees on Appropriations the amount the Secretary determines the Government of North Korea owes the Government of the United States for the unsupervised distribution of food assistance provided by the United States: Provided, that the Secretary of State should reduce any assistance made available to the Government of North Korea by such amount, unless the Secretary reports … that the Government of North Korea provided such food assistance to eligible recipients as intended ….” Subsequent to its nuclear tests, North Korea would also be denied U.S. Export-Import Bank support under this Act— see title VI (123128 Stat. 33412598). In the Korean Human Rights Act of 2004 (P.L. 108-333; 22 U.S.C. 7801 et seq.), Congress authorized as amended, Congress authorizes funding for FY2005FY2013 through 20122017 for various aid and diplomacy programs for refugees from from North Korea (migration and refugee assistance); up to $82 million per year for broadcasting into the country; $3.5 million in 5 million per year in economic support funds for programs promoting democracy, human rights, and governance; and Economic Support Funds to promote human rights, address needs of North Korean refugees, improve accountability of humanitarian humanitarian assistance inside the country, improve the flow of information into and out of the country, and promote a peaceful reunification of the peninsula under a democratic government. 25 Millennium Challenge Act of 2003 (division D of title VI of P.L. 108-199; 22 U.S.C. 7701 et seq.); Millennium Challenge Corporation, “Report on Countries That Are Candidates for Millennium Challenge Account Eligibility in Fiscal Year 2011 and Countries that Would Be Candidates But for Legal Prohibitions,” Notice of August 25, 2010 (75 F.R. 52990). 26 Sections 116 and 502B of P.L. 87-195 (22 U.S.C. 2151n and 2304, respectively), as amended. Congressional Research Service 8 North Korea: Legislative Basis for U.S. Economic Sanctions Religious Freedom Act of 1998,27 (continued...) Congressional Research Service 8 North Korea: Legislative Basis for U.S. Economic Sanctions support funds (ESF) for energy-related programs, and direct loans, credits, insurance and guarantees of the Export-Import Bank. The prohibitions on direct foreign aid to North Korea also make that country ineligible for Millennium Challenge Account programs.27 At the President’s discretion, North Korea is also subject to the economic sanctions provided in three provisions of law addressing human rights conditions: the Foreign Assistance Act of 1961,28 under which North Korea is annually castigated for its human rights record; the International Religious Freedom Act of 1998,29 under which the administration has identified North Korea as a “country of particular concern” since 2001; and the Trafficking Victims Protection Act of 2000,2830 under which the administration has, since 2003, classified North Korea as a Tier 3 (most severe) offender of standards pertaining to the trafficking of persons for slavery or sex trade. Because of North Korea’s failure to comply with minimum standards relating to trafficking in persons, President Obama, in 2010, strengthened the sanctions against North Korea to deny foreign assistance and also to deny “funding for participation by officials or employees of such governments in educational and cultural exchange programs for the subsequent fiscal year.”29Any31Any sanctions imposed pursuant to these acts would be largely redundant, however, with penalties already prescribed to North Korea for the above-stated reasons. Under Department of Defense Appropriations, 20112015, North Korea is denied assistance under that act “unless specifically appropriated for that purpose.”3032 Nonmarket Economy The Export-Import Bank Act of 1945 singles out Marxist-Leninist countries for denial of guarantees, insurance, credit, or other Bank funding programs. North Korea is specifically cited as a Marxist-Leninist country for purposes of the Export-Import Bank.3133 The Foreign Assistance Act of 1961 denies most non-humanitarian foreign assistance to any Communist country. North Korea is among five countries so designated, though the law is not limited to those countries named. 32 Several laws deny benefits or assistance to Communist countries, but do not explicitly name any particular state. Because North Korea has been denied such benefits or aid in the course of the events of the early 1950s and thereafter, these other sections of law would probably be redundant if applied to or cited for North Korea. In some instances, the President may determine that, for purposes of a particular law, North Korea is no longer a “Marxist-Leninist state.” If, however, all other aspects of the U.S.-North Korea relationship were to improve, it would probably be necessary for Congress to remove North Korea from the list set out in the Export-Import Bank Act and the Foreign Assistance Act of 1961, 27 28 P.L. 105-292 (22 U.S.C. 6401 et seq.). P.L. 106-386 (22 U.S.C. 7101 et seq.). 29 Sec.34 (...continued) peaceful reunification of the peninsula under a democratic government. 27 Millennium Challenge Act of 2003 (division D of title VI of P.L. 108-199; 22 U.S.C. 7701 et seq.); Millennium Challenge Corporation, “Report on Countries That Are Candidates for Millennium Challenge Account Eligibility in Fiscal Year 2015 and Countries that Would Be Candidates But for Legal Prohibitions,” Notice of August 25, 2014 (79 F.R. 50704). 28 Sections 116 and 502B of P.L. 87-195 (22 U.S.C. 2151n and 2304, respectively), as amended. 29 P.L. 105-292 (22 U.S.C. 6401 et seq.). Department of State. “Secretary of State’s Determination Under the International Religious Freedom Act of 1998,” Public Notice 8875 of September 16, 2014 (79 F.R. 57171; September 24, 2014). 30 P.L. 106-386 (22 U.S.C. 7101 et seq.). Department of State. Trafficking in Persons Report 2014. http://www.state.gov/documents/organization/226844.pdf 31 Section 110(d)(1)(A)(ii) of P.L. 106-386; Presidential Determination No. 2011-15 of September 10, 2010 (75 F.R. 67017). 3032 Section 8042 of the Department of Defense Appropriations, 20112015 (division AC of P.L. 112-10; 125 Stat. 68). 31113-235). 33 Section 2(b)(2) of P.L. 79-173 (12 U.S.C. 635(b)(2)); amended in 1986 to include this ban on funding to MarxistLeninist states. 3234 Section 620(f) of P.L. 87-195 (22 U.S.C. 2370(f)). Consider also subsec. (h) of that section, which requires the President to “adopt regulations and establish procedures to insure that United States foreign aid is not used in a manner which, contrary to the best interests of the United States, promotes or assists the foreign aid projects or activities of any country that is a Communist country for purposes of subsection (f).” Consider also sec. 5(b) of the Export Administration Act of 1979 (P.L. 96-72; 50 U.S.C. App. 2404(b)), which requires the President to “establish as a list of controlled countries those countries set forth in section 620(f) of the Foreign Assistance Act of 1961....” Congressional Research Service 9 North Korea: Legislative Basis for U.S. Economic Sanctions (continued...) Congressional Research Service 9 North Korea: Legislative Basis for U.S. Economic Sanctions Several laws deny benefits or assistance to Communist countries, but do not explicitly name any particular state. Because North Korea has been denied such benefits or aid in the course of the events of the early 1950s and thereafter, these other sections of law would probably be redundant if applied to or cited for North Korea. In some instances, the President may determine that, for purposes of a particular law, North Korea is no longer a “Marxist-Leninist state.” If, however, all other aspects of the U.S.