NoKo sanctions are largely ineffective now, but increased economic

pressure can compel diplomatic negotiations that lead to denuclearization---

2014 sanctions on Iran prove. Reject their defense.
Peter Harrell 17, an adjunct senior fellow with the Center for a New American Security,
“Yes, we do have a way to deal with North Korea,” May 9, Politico, retrieved at:
http://www.politico.com/agenda/story/2017/05/09/north-korea-nuclear-program-
sanctions-iran-000432
With speculation mounting that North Korea will conduct a sixth nuclear test, the Trump
administration has sent blunt signals about possible U.S. military strikes against the
rogue nation. In recent interviews, President Donald Trump has spoken of the potential
for “a major, major conflict” and said, “We’ll see,” when asked about potential military
action. The Pentagon last week dispatched B-1 Stealth bombers to fly near the North
Korean border in a clear signal that military options are under development if diplomacy
fails.
The conventional wisdom on North Korea — and the reason Trump and his policymakers
jump so quickly to saber-rattling — is that the dictatorship is all but immune to normal
diplomatic pressures, too isolated and extreme to yield to our usual tools of persuasion.
But, in fact, the United States still has plenty of leverage to drive North Korea to the
negotiating table through a well-tested tool: sanctions. Despite the common
assumption that North Korea is already subject to crippling international sanctions, U.S.
and international sanctions actually leave vast parts of the North Korean economy
untouched. This isn’t just about China; the United States and Europe can ratchet up
the pressure on the North Korean regime with the ultimate goal of reining in one of
today’s greatest national security challenges.
The Trump administration has a playbook from which to draw: the Obama
administration’s negotiations with Iran over its nuclear program. Trump, who declared
the Iran deal a “disaster,” won’t like the comparison. But there are broad similarities
between North Korea’s and Iran’s efforts to develop their nuclear programs, and the
policies that forced Tehran to the bargaining table can work against Pyongyang as well.
My own experience suggests that such policies can work. From 2012 to 2014, I was
involved in constructing U.S. sanctions on Iran while running two State Department
offices that handled economic sanctions work. I worked with Congress, the White House
and the Treasury Department to draft sanctions laws. As a diplomat, I traveled to more
than 20 countries to meet with government officials and hundreds of companies from
the private sector to drive international business out of Iran. By 2014, the international
pressure campaign had halved Iran’s oil exports, severed most international banking ties
with Iran, and driven companies out of Iran’s ports, shipping and other vital sectors.
Most importantly, it had convinced Iran to negotiate over its nuclear program.

The first thing to understand is that North Korea’s economy is not as isolated from the
global economy as most Americans believe. North Korea is heavily integrated with the
Chinese economy, and North Korea also trades with India, Pakistan, Russia, Angola,
Saudi Arabia and other countries. Korean trade with China alone likely amounted to
more than $5.8 billion in 2016 after rising by a factor of more than 10 since 2000. In
total, North Korea’s exports and imports were nearly one-third of North Korea’s
gross domestic product in 2015 — a higher trade dependence than Iran had in 2010,
when the U.S. and our international allies finally got serious about imposing sanctions
on Tehran.
Furthermore, the narrative that North Korea is on the verge of economic collapse is
incorrect. Estimates of North Korea’s GDP generally run at least $30 billion a year.
North Korean per capita income rose more than 15 percent between 2013 and 2015.
Travelers to North Korea report anecdotal signs of growth, including a construction
boom and new traffic in Pyongyang. Much like Iran’s supreme leader in 2009, Kim Jong
Un today has little reason to worry his country is facing insolvency.
While major Western firms shun direct business with North Korea, the nation’s goods
still slip into the West. For example, last year an Australian clothing company discovered
that one of the Chinese companies it hired to make clothing had subcontracted a factory
in North Korea and had sold millions of dollars of North Korean goods in Australia. In
2014, several dozen U.S. companies disclosed that they may have used North Korean
gold in products they manufactured in China, another example of how North Korean
products slip into international supply chains. In addition, major Western multinationals
operate strategic partnerships with Chinese companies that export to the North Korean
market. Volkswagen’s biggest partner in China, FAW Automotive, for example, lists on
its website that it has a “DPRK Export Facility” in Dandong, China, and an office in
Pyongyang.

All of this means that the United States has a real opportunity to use sanctions to
gain leverage over North Korea, just as we did with Iran. While sanctions enacted last
year began to impose economic costs on North Korea, much of North Korea’s economy
remains untouched. For example, there are no international sanctions on the provision
of oil to North Korea, which is essential to North Korea’s economy. Sanctions on
North Korea’s natural resource exports, the largest driver of North Korean revenue,
are filled with loopholes. The European Union, China and most other countries have
yet to ban the import of North Korean-made textiles, a growing part of North Korea’s
economy.
Travel agencies in the U.S., the United Kingdom, Australia and Germany (as well as
China) are among those that organize commercial tours to North Korea — commercial
tours that the North Korean government tightly controls to ensure that it captures most
of the revenue. Photos show foreign-made construction equipment and vehicles in
Pyongyang, including the trucks that North Korea uses to show off its missiles in
parades. Port operators and cargo handlers around the world face no meaningful
consequences for loading and unloading North Korean goods.
In designing sanctions, the international community can draw lessons from the
campaign of sanctions on Iran. One of the most effective sanctions against Iran then
was the requirement that countries importing oil from Iran to hold the oil payments in
escrow accounts that Iran could only use for agreed-on purposes. The United
Nations could require that North Korea do the same, ensuring that no North Korean
export revenue supports its nuclear and ballistic missile programs. Broad sector bans on
all business with key North Korean economic sectors like mining, textiles,
transportation, ports and shipping can degrade North Korea’s ability to trade
internationally and North Korea’s domestic economy. Western multinational companies
must aggressively audit their supply chains and business partners to ensure that they
are not inadvertently trading with North Korea.

