U.S. Sanctions and Treasury Department Actions Against North Korea from 1955 to October 2007

Abstract

OverviewThe history of U.S. sanctions against DPRK can be divided into six stages. The U.S. maintained fairly comprehensive economic sanctions from time of Korean War until 1989, occasionally increasing level of restriction during this period. Between 1989 and 1995 export of goods from U.S. commercial sector was permitted solely for purpose of meeting basic human needs. A more extensive easing of sanctions accompanied negotiation of Agreed Framework in 1994.In 2000, President Clinton eased many remaining trade and travel sanctions in response to DPRK's 1999 voluntary halt in missile testing. Licensing and trade regulations on most items for civilian use were significantly relaxed at this time.Although George W. Bush administration's approach to DPRK differed considerably from that of Clinton administration, no economic sanctions were re-imposed during President Bush's first term, although two North Korean companies were cited for WMD and missile proliferation (Rennack).In March 2005, North Korea declared that because the DPRK-U.S. dialogue on which missile test moratorium was based had been totally suspended when Bush administration took office in 2001, DPRK is bound to moratorium on missile launch at present. The DPRK then tested short range missiles first on May 1, 2005, and again on March 8, 2006. These short range tests, which did not break any international laws, garnered only limited public attention and condemnation from United States and international community, and no U.S. economic sanctions were re-imposed.Instead, in this fifth phase, U.S. administration focused on financial sanc- tions, including assets of individual companies suspected of proliferating weapons of mass destruction (WMD). On June 28, 2005, United States froze assets under U.S. jurisdiction of three DPRK firms that it accused of engaging in WMD proliferation, and in October 2005 froze assets of an additional eight firms (Rennack).In September 2005 U.S. Department of Treasury designated Banco Delta Asia as a bank of primary money laundry concern. This action, coupled with a December 2005 Treasury Department advisory warning financial institutions against transactions with DPRK, proved to have considerable impact on DPRK's ability to do business, and may have had a greater impact than sanctions that had been lifted during Clinton administration.In March 2006, U.S. Department of Treasury accused a Swiss company of doing business with one of sanctioned North Korean firms, and froze assets of Swiss company and its owner and banned U.S. entities from doing business with firm or owner. In April 2006 Department of Treasury issued an Office of Foreign Assets Control (OFAC) regulation banning U.S. persons from owning or leasing North Korean-flagged vessels.On July 5, 2006, DPRK test-launched an array of ballistic missiles, including a long-range Taepodong-2. The United Nations Security Council adopted Resolution 1695 ten days later, although, as with earlier short-range tests, long range test broke no international laws. Even with adoption of 1695, Bush Administration did not immediately re-impose sanctions lifted by Clinton administration in exchange for moratorium.North Korea tested a nuclear device on October 9, 2006, after which UN Security Council quickly adopted UN Resolution 1718 in response. In January 2007, Bush administration re-imposed some of sanctions lifted in Clinton era, and published a list of luxury items prohibited for export to DPRK, ushering in a sixth phase of sanctions.In Initial Actions agreement signed by Six Parties on February 13, 2007, United States agreed to begin process of removing designation of DPRK as a state sponsor of terrorism and advance process of terminating application of Trading with Enemy Act with respect to DPRK. …