-North Korea relationship were to improve, it would probably be necessary for Congress to remove North Korea from the list set out in the Export-Import Bank Act and the Foreign Assistance Act of 1961, or necessary for the President to exercise waiver authority made available to his office under those acts, to make these other laws inapplicable to North Korea.3335 Arms Sales and Arms Transfers The International Traffic in Arms Regulations (ITAR), administered by the Department of State, begins: It is the policy of the United States to deny licenses and other approvals for exports and imports of defense articles and defense services, destined for or originating in certain countries. This policy applies to Belarus, Cuba, Eritrea, Iran, North Korea, Syria, and Venezuela. This policy also applies to countries with respect to which the United States maintains an arms embargo (e.g., Burma, China, Liberia, andand the Republic of the Sudan) or whenever an export would not otherwise be in furtherance of world peace and the security and foreign policy of the United States.3436 The first ITAR was issued on August 26, 1955; North Korea has been listed as a restricted country from the ITAR’s inception. North Korea is also restricted under ITAR as the United States denies North Korea conventional arms to comply with U.N. Security Council requirements. 3537 Importing of defense articles and defense services is similarly restricted by the Department of Justice’s Bureau of Alcohol, Tobacco, Firearms, and Explosives, the regulations of which state: It is the policy of the United States to deny licenses and other approvals with respect to defense articles and defense services originating in certain countries or areas. This policy applies to Afghanistan, Belarus (one of the states composing the former Soviet Union), Cuba, Iran, Iraq, Libya, Mongolia, North Korea, Sudan, Syria, and Vietnam. This policy applies to countries or areas with respect to which the United States maintains an arms embargo (e.g., Burma, China, the Democratic Republic of the Congo, Haiti, Liberia, Rwanda, Somalia, Sudan, and UNITA (Angola)). It also applies when an import would not be in furtherance of world peace and the security and foreign policy of the United States.36 Again, the President has the authority to change these regulations by removing North Korea from the list of restricted countries. 33 For example: sec. (...continued) President to “adopt regulations and establish procedures to insure that United States foreign aid is not used in a manner which, contrary to the best interests of the United States, promotes or assists the foreign aid projects or activities of any country that is a Communist country for purposes of subsection (f).” Consider also Section 5(b) of the Export Administration Act of 1979 (P.L. 96-72; 50 U.S.C. App. 2404(b)), which requires the President to “establish as a list of controlled countries those countries set forth in section 620(f) of the Foreign Assistance Act of 1961....” 35 For example: Section 620(h) of the Foreign Assistance Act of 1961 (P.L. 87-195; 22 U.S.C. 2370(h)), secs. 502(b)(1) and (b)(2)(A) of the Trade Act of 1974 (P.L. 93-618; 19 U.S.C. 2462(b)(2)(A)), sec.Section 5(b) of the Export Administration Administration Act of 1979 (P.L. 96-72; 50 U.S.C. App. 2404(b)), and sec.Section 43 of the Bretton Woods Agreements Act (P.L. 79-171; 22 U.S.C. 286aa), the latter of which requires the U.S. Executive Directors to the International Monetary Fund “to actively oppose any facility involving use of Fund credit by any Communist dictatorship....” 3436 22 CFR Part 126.1(a), authorized pursuant to sec.Section 38 of the Arms Export Control Act (P.L. 90-629; 22 U.S.C. 2778). 3537 U.N. Security Council Resolution 1718 (2006), October 14, 2006 (U.N. document S/Res/1718 (2006)); U.N. Security Council Resolution 1874 (2009), June 12, 2009 (U.N. document S/Res/1874 (2009)). 36 27 CFR Part 447.52, also authorized under sec. 38 of the Arms Export Control Act. Congressional Research Service 10 North Korea: Legislative Basis for U.S. Economic Sanctions Congressional Research Service 10 North Korea: Legislative Basis for U.S. Economic Sanctions It is the policy of the United States to deny licenses and other approvals with respect to defense articles and defense services originating in certain countries or areas. This policy applies to Afghanistan, Belarus (one of the states composing the former Soviet Union), Cuba, Iran, Iraq, Libya, Mongolia, North Korea, Sudan, Syria, and Vietnam. This policy applies to countries or areas with respect to which the United States maintains an arms embargo (e.g., Burma, China, the Democratic Republic of the Congo, Haiti, Liberia, Rwanda, Somalia, Sudan, and UNITA (Angola)). It also applies when an import would not be in furtherance of world peace and the security and foreign policy of the United States.38 Again, the President has the authority to change these regulations by removing North Korea from the list of restricted countries. Access to Assets Declaration of National Emergency On June 26, 2008, when the Six Party Talks appeared to be making progress, President Bush determined it was no longer in the national interest to continue certain restrictions imposed on trade and transactions with North Korea, in place since 1950.3739 At the same time, however, he found that—3840 …the current existence and risk of the proliferation of weapons-usable fissile material on the Korean Peninsula constitute an unusual and extraordinary threat to the national security and foreign policy of the United States, and I hereby declare a national emergency to deal with that threat. I further find that, as we deal with that threat through multilateral diplomacy, it is necessary to continue certain restrictions with respect to North Korea that would otherwise be lifted pursuant to a forthcoming proclamation that will terminate the exercise of authorities under the Trading With the Enemy Act…. Accordingly, I hereby order… the following are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in: • all property and interests in property of North Korea or a North Korean national that … were blocked as of June 16, 2000,39 and remained blocked immediately prior to the date of this order. • United States persons may not register a vessel in North Korea, obtain authorization for a vessel to fly the North Korean flag, or own, lease, operate, or insure any vessel flagged by North Korea. Generally, the President has the authority to change regulations, as long as those changes meet the requirements of any relevant law. He must also annually revisit his declaration of a state of national emergency; it expires if the President does not renew it. He could allow the declaration to expire, or he could lift it at any time. And Congress could terminate a declaration of national emergency by passing a joint resolution under terms of the National Emergencies Act. 37 41 and remained blocked immediately prior to the date of this order. 38 27 CFR Part 447.52, also authorized under Section 38 of the Arms Export Control Act. The President. “Termination of the Exercise of Authorities Under the Trading With the Enemy Act With Respect to North Korea,” Proclamation 8271 (June 26, 2008; 73 F.R. 36785). On December 16, 1950, President Truman invoked authority granted his office under the Trading With the Enemy Act (TWEA) to declare that a U.S. national emergency existed because of the outbreak of the Korean War (and events elsewhere, as “world conquest by communist imperialism is a goal of the forces of aggression that have been loosed upon the world”) (Proclamation 2914; 15 F.R. 9029). A few days later, the Department of the Treasury issued Foreign Assets Control Regulations (FACR; 31 CFR Part 500; 15 F.R. 9040, December 19, 1950, and subsequently amended) to forbid any financial transactions involving, or on behalf of, North Korea and China, including transactions related to travel or the access to North Korean assets that were subject to U.S. jurisdiction. Korea-related FACR have been modified on numerous occasions to take into consideration new circumstances (i.e., transactions relating to technology not in existence at the time the regulations were issued) or to ease restrictions in response to changing conditions (i.e., signing of the Agreed Framework, emerging reports of famine, North Korea’s announced moratorium on missile testing). 