How new lead, iron sanctions could cut $200 million from N. Korea’s trade revenue
KITA and UN figures lower than those presented by the U.S. Mission to the UN, however
The UN’s latest resolution added another metal to the list of commodities which member states can no longer purchase from North Korea, while also removing loopholes on existing restrictions covering iron and coal.
Following Resolution 2371’s passage, member states can no longer import coal, iron, lead, nickel, copper, titanium, vanadium, rare earth minerals, gold or silver from the DPRK.
Between them, the prohibitions target many of the DPRK’s most lucrative exports. With member states also barred from importing seafood, North Korea’s only remaining high-value exports are those related to its textile industry.
The omission of lead from previous UN resolutions was odd, given the relatively high value of the exports when compared to vanadium or nickel, which were only infrequently sold abroad and generated little revenue for the North Korean government but on which export restrictions were placed in March and November last year.
According to Chinese customs figures compiled by the Korea International Trade Association (KITA), shipments of lead and its derivates to China earned the DPRK over USD$63 million in 2016. The UN’s Comtrade database indicates that an additional USD$1 million worth of lead was sold to countries other than China.
The more straightforward ban on iron will also make it simpler to assess how much business the DPRK is losing. Prior to Resolution 2371’s passage, iron was covered by a humanitarian exemption that Chinese traders likely exploited to continue trading as normal, with monthly shipments occasionally increasing to record levels.
Overall, the DPRK’s exports of iron and iron products to China were worth around USD$120 million in 2016, though the total might be lower in reality, as in some cases, it’s not possible to separate iron from steel using trade data alone.
Factoring in trade with other countries, the total is a little larger, coming it at roughly USD$150 million, though, again, this will probably include some (unsanctioned) steel exports.
But numbers in the KITA and UN Comtrade databases are significantly lower than those issued by the U.S. Mission to the UN in their fact sheet accompanying Resolution 2731.
The U.S. data valued iron trade at USD$250 million, and lead at USD$110 million: around double those collated by KITA and the UN, while a third database compiled by the Korea Trade-Investment Promotion Agency (KOTRA) also had different tallies.
“I was comparing the figures that the State Department was referencing to the KOTRA 2016 report numbers… The lead and lead ores seem to be too high and also the State Department figures for seafood seem too high by about $100 million,” Kent Boydston, research analyst at the Peterson Institute for International Economics, told NK Pro.
In response to a question from NK Pro, the U.S. Department of State said the UN mission’s numbers were in part extrapolated.
“These numbers were compiled by U.S. government experts familiar with the latest trade data for North Korea,” a State Department official explained. “They are based on our best available information regarding past DPRK export revenues, including extrapolating export trends observed over the first six months of 2017.”
The predictions may be legitimate, as North Korea may have been attempting to increase exports of certain commodities following last year’s resolutions. Iron appeared to be on the increase, while seafood shipments had also been trending upwards in recent years.
But even taking last year’s trade with China as a benchmark, the combination of Resolution’s 2270, 2321 and 2371 should reduce North Korea’s revenues from exports by around USD$1.6 billion a year.
Additional reporting by Minyoung Kim
Edited by Oliver Hotham
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