North Korea: Economic Sanctions

Publication Date: October 2006

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Government

Type:

Coverage: Korea (North)

Abstract:

U.S. economic sanctions are imposed against North Korea for four primary reasons: (1) North Korea is seen as posing a threat to U.S. national security; (2) North Korea is designated by the Secretary of State as a state sponsor or supporter of international terrorism; (3) North Korea is a Marxist-Leninist state, with a Communist government; and (4) North Korea has been found by the State Department to have engaged in proliferation of weapons of mass destruction. The United States has also taken steps to isolate the Macau-based Banco Delta Asia for counterfeiting and money-laundering activities, actions North Korea has characterized as attacks against it. In accordance with U.S. law, the United States limits some trade, denies trade in dual-use goods and services, limits foreign aid, and opposes entry into or support from international financial institutions. At the President's discretion, North Korea would also be subject to the economic sanctions pursuant to the International Religious Freedom Act of 1998, under which the administration has identified North Korea as a "country of particular concern" since 2001, and pursuant to the Trafficking Victims Protection Act of 2000, under which the administration has classified North Korea in the category of most severe offender (Tier 3) since 2003.

In October 2002, after meetings between high-level U.S. and North Korean government officials, the United States reported that North Korea had confirmed suspicions that it had reactivated its nuclear weapons development program. An international crisis ensued, with North Korea expelling International Atomic Energy Agency (IAEA) inspectors and declaring that it would withdraw from the NonProliferation Treaty. Participants in the Korean Energy Development Organization (KEDO) -- including United States, Japan, South Korea and European Union -- in turn suspended shipments of fuel oil. KEDO also suspended construction of the light-water reactors, the completion of which had been planned for 2003. North Korea officially withdrew from the Nuclear Nonproliferation Treaty on January 10, 2003 (effective three months hence), the first signatory country to do so.

In August 2003, North Korea joined the United States, Japan, South Korea, China and Russia in six-party talks. The six nations have met for four rounds; at the last, in September 2005, a preliminary agreement was signed by all parties. North Korea would end its pursuit of nuclear weapons, rejoin the Nuclear Nonproliferation Treaty, and readmit IAEA inspectors. Other signatories would, in turn, provide security guarantees, energy infrastructure, and aid. Different signatories had different views of what should happen next, however, and the agreement was essentially scuttled amid tense exchanges.

In July 2006, North Korea conducted ballistic missile tests. In October 2006, it detonated a nuclear explosive device.

This paper explains the U.S. economic sanctions currently in place, and summarizes recent events as they relate to the potential application of additional restrictions. It will be updated as necessary.