3840 Executive Order 13466, “Continuing Certain Restrictions With Respect to North Korea and North Korean Nationals,” 73 F.R. 36787, June 26, 2008. 31 CFR Part 510, November 4, 2010. 3941 In 1999, President Clinton announced he would lift many restrictions on U.S. exports to and imports from North Korea in areas other than those controlled for national security concerns; the Departments of Commerce, Treasury, and Transportation issued new regulations a year later, effective June 16, 2000, to implement the new policy. Congressional Research Service 11 North Korea: Legislative Basis for U.S. Economic Sanctions(continued...) 39 Congressional Research Service 11 North Korea: Legislative Basis for U.S. Economic Sanctions • United States persons may not register a vessel in North Korea, obtain authorization for a vessel to fly the North Korean flag, or own, lease, operate, or insure any vessel flagged by North Korea. To date, three of the four executive orders to address North Korea events issued by Presidents Bush and Obama block access to assets of designated individuals and entities: • Executive Order 13466 of June 26, 2008 (President Bush; 73 F.R. 36787)— continuing the block of assets that were blocked as of June 16, 2000; • Executive Order 13551 of August 30, 2010 (President Obama; 75 F.R. 53837)— blocking assets of Kim Yong Chol, and the entities Green Pine Associated Corporation, Reconnaissance General Bureau, and Office 39;42 and • Executive Order of January 2, 2015 (as yet, unnumbered)—blocking assets that come under U.S. jurisdiction of any agency, instrumentality, or controlled entity of the North Korean government or the Workers’ Party of Korea, or any official of those entities; those found to materially support transactions with or act on behalf of those blocked entities.43 Generally, the President has the authority to change regulations, as long as those changes meet the requirements of any relevant law. He must also annually revisit his declaration of a state of national emergency; it expires if the President does not renew it. He could allow the declaration to expire, or he could lift it at any time. And Congress could terminate a declaration of national emergency by passing a joint resolution under terms of the National Emergencies Act. Proliferation of Weapons of Mass Destruction On June 28, 2005, President George W. Bush expanded the authority granted his office to address the threat posed by the proliferation of weapons of mass destruction—authority first exercised by President George H. W. Bush in 1990—to freeze assets and property of those engaged in the proliferation of weapons of mass destruction. The 41st President had declared that the United States faced a national emergency relating to weapons proliferation (in the absence, at the time, of a reauthorized Export Administration Act), and thus took steps in 1990 to control the exports of certain goods and services, and authorized a ban on foreign aid and credit, procurement contracts, imports and exports, support in international financial institutions, and landing rights.4044 Fifteen years later, the 43rd President’s executive order took additional steps to block property and assets under U.S. jurisdiction of any person found, in part— (...continued) Transportation issued new regulations a year later, effective June 16, 2000, to implement the new policy. 42 OFAC made add to this list at any time. The Specially Designated Nationals list may be searched online at http://www.treasury.gov/resource-center/sanctions/SDN-List/Pages/default.aspx 43 OFAC, on January 2, 2015, designated three entities and 10 individuals under this executive order: Reconnaissance General Bureau, Korea Mining Development Trading Corporation, and Korea Tangun Trading Corporation; and Kil Jong Hun, Kim Kwang Yon, Jang Song Chol, Yu Kwang Ho, Kim Yong Chol, Jang Yong Son, Kim Kyu, Ryu Jin, Kang Ryong, Kim Kwang Chun—all officers of either the government or the sanctioned entities. Department of the Treasury. “Treasury Imposes Sanctions Against the Government of the Democratic People’s Republic of Korea,” press release, January 2, 2015. 44 Executive Order 12735 of November 16, 1990. On the same day, the President announced his intention to pocket veto H.R. 4653—the Omnibus Export Amendments Act of 1990—with which Congress intended to reauthorize the (continued...) Congressional Research Service 12 North Korea: Legislative Basis for U.S. Economic Sanctions ... to have engaged, or attempted to engage, in activities or transactions that have materially contributed to, or pose a risk of materially contributing to, the proliferation of weapons of mass destruction or their means of delivery (including missiles capable of delivering such weapons), including any efforts to manufacture, acquire, possess, develop, transport, transfer or use such items, by any person or foreign country of proliferation concern; ... to have provided, or attempted to provide, financial, material, technological or other support for, or goods or services in support of, any activity or transaction described [above] ... or any person whose property and interests in property are blocked pursuant to this order ...4145 At its outset, Executive Order 13382 identified eight foreign entities as contributors to proliferation, of which three were North Korean. The Department of the Treasury’s Office of Foreign Assets Control (OFAC) subsequently added another 19 North Korean entities and four individuals to this restricted list. In the same findings, OFAC identified entities operating out of Switzerland, Iran, China, South Korea, Russia, Sudan, Syria, United Arab Emirates, Venezuela, Belgium, and Belarus, as entities engaging in WMD proliferation.42 40 Executive Order 12735 of November 16, 1990. On the same day, the President announced his intention to pocket veto H.R. 4653—the Omnibus Export Amendments Act of 1990—with which Congress intended to reauthorize the46 Counterfeiting and Money-Laundering On September 12, 2005, the Treasury Department found that Banco Delta Asia—a Macau-based bank in which North Korea had holdings of more than $ U.S. 50 million—was a “financial institution of primary money laundering concern.”47 The Treasury Department’s Financial Crimes Enforcement Center (FinCen) found that North Korea may reap as much as $500 million annually from counterfeiting, and another $100 million to $200 million annually from narcotics trafficking. (...continued) then-expired Export Administration Act of 1979. In his announcement, President Bush stated his intentions to curtail significantly trade in goods and services that lent themselves to the proliferation of weapons of mass destruction. See “Memorandum of Disapproval for the Omnibus Export Amendments Act of 1990,” Public Papers of the President, November 16, 1990. 26 Weekly Comp. Pres. Doc. 1839. E.O. 12735 was subsequently overhauled by President Clinton with the issuance of Executive Order 12938 (November 14, 1994; 59 F.R. 59099; 50 U.S.C. 1701 note). The national emergency therein is renewed annually. 4145 Executive Order 13382, Blocking Property of Weapons of Mass Destruction Proliferators and Their Supporters (June 28, 2005; 70 F.R. 38567). 