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

Abstract

OverviewThe history of U.S. sanctions against the DPRK can be divided into six stages. The U.S. maintained fairly comprehensive economic sanctions from the time of the Korean War until 1989, occasionally increasing the level of restriction during this period. Between 1989 and 1995 the export of goods from the U.S. commercial sector was permitted solely for the purpose of meeting "basic human needs." A more extensive easing of sanctions accompanied the negotiation of the Agreed Framework in 1994.In 2000, President Clinton eased many remaining trade and travel sanctions in response to the 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 the George W. Bush administration's approach to the DPRK differed considerably from that of the 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 the missile test moratorium was based had been "totally suspended when the Bush administration took office in 2001," the DPRK is "not bound to the moratorium on the 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 the United States and international community, and no U.S. economic sanctions were re-imposed.Instead, in this fifth phase, the U.S. administration focused on financial sanc- tions, including the assets of individual companies suspected of proliferating weapons of mass destruction (WMD). On June 28, 2005, the United States froze the assets under U.S. jurisdiction of three DPRK firms that it accused of engaging in WMD proliferation, and in October 2005 froze the assets of an additional eight firms (Rennack).In September 2005 the 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 the DPRK, proved to have considerable impact on the DPRK's ability to do business, and may have had a greater impact than sanctions that had been lifted during the Clinton administration.In March 2006, the U.S. Department of Treasury accused a Swiss company of doing business with one of the sanctioned North Korean firms, and froze the assets of the Swiss company and its owner and banned U.S. entities from doing business with the firm or owner. In April 2006 the 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, the 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 the earlier short-range tests, the long range test broke no international laws. Even with the adoption of 1695, the Bush Administration did not immediately re-impose sanctions lifted by the Clinton administration in exchange for the moratorium.North Korea tested a nuclear device on October 9, 2006, after which the UN Security Council quickly adopted UN Resolution 1718 in response. In January 2007, the Bush administration re-imposed some of the sanctions lifted in the Clinton era, and published a list of luxury items prohibited for export to the DPRK, ushering in a sixth phase of sanctions.In the "Initial Actions" agreement signed by the Six Parties on February 13, 2007, the United States agreed to "begin the process of removing the designation of the DPRK as a state sponsor of terrorism and advance the process of terminating the application of the Trading with the Enemy Act with respect to the DPRK. …