Canadian Manufacturing

U.S. pressuring China to restrict coal imports from North Korea

by Matthew Pennington, The Associated Press   

Canadian Manufacturing
Exporting & Importing Regulation Supply Chain Mining & Resources Public Sector

Coal and iron exports are allowed under U.N. sanctions if the exports are determined to be for "livelihood purposes" and not for generating revenue for weapons programs

WASHINGTON—The United States is negotiating at the U.N. Security Council to address a provision in U.N. sanctions that allows China to import coal and iron ore from North Korea, Obama administration officials said.

Senators at a hearing questioned the effectiveness of U.S. efforts to get China—the North’s main trading partner—to use its economic leverage against the North.

North Korea has stepped up its missile tests, and this month conducted its largest nuclear test explosion in spite of tough U.N. and U.S. penalties imposed in March. That’s fueling worries that North Korea is moving closer to its goal of a nuclear-armed missile that could one day strike the U.S. mainland.

“All the work we are doing on sanctions, globally, is being compromised dramatically because of China’s economic relationship with North Korea,” said Sen. Ben Cardin of Maryland, the top Democrat on the Senate Foreign Relations subcommittee that oversees U.S. policy toward Asia.


Administration officials testified that North Korea’s coal exports, mostly to China, generate more than $1 billion in revenue for the North annually and account for about one-third of all export income.

Coal and iron exports are allowed under U.N. sanctions if the exports are determined to be for “livelihood purposes,” and not for generating revenue for weapons programs. That provision is intended to prevent sanctions from hurting ordinary North Koreans; China is suspected of trying to exploit it.

“We share the concern that China’s purchases of coal and other economic activities create a lifeline that reduces the impact of global sanctions,” said Assistant Secretary of State Daniel Russel, the top U.S. diplomat for East Asia. He added that China’s co-operation on sanctions enforcement was improving.

In a new sign of U.S. willingness to target companies in other countries that deal with North Korea, the Justice Department on Monday charged China-based Hongxiang Industrial Development Company and four executives with conspiring to evade penalties for providing financial services to a North Korean bank under sanctions.

A South Korean think-tank , the Asan Institute for Policy Studies, said in a report last month that Hongxiang supplied aluminum oxide and other materials that can be used in processing nuclear bomb fuel. Hongxiang is one of the biggest traders with North Korea and carried out imports and exports worth a total of $532 million in 2011-15, said the report, co-written by the U.S.-based research group C4ADS.

Sen. Marco Rubio, R-Fla., questioned why the administration had not designated five other companies identified in that report, and contended it was for reasons of political expediency.

“We are afraid to press the case against too many Chinese companies because of the broader situation between China and the United States,” he said.

Daniel Fried, the State Department’s co-ordinator for sanctions policy, responded that the U.S. government is “actively looking against all possible targets.

“There are no limits and there is no administration red line of exempt countries or companies. We go where the evidence takes us,” Fried said. He said the departments of State and Treasury are investigating a number of companies around the world over sanctions evasion.


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