Of course, sanctions aren’t an end in themselves. They are simply a tool to impose
enough economic costs to drive Kim Jong Un to the negotiating table where he would be
willing to give up his nuclear ambitions, a high bar, given that the North Korean dictator
views as essential to the survival of his regime. The Trump administration is right to
increase the U.S. military force posture near North Korea to establish a more credible
threat of targeted military strikes against North Korea’s nuclear facilities.

During my time at the State Department, I saw how essential it was that increased
economic pressure be paired with diplomatic negotiations and credible offers of
sanctions relief in exchange for nuclear concessions. Trump was smart to say that
he would be prepared to talk directly to Kim Jong Un if a meeting could yield real
progress. The administration should also be prepared to offer major policy concessions if
North Korea dismantles its nuclear weapons program, even if such concessions leave
Kim’s regime in place. While sanctions can create leverage needed to reach a
negotiated agreement, we should always remember that our goal is a denuclearized
North Korea — not a poorer and more isolated, yet more heavily armed one.

Tougher sanctions work---demonstrate US resolve and pressure China to

act.
Julian Ku 17, the Maurice A. Deane Distinguished Professor of Constitutional Law at
Hofstra University School of Law, “Why Is the US More Likely to Sanction Chinese
Companies for Supporting Iran than for Supporting North Korea?” May 22, Lawfare,
retrieved at: https://lawfareblog.com/why-us-more-likely-sanction-chinese-companies-
supporting-iran-supporting-north-korea
Lost amid the fallout of President Trump’s firing of FBI Director James Comey last week
was the U.S. Treasury Department’s announcement of new sanctions on individuals
and companies found to be supporting Iran’s missile program. Four of the seven
new sanctions targets are Chinese. This matters because although this is the second
time since President Trump has taken office that the U.S. has sanctioned Chinese
nationals for supporting Iran’s weapons programs, his administration has not yet
imposed any sanctions on Chinese nationals and companies for
supporting North Korea. Though treating China lightly on North Korea sanctions
is consistent with the approach of the Bush and Obama administrations, it makes little
legal or strategic sense today. After all, it was North Korea, and not Iran,
that tested another potentially dangerous and threatening missile yesterday.
According to Treasury, Ruan Runling, a Chinese national, and three Chinese companies
associated with Ruan sold over $17 million worth of navigation-applicable technology
and guidance systems to Iranian companies controlled by Iran’s Ministry of Defense for
the production of missile guidance technology for the Iranian military. As of the date of
the order last week, Ruan and his affiliated companies are “blocked,” which
means that “all property and interests in property” they might have that are in the
United States is now frozen and cannot be transferred or withdrawn.
Furthermore, all transactions between these targets and U.S. persons (including foreign
companies resident in the United States) are now prohibited.

The main legal basis for these sanctions is the International Emergency Economic
Powers Act (IEEPA), 50 U.S.C. 1701 et seq., which delegates broad powers to the
President to impose sanctions on individuals he deems threats to the national security of
the United States. Iran’s various weapons programs have long been deemed to
constitute such a threat under Executive Order 13382, issued by President Bush in
2005.

But individuals and companies supporting North Korea’s weapons

programs are also subjected to sanctions under the same statute and several
executive orders. Indeed, U.S. sanctions against North Korea are, if anything,
broader than those currently imposed against Iran. Not only do they apply to any
individual or entity that directly or indirectly assisted North Korea’s weapons programs
in ways similar to the Iran sanctions, but U.S. sanctions on North Korea also apply to
anyone who has sold luxury goods or supported illegal financial
transactions like money laundering, or indirectly or directly supported the North
Korean government or its ruling party.
The key question for U.S. sanctions on North Korea is how they will be applied to foreign
nationals, since the U.S. essentially imposes an embargo on all transactions between the
U.S. and North Korea and the U.S. has never done any serious trade with North Korea
since before the Korean War. As everyone is well aware, Chinese individuals and
companies are the key source of outside economic support for North Korea.

Yet as Politico recently reported, sanctions on Chinese companies supporting

North Korea’s missile programs or the North Korean government’s money
laundering schemes are rare. Last September, the U.S. sanctioned Dandong
Hongxiang, a Chinese company, for supporting North Korea’s weapons programs and
money laundering operations. But although the U.S. seized 25 bank accounts belonging
to Dandong, it did not sanction the Chinese banks that held the accounts and
facilitated the payments to North Korean front companies.
According to former U.S. government officials, the U.S. has spent years compiling a
long list of Chinese individuals and companies whom it can immediately
sanction for violating its North Korea sanctions. The argument against imposing
these sanctions is that doing so will undermine Chinese cooperation in
pressuring North Korea. But even if that cooperation from China was effective (and the
evidence is thin so far), any sanctions would target individual Chinese companies
and individuals. It does not sanction the Chinese government in any way, nor
does it impose an embargo on trade akin to U.S. trade with Cuba. It would simply
sanction Chinese companies and individuals for doing what the Chinese government
claims they should not be doing anyway: supporting North Korea’s weapons programs.
To be sure, imposing sanctions will not solve the North Korea problem. But imposing
sanctions is a more tangible and sustainable action to show U.S. resolve on
North Korea than making empty threats of military action. If imposed on Chinese
financial institutions, it could also put serious new pressure on China’s
leadership and economy. At the very least, it might show China that the U.S.
government cares as much about North Korea’s weapons program as it does about
Iran’s. That would be a good start.