42 For details, see 0. See also,46 See Department of the Treasury. Office of Foreign Assets Control. “Nonproliferation: What You Need to Know About Treasury Restrictions.” Information Bulletin, most recently updated September 7, 201019, 2012, http://www.treas.gov/offices/enforcement/ofac/programs/wmd/wmd.shtmltreasury.gov/resource-center/sanctions/Programs/Documents/wmd.pdf. See also testimony of Robert W. Werner, Director of the Office of Foreign Assets Control, Department of the Treasury, before the House Committee on Financial Services, February 16, 2006. On January 9, 2007, the Department of the Treasury announced that it had designated Bank Sepah, a state-owned Iranian financial institution, as an entity materially contributing to Iran’s proliferation activities. Bank Sepah, coincidentally, according to Treasury, is credited with transferring more than $500,000 for an associate of the Korean Mining Development Corporation. That entity was cited on December 28, 2006, under the Iran, North Korea, and Syria Nonproliferation Act of 2000, for exporting missile technology to Iran. Department of the Treasury. Press release. Iran’s Bank Sepah Designated by Treasury: Sepah Facilitating Iran’s Weapons Program. January 9, 2007. HP-219; Weisman, Steven. “U.S. Prohibits All Transactions with a Major Iranian Bank,” The New York Times. January 10, (continued...) Congressional Research Service 12 North Korea: Legislative Basis for U.S. Economic Sanctions Counterfeiting and Money-Laundering On September 12, 2005, the Treasury Department found that Banco Delta Asia—a Macau-based bank in which North Korea had holdings of more than $ U.S. 50 million—was a “financial institution of primary money laundering concern.”43 The Treasury Department’s Financial Crimes Enforcement Center (FinCen) found that North Korea may reap as much as $500 million annually from counterfeiting, and another $100 million to $200 million annually from narcotics trafficking. 2007. p. 3. Korean Mining Development Corporation is cited multiple times under Executive Order 13882. 47 Pursuant to 31 U.S.C. 5318A, as enacted by the USA PATRIOT Act (Section 311 of P.L. 107-56; 115 Stat. 298). Effective September 12, 2005, the Treasury Department’s Financial Crimes Enforcement Network issued a finding (70 F.R. 55214) and a notice of proposed rulemaking (to amend 31 CFR Part 103; 70 F.R. 55217). Documentation on the use of this authority may be found at http://www.fincen.gov/statutes_regs/patriot/section311.html Congressional Research Service 13 North Korea: Legislative Basis for U.S. Economic Sanctions The finding authorizes the Secretary of the Treasury to require “special measures”4448 on the part of U.S. financial institutions and financial agencies that involve increased record keeping and reporting on Banco Delta Asia’s transactions. Treasury issued a final rule, effective April 18, 2007, to impose the most stringent fifth special measure—to prohibit certain bank transactions— and issued regulations to implement the rule.4549 The finding and initial proposed rulemaking had a chilling effect on Banco Delta Asia’s international business relations. Department of the Treasury officials testified that— some two dozen financial institutions across the globe have voluntarily cut back or terminated their business with North Korea, notably including institutions in China, Japan, Vietnam, Mongolia, and Singapore. The result of these voluntary actions is that it is becoming very difficult for the Kim Jong-Il regime to benefit from its criminal conduct.4650 North Korea’s funds held in Banco Delta Asia were released in 2007; Banco Delta Asia, however, remains under the most stringent fifth special rule shuttered its operations in 2010. President Obama also addresses money laundering and counterfeiting in Executive Order 13551 as one of North Korea’s many objectionable behaviors to be deterred. The order requires the access to property and interests in property be blocked for any individual or entity identified by the Secretary of the Treasury to have, directly or indirectly:4751 • imported, exported, or reexported to, into, or from North Korea any arms or related materiel; (...continued) 2007. p. 3. Korean Mining Development Corporation is cited multiple times under Executive Order 13882. 43 Pursuant to 31 U.S.C. 5318A, as enacted by the USA PATRIOT Act (Sec. 311 of P.L. 107-56; 115 Stat. 298). Effective September 12, 2005, the Treasury Department’s Financial Crimes Enforcement Network issued a finding (70 F.R. 55214) and a notice of proposed rulemaking (to amend 31 CFR Part 103; 70 F.R. 55217). Documentation on the use of this authority may be found at http://www.fincen.gov/statutes_regs/patriot/section311.html 44 • provided training, advice, or other services or assistance, or engaged in financial transactions, related to the manufacture, maintenance, or use of any arms or related materiel to be imported, exported, or reexported to, into, or from North Korea, or following their importation, exportation, or reexportation to, into, or from North Korea; • imported, exported, or reexported luxury goods to or into North Korea; • engaged in money laundering, the counterfeiting of goods or currency, bulk cash smuggling, narcotics trafficking, or other illicit economic activity that involves or supports the Government of North Korea or any senior official thereof; • materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, prohibited activities or any person whose property and interests in property are blocked; or 48 31 U.S.C. 5318A(b) defines “special measures” as (1) record keeping and reporting of certain financial transactions; (2) collection of information relating to beneficial ownership; (3) collection of information relating to certain payablethrough accounts; (4) collection of information relating to certain correspondent accounts; and (5) prohibitions or conditions on opening or maintaining in the United States correspondent accounts or payable-through accounts. 4549 Department of the Treasury. “Financial Crimes Enforcement Network; Amendment to the Bank Secrecy Act Regulations—Imposition of Special Measure Against Banco Delta Asia, Including Its Subsidiaries Delta Asia Credit Limited and Delta Asia Insurance Limited, as a Financial Institution of Primary Money Laundering Concern,” Final Rule, 31 CFR Part 103 (72 F.R. 12730). 4650 Senate Committee on Banking, Housing and Urban Affairs hearings, September 12, 2006, testimony of Treasury Deputy Under Secretary Daniel Glaser. Congressional Quarterly. 4751 Executive Order 13551, “Blocking Property of Certain Persons With Respect to North Korea,” 75 F.R. 53837, September 1, 2010. Congressional Research Service 13 North Korea: Legislative Basis for U.S. Economic Sanctions • provided training, advice, or other services or assistance, or engaged in financial transactions, related to the manufacture, maintenance, or use of any arms or related materiel to be imported, exported, or reexported to, into, or from North Korea, or following their importation, exportation, or reexportation to, into, or from North Korea; • imported, exported, or reexported luxury goods to or into North Korea; • engaged in money laundering, the counterfeiting of goods or currency, bulk cash smuggling, narcotics trafficking, or other illicit economic activity that involves or supports the Government of North Korea or any senior official thereof; • materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, prohibited activities or any person whose property and interests in property are blocked; or • 14 North Korea: Legislative Basis for U.S. Economic Sanctions • be owned or controlled by, or to have acted or purported to act for or on behalf of, any person whose property and interests in property are blocked. Concluding Observations The U.S. economic sanctions imposed on North Korea exemplify both the independent and intertwined aspects of the relationship between the legislative and executive branches. Congress defers the