UN and U.S. Sanctions Target North Korea: Impacts for Asia and Beyond

North Korea was subjected to new sanctions under United Nations Security Council Resolution 2270 on March 2, 2016 (UNSC Resolution 2270). The United States expanded its North Korea primary and secondary sanctions via a March 15, 2016 Executive Order, following a new U.S. sanctions statute on February 18, 2016. These UN and U.S. steps were taken in response to North Korean nuclear weapon and ballistic missile tests in January and February of 2016.

UN Sanctions

UNSC Resolution 2270 introduced broader sanctions on North Korea, prohibiting Member States from:

• Procuring coal, iron ore, gold, titanium ore, vanadium ore and rare earth minerals from North Korea.
• Supplying to North Korea aviation fuel, aviation gasoline, naphtha-type jet fuel, kerosene-type jet fuel and kerosene-type rocket fuel.
• Leasing or chartering vessels or aircraft to, providing crews for, or insuring vessels under the flag of North Korea.

UNSC Resolution 2270 also recited existing export restrictions on trade with North Korea covering certain nuclear-related, military, dual-use, luxury good and imposed new inspection and service controls which require each Member State to:

• Inspect cargo transiting through the Member’s territory if the cargo has originated, is destined for or is brokered by North Korea or any designated entities.
• Prohibit entry of vessels believed to be owned or controlled by designated individuals or those carrying prohibited cargo.
• Prohibit the registering of the Member’s vessels in North Korea; using the North Korean flag; owning, leasing or operating North Korean vessels; or providing any vessel classification or certification service.

Resolution 2270 also calls upon Member States to sever banking and financial relationships with North Korean banks including by terminating all joint ventures, ownership interests or correspondent banking relationships. Finally, the resolution added several sanctions designations for individuals and companies.

U.S. Sanctions

North Korea Sanctions and Policy Enhancement Act of 2016

On February 18, 2016, President Obama signed into law the North Korea Sanctions and Policy Enhancement Act of 2016 (the Act). This expanded existing sanctions authorities for North Korea and mandated secondary sanctions for non-U.S. parties found to engage in a range of activities with North Korea.

Executive Order 13722

On March 15, 2016, President Obama issued Executive Order 13722, which implements the Act as well as aspects of UNSC Resolution 2270. This adds broad new primary sanctions for North Korea and secondary sanctions pursuant to the Act (in fact covering more activity than required by the Act). Specifically, Executive Order 13722:

1. blocks the property of the Government of North Korea and the Workers’ Party of Korea (together, the North Korean Regime) and prohibits transactions and services relating to those parties;
2. implements secondary sanctions against participants in sectors of the North Korean economy and persons engaging in a variety of activities relating to North Korea;
3. implements a broad trade embargo on exports or reexports of goods, services or technology from the United States or by U.S. persons to North Korea;
4. prohibits new investment in North Korea by U.S. persons; and
5. prohibits approval, finance, facilitation or guarantee by a U.S. person of transactions by a non-U.S. person which would be prohibited if performed by a U.S. person or in the United States.

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