broadest power to the President, in the National Emergencies Act and the International Emergency Economic Powers Act, to curtail trade and transactions between the United States and North Korea. Congress authorizes the President to fine-tune the relationship with North Korea for foreign policy and national security reasons with each waiver authority it incorporates into legislation. At the same time, Congress closely influences the President’s choices by enacting issue-driven legislation—addressing human rights matters or proliferation concerns, for example—and by adopting North Korea-specific statutes—most particularly the North Korean Human Rights Act of 2004 (P.L. 108-333), the North Korean Human Rights Reauthorization Act of 2008 (P.L. 110-346), and the inclusion of North Korea into the Iran, North Korea, and Syria Nonproliferation Act of 2000 (P.L. 106-178).48 As Congress and the President consider proposals to reform foreign aid, streamline export controls, fund defense and international programs, keep proliferation regimes relevant, assess and enter into treaties and international agreements, and participate in multilateral fora, the effectiveness of economic sanctions as a foreign policy and national security tool is likely to be considered. U.S. policy toward North Korea, expressed both unilaterally and in the United States’ position in multilateral fora, is further complicated by other considerations—not the least of which include relations with other states in the region, security responsibilities with South Korea, trade with China, a determination to keep key stakeholders engaged in nonproliferation efforts in both North Korea and elsewhere, and finding the means to balance all U.S. foreign policy and national security interests in a meaningful way. 48 In the 112th Congress, Members have introduced legislation to prohibit funding to establish a diplomatic presence in North Korea and to, in effect, reimpose sanctions related to a terrorist designation under sec. 6(j) of the Export Administration Act of 1979 (P.L. 96-72; 50 U.S.C. app. 2405(j)), sec. 620A of the Foreign Assistance Act of 1961 (P.L. 87-195; 22 U.S.C. 2371), and sec. 40(d) of the Arms Export Control Act (P.L. 90-629; 22 U.S.C. 2780(d)) (the North Korea Sanctions and Diplomatic Nonrecognition Act of 2011; H.R. 1321). Congressional Research Service 14 North Korea: Legislative Basis for U.S. Economic Sanctions Appendix A. Selected CRS Products Relating to North Korea Overview CRS Report R41259, North Korea: U.S. Relations, Nuclear Diplomacy, and Internal Situation, by Emma Chanlett-Avery and Mi Ae Taylor CRS Report RL30613, North Korea: Back on the Terrorism List?, by Mark E. Manyin CRS Report R41043, China-North Korea Relations, by Dick K. Nanto and Mark E. Manyin CRS Report RL31696, North Korea: Economic Sanctions Prior to Removal from Terrorism Designation, by Dianne E. Rennack Proliferation CRS Report R40684, North Korea’s Second Nuclear Test: Implications of U.N. Security Council Resolution 1874, coordinated by Mary Beth Nikitin and Mark E. Manyin CRS Report RL34256, North Korea’s Nuclear Weapons: Technical Issues, by Mary Beth Nikitin, CRS Report R41160, North Korea’s 2009 Nuclear Test: Containment, Monitoring, Implications, by Jonathan Medalia North Korea’s Economy CRS Report RL34093, The Kaesong North-South Korean Industrial Complex, by Mark E. Manyin and Dick K. Nanto CRS Report RL32493, North Korea: Economic Leverage and Policy Analysis, by Dick K. Nanto and Emma Chanlett-Avery CRS Report RL33324, North Korean Counterfeiting of U.S. Currency, by Dick K. Nanto Foreign Aid CRS Report R40095, Foreign Assistance to North Korea, by Mark E. Manyin and Mary Beth Nikitin CRS Report R41749, Non-Governmental Organizations Activities in North Korea, by Mi Ae Taylor and Mark E. Manyin Congressional Research Service 15 Appendix B Congressional Research Service 15 Appendix A. North Korea—Economic Sanctions Currently Imposed in Furtherance of U.S. Foreign Policy or National Security Objectives Rationale General foreign policy reasons Restriction Limits the export of goods or services Statutory Basis [regulation] Export Administration Act of 1979 (P.L. 96-72; 50 U.S.C. App. 2401 et seq.) Authority to impose Authority to lift or waive President, Secretary of Commerce, generally President, Secretary of Commerce, generally [15 CFR Part 730-774] General foreign policy reasons Limits proportionate share to international organizations which, in turn, expend funds in North Korea Sec. 307, Foreign Assistance Act of 1961 (P.L. 87-195; 22 U.S.C. 2227) Statutory requirement No waiver; exemption for certain IAEA programs General foreign policy reasons Prohibits assistance from defense appropriations Sec. 8042, Department of Defense Appropriations, 2011 (P.L. 112-10; 125 Stat. 682015 (Division C, P.L. 113-235; 128 Stat. 2130) Statutory requirement No waiver General foreign policy reasons Prohibits bilateral assistance Sec. 7007, Department of State, Foreign Operations, and Related Programs Appropriations Act, 20102015 (P.L. 111-117; 123 Stat. 3345), as continued by sec. 1101(a)(6), P.L. 112-10 (125 Stat. 104) Statutory requirement No waiver 113-235; 128 Stat. 2753) Statutory requirement No waiver General foreign policy reasons Prohibits Economic Support Funds Sec. 7043(d), Department of State, Foreign Operations, and Related Programs Appropriations Act, 2015 (P.L. 113-235; 128 Stat. 2649) Statutory requirement No waiver General foreign policy reasons Prohibits DOD funds Sec. 8042, Department of Defense Appropriations, 2015 (division C of P.L. 113-235). Statutory requirement No waiver Diplomatic relations severed Prohibits most foreign aid and agricultural sales under P.L. 480 Sec. 620(t), Foreign Assistance Act of 1961 (P.L. 87-195; 22 U.S.C. 2370(t)) Statutory requirement No waiver CRS-16 Rationale National security controls, Communism Restriction Limits the export of goods or services Statutory Basis [regulation] Sec. 5, Export Administration Act of 1979 (P.L. 96-72; 50 U.S.C. App. 2404) President President Statutory requirementAuthority to impose Authority to lift or waive President President [15 CFR Part 730-774] Communism CRS-16 Prohibits foreign aid Sec. 620(f), Foreign Assistance Act of 1961 (P.L. 87-195; 22 U.S.C. 2370(f)) Rationale Restriction Statutory Basis [regulation] Authority to impose Authority to lift or waive Statutory requirement President Communism Limits proportionate share to international organizations which, in turn, expend funds in North Korea Sec. 307, Foreign Assistance Act of 1961 (P.L. 87-195; 22 U.S.C. 2227) Statutory requirement No waiver; exemption for certain IAEA programs Communism Prohibits Export-Import Bank funding to Marxist-Leninist states Sec. 2(b)(2), Export-Import Bank Act of 1945 (P.L. 79-173; 12 U.S.C. 635(b)(2)) Statutory requirement President Communism Prohibits support in the IFIs Sec. 43, Bretton Woods Agreements Act (P.L. 79-171; 22 U.S.C. 286aa) Statutory requirement Secretary of the Treasury Communism Limits the export of goods or services Sec. 5(b), Export Administration Act of 1979 (P.L. 96-72; 50 U.S.C. App. 2404(b)) Statutory requirement President Communism Denies favorable trade terms Sec. 401, Trade Act of 1974 (19 U.S.C. 2431) Statutory requirement President Nonmarket economy and emigration Denies favorable trade terms Sec. 402, Trade Act of 1974 (19 U.S.C. 2432) Statutory requirement President Nonmarket economy and emigration Denies favorable trade terms Sec. 409, Trade Act of 1974 (19 U.S.C. 2439) President President Communism and market disruption Denies favorable trade terms Sec. 406, Trade Act of 1974 (19 U.S.C. 2436) President President Communism Prohibits the acquisition of property in U.S. for diplomatic mission Sec. 205, State Department Basic Authorities Act (P.L. 84885; 22 U.S.C. 4305) Secretary of State Secretary of State CRS-17 Rationale Restriction Statutory Basis [regulation] Authority to impose Authority to lift or waive Terrorism, failure to cooperate with U.S. efforts Prohibits transactions related to defense articles and defense services Sec. 40A, Arms Export Control Act (P.L. 90-629; 22 U.S.C. 2781) President President, at annual review, or waived by the President if he finds it “important to the national interests of the United States.” Excessive military expenditure, human rights violations Prohibits the cancellation or reduction of certain debt Sec. 501, Miscellaneous Appropriations, 2000 (H.R. 3425, enacted by reference in P.L. 106-113; 22 U.S.C. 2395a note) Statutory requirement President CRS-17 Rationale Restriction National emergency, proliferation of weapons of mass destruction Blocks assets of named proliferators of weapons of mass destruction Statutory Basis [regulation] International Emergency Economic Powers Act (P.L. 95223; esp. at 50 U.S.C. 1702); Authority to impose Authority to lift or waive President [Executive Order 13382, June 28, 2005; 50 U.S.C. 1701 note] President President [Executive Order 13466, June 26, 2008; 50 U.S.C. 1701 note] President International Emergency Economic Powers Act (P.L. 95223; esp. at 50 U.S.C. 1702); President [Executive Order 13551, August 30, 2010; 50 U.S.C. 1701 note] President National Emergencies Act (P.L. 94-412; 50 U.S.C. 1601 et seq.) [expands on the national emergency declared in E.O. 13466] National Emergencies Act (P.L. 94-412; 50 U.S.C. 1601 et seq.) National emergency Prohibits imports, exports, transactions related to transportation International Emergency Economic Powers Act (P.L. 95223; esp. at 50 U.S.C. 1702); National Emergencies Act (P.L. 94-412; 50 U.S.C. 1601 et seq.) [31 CFR Part 500510] National emergency, proliferation of weapons of mass destruction, attack of the Cheonan, nuclear detonations, missile launches, violation of UNSCR resolutions, counterfeiting of goods and currency, money laundering, smuggling, narcotics trafficking, destabilizing the region CRS-18 Blocks assets of, and transactions with or on behalf of, named entities Sec. 5, United Nations Participation Act of 1945 (P.L. 79-264; 22 U.S.C. 287c) [31 CFR Part 510] Statutory Basis [regulation] Authority to impose Rationale Restriction To ensure implementation of import restrictions agreed to in the U.N. Security Council “Except to the extent provided in statutes or in licenses, regulations, orders, or directives that may be issued pursuant to this order…” prohibits “importation into the United States, directly or indirectly, of any goods, services, or technology from North Korea” International Emergency Economic Powers Act (P.L. 95223; esp. at 50 U.S.C. 1702); President [Executive Order 13570, April 18, 2011; 50 U.S.C. 1701 note] National Emergencies Act (P.L. 94-412; 50 U.S.C. 1601 et seq.) [expands on the national emergency declared in E.O. 13466] Prohibits a range of transactions—U.S. Government contracts, export licenses, imports into United States Sec. 73, Arms Export Control Act (P.L. 90-629; 22 U.S.C. 2797b) Proliferation of weapons of mass destruction: missiles CRS-18 Sec. 5, United Nations Participation Act of 1945 (P.L. 79-264; 22 U.S.C. 287c) [31 CFR Part 510] Sec. 5, United Nations Participation Act of 1945 (P.L. 79-264; 22 U.S.C. 287c) President President President Statutory Basis [regulation] Authority to impose Authority to lift or waive Rationale Restrictiontransactions with and blocks assets of any entity of the government of North Korea or the Workers’ Party of Korea International Emergency Economic Powers Act (P.L. 95223; esp. at 50 U.S.C. 1702); Provocative, destabilizing, and repressive actions of DPRK, including cyber-related actions; violation of UNSC resolutions; human rights abuses Sec. 5, United Nations Participation Act of 1945 (P.L. 79-264; 22 U.S.C. 287c) National Emergencies Act (P.L. 94-412; 50 U.S.C. 1601 et seq.) Authority to lift or waive President President [Executive Order of January 2, 2015 (as yet unnumbered; 50 U.S.C. 1701 note] President Immigration and Nationality Act of 1952 (8 U.S.C. 1182(f)) Proliferation of weapons of mass destruction: missiles Prohibits a range of transactions—U.S. Government contracts, export licenses, imports into United States Sec. 73, Arms Export Control Act (P.L. 90-629; 22 U.S.C. 2797b) President President Proliferation of weapons of mass destruction: nuclear enrichment transfers Prohibits foreign aid, military aid Sec. 101, Arms Export Control Act (P.L. 90-629; 22 U.S.C. 2799aa) President President Proliferation of weapons of mass destruction: nuclear reprocessing transfers, nuclear detonations Prohibits foreign aid (except humanitarian), military aid, USG defense sales and transfers, export licenses for USML goods and services, U.S. Governmentbacked credits, support in the international banks, agricultural credits or financing, U.S. commercial bank financing, licenses for export of certain goods and services Sec. 102, Arms Export Control Act (P.L. 90-629; 22 U.S.C. 2799aa-1) President President Proliferation of weapons of mass destruction: nuclear detonations Prohibits Export-Import Bank financing Sec. 2(b)(4) of the ExportImport Bank Act of 1945 (P.L. 79-173; 12 U.S.C. 635(b)(4)) Statutory requirement President Proliferation of weapons of mass destruction: nuclear detonations [though not explicitly stated as such] Prohibits Economic Support Funds for energy-related programs Sec. 7071(f) of the Department of State, Foreign Operations, and Related Programs appropriations Act, 2010 (P.L. 111-117; 123 Stat. 3390); as continued by sec. 1101(a)(6), P.L. 112-10 (125 Stat. 104) Statutory requirement No waiverCRS-19 Rationale Restriction Statutory Basis [regulation] Authority to impose Authority to lift or waive Proliferation of weapons of mass destruction: nuclear detonations Prohibits Export-Import Bank financing Title VI of the Department of State, Foreign Operations, and Related Programs Appropriations Act, 2010 (P.L. 111-117; 123 Stat. 3341); as continued by sec. 1101(a)(6), P.L. 112-10 (125 Stat. 1042015 (Division J, P.L. 113-235; 128 Stat. 2598) Statutory requirement No waiver Proliferation of weapons of mass destruction: missiles Prohibits a range of transactions—contracts, export licenses, imports into US Sec. 11B, Export Administration Act (P.L. 96-72; 50 U.S.C. App. 2410b) President President CRS-19 Rationale Restriction Statutory Basis [regulation] Authority to impose Authority to lift or waive Proliferation of weapons of mass destruction Prohibits a range of transactions—arms sales and exports, dual-use exports, procurement contracts, assistance, imports, support in the international banks, credit, landing rights Sec. 3, Iran, North Korea, and Syria Nonproliferation Act of 2000 (P.L. 106-178; 50 U.S.C. 1701 note) President President Human rights (trafficking in persons) Prohibits non-humanitarian foreign aid, cultural exchanges, support in international financial institutions Sec. 110, Trafficking Victims Protection Act of 2000 (P.L. 106-386; 22 U.S.C. 7107) President President, waiver if in the national interest Counterfeiting, moneylaundering Prohibits certain commercial bank transactions 31 U.S.C. 5318A (generally referred to by its amendatory vehicle—Sec. 311, USA PATRIOT Act) Secretary of the Treasury Secretary of the Treasury CRS-20 Appendix C. North Korean Entities Cited for Activities in Violation of U.S. Law North Korean Entity Effective Date/Cite March 6, 1992 (57 F.R. 11767) [those also designated by the U.N. Sanctions Committee, subject to UNSCR 1718 and 1874, appear in bold]a —Lyongaksan Machineries and Equipment Export Corporation; Possible Trading Partner (cited in same finding) Ministry of Defense and Armed Forces (Iran) —Changgwang Credit Corporation Activity/Statute Category I missile proliferation; contribution to MTCR nonadherent §73(a)(2)(B), (C), AECA §11B(b)(1)(B)(ii), (iii), EAA June 23, 1992 (57 F.R. 29924) —Lyongaksan Machineries and Equipment Export Corporation; —Changgwang Credit Corporation —Syrian Scientific Research Center —Ministry of Defense (Syria) Category I missile proliferation; contribution to MTCR nonadherent §73(a)(2)(B), (C), AECA §11B(b)(1)(B)(ii), (iii), EAA May 24, 1996 (61 F.R. 29785) August 6, 1997 (62 F.R. 44302) —Changgwang Sinyong Corporation (Korea Mining Development Trading Bureau) —Lyongaksan General Trading Corporation —Ministry of Defense Armed Forces Logistics (Iran) —State Purchasing Office (Iran) Unnamed entity cited on same date, separate findingb Category II missile proliferation §73(a)(2)(A), AECA §11B(b)(1)(B)(i), EAA Category II missile proliferation §73(a)(2)(A), AECA §11B(b)(1)(B)(i), EAA August 6, 1997 (62 F.R. 44302) —Korea Pugang Trading Corporation Unnamed entity cited on same date, separate finding Category II missile proliferation §73(a)(2)(A), AECA §11B(b)(1)(B)(i), EAA April 17, 1998 (63 F.R. 24585) —Changgwang Sinyong Corporation (Korea Mining Development Trading Corporation) Khan Research Laboratories (Pakistan) Category I missile proliferation; contribution to MTCR nonadherent §73(a)(2)(B), (C), AECA §11B(b)(1)(B)(ii), (iii), EAA CRS-21 North Korean Entity Effective Date/Cite April 6, 2000 (65 F.R. 20239) [those also designated by the U.N. Sanctions Committee, subject to UNSCR 1718 and 1874, appear in bold]a —Changgwang Sinyong Corporation Possible Trading Partner (cited in same finding) Activity/Statute —Ministry of Defense and Armed Forces Logistics (MODAFL) (Iran) Category I missile proliferation; contribution to MTCR nonadherent —Aerospace Industries Organization (AIO) (Iran); §73(a)(2)(B), (C), AECA —Shahid Hemmat Industrial Group (SHIG) (Iran) §11B(b)(1)(B)(ii), (iii), EAA —SANAM Industrial Group (Iran) (Determination was made for an unnamed entity April 7, 2000) January 2, 2001 (66 F.R. 4050) —Changgwang Sinyong Corporation June 14, 2001 (66 F.R. 33988) —Changgwang Sinyong Corporation August 16, 2002 (67 F.R. 54693) —Changgwang Sinyong Corporation Iranian entity/ies WMD proliferation §§2 and 3, INA Iranian entity/ies WMD proliferation §§2 and 3, INA Unnamed entity cited on same date, separate finding Category II missile proliferation §73(a)(2)(A), AECA §11B(b)(1)(B)(i), EAA March 24, 2003 (68 F.R. 16113) —Changgwang Sinyong Corporation Unnamed entity cited on same date, separate finding Category I missile proliferation; contribution to MTCR nonadherent §73(a)(2)(B), (C), AECA §11B(b)(1)(B)(ii), (iii), EAA June 26, 2003 (68 F.R. 40011) —Changgwang Sinyong Corporation July 25, 2003 (68 F.R. 44136) —Changgwang Sinyong Corporation Iranian entity/ies WMD proliferation §§2 and 3, INA Unnamed Category I missile proliferation, contribution to MTCR nonadherent §73(a)(2)(B), (C), AECA §11B(b)(1)(B)(ii), (iii), EAA CRS-22 North Korean Entity Effective Date/Cite [those also designated by the U.N. Sanctions Committee, subject to UNSCR 1718 and 1874, appear in bold]a April 1, 2004 (69 F.R. 18415) —Changgwang Sinyong Corporation September 23, 2004 (69 F.R. 58212) —Changgwang Sinyong Corporation November 24, 2004 (69 F.R. 69989) —Changgwang Sinyong Corporation December 27, 2004 (70 F.R. 133) —Paeksan Associated Corporation June 28, 2005 (70 F.R. 38567)c,d —Korea Mining Development Trading Corporation (Changgwang Sinyong Corp.) Possible Trading Partner (cited in same finding) Iranian entity/ies Activity/Statute WMD proliferation §§2 and 3, INA Iranian entity/ies WMD proliferation §§2 and 3, INA Iranian entity/ies WMD proliferation §§2 and 3, INA Iranian entity/ies WMD proliferation §§2 and 3, INA N/A WMD proliferation E.O. 13382; E.O. 12938; IEEPA; NEA —Korea Ryonbong General Corporation —Tanchon Commercial Bank (Changgwang Credit Bank) October 21, 2005e —Hesong Trading Corp. N/A —Korea Complex Equipment Import Corp. WMD proliferation E.O. 13382; E.O. 12938; IEEPA; NEA —Korea International Chemical Joint Venture Company —Korea Kwangsong Trading Corp. —Korea Pugang Trading Corp. —Korea Ryonha Machinery Joint Venture —Tosong Technology Trading Corp. July 13, 2006 (71 F.R. 35857) CRS-23 —Korea Ryongwang Trading Corporation N/A WMD proliferation E.O. 13382; E.O. 12938; IEEPA; NEA North Korean Entity Effective Date/Cite [those also designated by the U.N. Sanctions Committee, subject to UNSCR 1718 and 1874, appear in bold]a Possible Trading Partner (cited in same finding) Activity/Statute December 7, 2006 (Presidential Determination No. 2007-7; Public Papers of the President, December 18, 2006; 72 F.R. 1899) —Government of North Korea December 28, 2006 (72 F.R. 606) —Korea Mining [and] Development Corporation N/A [Iran mentioned in press accounts around the same time] WMD proliferation September 26, 2007 (72 F.R. 54708) —Korea Mining and Development Corporation —Aerospace Industries Organization (AIO) (Iran) WMD proliferation N/A §102(b)(2), AECA §129 AEA —Shahid Hemmat Industrial Group (SHIG) (Iran) September 26, 2007 (72 F.R. 54709) —Korea Mining and Development Corporation §§2 and 3, INKSNA E.O. 13382; E.O. 12938; IEEPA; NEA —Aerospace Industries Organization (AIO) (Iran) Category I missile proliferation; contribution to MTCR nonadherent —Shahid Hemmat Industrial Group (SHIG) (Iran) §73(a)(2)(B), (C), AECA [cited in separate finding, see above] CRS-24 Detonating a nuclear explosive device §11B(b)(1)(B)(ii), (iii), EAA North Korean Entity Effective Date/Cite October 16, 2008 (73 F.R. 63227) [those also designated by the U.N. Sanctions Committee, subject to UNSCR 1718 and 1874, appear in bold]a —Korea Mining and Development Corporation —Korea Taesong Trading Company Possible Trading Partner (cited in same finding) Activity/Statute —China Xinshidai Company (China) WMD proliferation —China Shipbuilding and Offshore International Corporation (China) §§2 and 3, INKSNA —Huazhong CNC (China) —Islamic Revolutionary Guard Corps (Iran) —Yolin/Yullin Tech, Inc., Ltd. (South Korea) —Rosoboronexport (Russia) —Sudan Master Technology (Sudan) —Sudan Technical Center Company (Sudan) —Army Supply Bureau (Syria) —R and M International FZCO (United Arab Emirates) —Venezuelan Military Industries Company (Venezuela) February 2, 2009 (74 F.R. 5881; 74 F.R. 6943)) —Korea Mining and Development Corporation —Dalian Sunny Industries (LMMT Economic and Trade Company) (China) —Moksong Trading Corporation —Bellamax (China) —Sino-Ki February 2, 2009 (74 F.R. 5882) —Korea Mining and Development Corporation —Shahid Bakeri Industrial Group (Iran) Category II missile proliferation §73(a)(2)(A), AECA §11B(b)(1)(B)(i), EAA WMD proliferation E.O. 13382; E.O. 12938; IEEPA; NEA —Moksong Trading Corporation —Sino-Ki June 30, 2009 (74 F.R. 35226) CRS-25 —Namchongang Trading Corporation N/A WMD proliferation E.O. 13382; E.O. 12938; IEEPA; NEA North Korean Entity Effective Date/Cite [those also designated by the U.N. Sanctions Committee, subject to UNSCR 1718 and 1874, appear in bold]a July 30, 2009 (74 F.R. 41783) —Korea Hyoksin Trading Corporation August 11, 2009 (74 F.R. 41782) —Korea Kwangson Banking Corp (KKBC) September 3, 2009 (74 F.R. 47636) —General Bureau of Atomic Energy July 10, 2010 (75 F.R. 38212) —Amroggang Development Bank July 14, 2010 (75 F.R. 40862) —Korea Mining [and] Development Corporation Possible Trading Partner (cited in same finding) Activity/Statute N/A [Antares Shipping Company (IRISL Benelux) (Belgium) identified around the same date] WMD proliferation N/A [Antares Shipping Company (IRISL Benelux) (Belgium) identified around the same date] WMD proliferation N/A WMD proliferation —Korea Tangun Trading Corporation E.O. 13382; E.O. 12938; IEEPA; NEA E.O. 13382; E.O. 12938; IEEPA; NEA E.O. 13382; E.O. 12938; IEEPA; NEA N/A WMD proliferation E.O. 13382; E.O. 12938; IEEPA; NEA —BelTechExport (Belarus) WMD proliferation —Karl Lee (China; individual) §§2 and 3, INKSNA —Dalian Sunny Industries (LMMT) (China) —Shanghai Technical By-Products International (China) —Zibo Chemet Equipment Company (China) —Defense Industries Organization (Iran) —Shahid Bakeri Industries Group (Iran) August 30, 2010 (75 F.R. 53837) —Green Pine Associated Corporation N/A —Reconnaissance General Bureau E.O. 13551; IEEPA; NEA; U.N. Participation Act —Office 39 August 30, 2010 (75 F.R. 54689) —Second Academy of Natural Sciences —Second Economic Committee —Munitions Industry Department CRS-26 Violation of U.N. Security Council Resolutions 1718 and 1874 N/A WMD proliferation E.O. 13382; E.O. 12938; IEEPA; NEA North Korean Entity Effective Date/Cite September 27, 2010 (75 F.R. 61246) [those also designated by the U.N. Sanctions Committee, subject to UNSCR 1718 and 1874, appear in bold]a —Green Pine Associated Corporation Possible Trading Partner (cited in same finding) N/A —Office 39 April 19, 2011 (Treasury Department Press Release) —Korea Daesong Bank N/A —Korea Daesong General Trading Corporation —Bank of East Land (Dongbang Bank) Violation of U.N. Security Council Resolutions 1718 and 1874 E.O. 13551; IEEPA; NEA; U.N. Participation Act —Reconnaissance General Bureau November 18, 2010 (75 F.R. 71794) Activity/Statute Violation of U.N. Security Council Resolutions 1718 and 1874 E.O. 13551; IEEPA; NEA; U.N. Participation Act N/A Violation of U.N. Security Council Resolutions 1718 and 1874 E.O. 13551; IEEPA; NEA; U.N. Participation Act Notes: MTCR = Missile Technology Control Regime WMD = Weapons of Mass Destruction AECA = Arms Export Control Act (P.L. 90-629) EAA = Export Administration Act of 1979 (P.L. 96-72) AEA = Atomic Energy Act (P.L. 83-703) INA = Iran Nonproliferation Act of 2000 (P.L. 106-178) ISNA = Iran and Syria Nonproliferation Act of 2000 (P.L. 106-178, INA, as amended by P.L. 109-112, 11/22/2005) INKSNA = Iran, North Korea, and Syria Nonproliferation Act of 2000 (P.L. 106-178, ISNA, as further amended by P.L. 109-353, 10/13/2006) E.O. = Executive Order IEEPA = International Emergency Economic Powers Act (P.L. 95-223) NEA = National Emergencies Act (P.L. 94-412) OFAC = Office of Foreign Assets Control, Department of the Treasury N/A = Not Available a. The United Nations Sanctions Committee, on April 24, 2009, and on July 16, 2009, identified entities and individuals subject to sanctions adopted in UNSCR 1718 (2006). This table lists only North Korean entities, though both the United Nations and the Department of the Treasury have also identified a number of individuals. The United Nations also identifies Hong Kong Electronics, an entity located in Iran, which, the U.N. Sanctions Committee describes as “owned or controlled by, or acts or purports to act for on behalf of Tanchon Commercial Bank and KOMID (Korea Mining [and] Development Corporation). Hong Kong Electronics has transferred millions of dollars of proliferation-related funds on behalf of Tanchon Commercial Bank and KOMID … since 2007. Hong Kong Electronics has facilitated the movement of money from Iran to the DPRK on behalf of KOMID.” b. Section 654 of the Foreign Assistance Act of 1961 (22 U.S.C. 2414) requires the President to publish determinations and findings in the Federal Register. In instances where publication would be harmful to U.S. national security, however, “only a statement that a determination or finding has been made by the President, including the name and section of the Act under which it was made, shall be published.” CRS-27 c. In testimony before the House Committee on Financial Services, Subcommittee on Oversight and Investigations, OFAC Director Robert Werner identified the Korea Mining Development Trading Corporation as “Pyongyang’s premier arms dealer and main exporter of goods and equipment related to ballistic missiles and conventional weapons”; “the North Korean defense conglomerate Korea Ryonbong General Corporation ... ” as a specialist “in acquisition for North Korean defense industries and support to Pyongyang’s military-related sales ... identified in export control watch lists in the United States and among U.S. allies ... ”; and “Tanchon Commercial Bank, headquartered in Pyongyang, inherited from the Korea Changgwang Credit Bank Corporation ... the role as the main North Korean financial agent for sales of conventional arms, ballistic missiles, and good[s] related to the assembly and manufacture of such weapons. Since the late 1980s, Tanchon’s predecessor, [Changgwang ... ]collected revenue from weapons-related sales that were concentrated in a handful of countries mainly located in the Mid-East and several African states. These revenues provide North Korea with a significant portion of its export earnings and financially aid Pyongyang’s own weapons development and armsrelated purchases.” Capitol Hill Hearing Testimony, Congressional Quarterly. February 16, 2006. d. On March 30, 2006, the Department of the Treasury announced it would add Kohas AG, a Swiss company, and its president, Jakob Steiger, on the Blocked Entities list under E.O. 13382, because of its financial ties to Korea Ryonbong General Corporation. A subsidiary of Ryonbong owns nearly half the outstanding shares of Kohas. Department of the Treasury, Office of Foreign Assets Control. Amendment of final rule. 31 CFR Chapter v. 71 F.R. 39708 (July 13, 2006). Effective June 27, 2006. Aversa, Jeannine. “U.S. Freezes Assets of Swiss Company Tied to North Korea,” Associated Press. March 30, 2006. Stuart Levey, Under Secretary for Terrorism and Financial Intelligence, Department of the Treasury. Testimony before Senate Committee on Banking, Housing, and Urban Affairs, April 4, 2006, Congressional Quarterly. e. In his February 16, 2006 testimony before the House Committee on Financial Services, Subcommittee on Oversight and Investigations, OFAC Director Werner identified Hesong Trading Corporation and Tosong Technology Trading Corporation as owned or controlled by parent company Changgwang Sinyong Corporation. He further cited Korea Ryonbong General Corporation as the parent company of the remaining six entities identified for purposes of E.O. 13382. CRS-28 North Korea: Legislative Basis for U.S. Economic Sanctions Appendix D. North Korean Individuals Cited for Prohibited Activities Under U.S. Law North Korean Individual Effective Date/Cite July 16, 2009 [those designated by the U.N. Sanctions Committee, subject to UNSCR 1718 and 1874, appear in BOLD] Activity/Statute —Han Yu-ro (director of Korea Ryongaksan General Trading Corporation) Violation of U.N. Security Council Resolutions 1718 and 1874 —Hwang Sok-hwa (director of General Bureau of Atomic Energy) Violation of U.N. Security Council Resolutions 1718 and 1874 —Kim Tong-myong (Tanchon Commercial Bank) WMD proliferation August 30, 2010 (Department of Treasury Press Release, TG-840) —Ri Hong-sop (former director of Yongbyon Nuclear Research Center) WMD proliferation August 30, 2010 (Department of Treasury Press Release, TG-840) —Ri Je-son (director of General Bureau of Atomic Energy) WMD proliferation August 30, 2010 (Department of Treasury Press Release, TG-840) —Yun Ho-jin (director of Namchongang Trading Corporation) WMD proliferation September 27, 2010 (OFAC Notice; 75 F.R. 61246) —Kim, Yong Chol Violation of U.N. Security Council Resolutions 1718 and 1874 Identified only by United Nations July 16, 2009 Identified only by United Nations October 2009 E.O. 13382; E.O. 12938; IEEPA; NEA E.O. 13382; E.O. 12938; IEEPA; NEA E.O. 13382; E.O. 12938; IEEPA; NEA E.O. 13382; E.O. 12938; IEEPA; NEA E.O. 13551; IEEPA; NEA; UNPANorth Korea: Legislative Basis for U.S. Economic Sanctions Author Contact Information Dianne E. Rennack Specialist in Foreign Policy Legislation drennack@crs.loc.gov, 7-7608 Congressional Research Service 2921