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Easing Sanctions Against North Korea

 September 17, 1999

"Today the President announced his decision to ease some sanctions against the Democratic Peoples Republic of Korea (North Korea), administered under the Trading With the Enemy Act, Defense Production Act, and the Department of Commerce's Export Administration Regulations.

The United States is taking this action in order to pursue improved overall relations with North Korea, support the Agreed Framework, and as a result of U.S.-North Korean discussions in Berlin September 7-12,1999. On the basis of these discussions, it is our understanding that North Korea will continue to refrain from testing long-range missiles of any kind as both sides move toward more normal relations.

The easing of sanctions will allow most consumer goods to be available for export to North Korea and will allow the importation of most North Korean-origin goods into the United States. To support this easing of sanctions in the trade of goods, most personal and commercial funds transfers will be allowed between U.S. and North Korean persons.

The relaxation of transportation restrictions will allow commercial air and sea transportation between the U.S. and North Korea for passengers and cargo, subject to normal regulatory requirements.

This easing of sanctions does not affect our counterterrorism or nonproliferation controls on North Korea, which prohibit exports of military and sensitive dual-use items and most types of U.S. assistance. Statutory restrictions, such as U.S. missile sanctions, will remain in place. Restrictions on North Korea based on multilateral arrangements also will remain in place, such as the Wassenaar Arrangement."

The White House

This press release opens one of the last frontiers to international commerce, a market that has been closed for the lifetime of most companies and many marketing mangers, sales managers, etc. Information on North Korea is limited at best. The following is a summary of available Internet based information.

DO

• Be sure that the ultimate purchaser and end-user of the items is not associated with North Korean missile technology exports. This is especially important when a license is not required (e.g., export of an EAR99 item).

• Be aware of the instability of the North Korean financial sector. There is little, if any, fungible capital in the consumer economy since everything is provided by state enterprises. Initially, cash deals with pre-payment may be the best way to structure your exports to the North Korean government until you gain confidence that you can be paid by more conventional (e.g., electronic, letters of credit, etc.) methods.

• U.S. exporters are encouraged to establish direct contact with the North Korean government, either in Pyongyang itself, through the North Korean mission to the United Nations or the North Korean embassy in Beijing, to ascertain DPRK laws and regulations for doing business in North Korea. Familiarize yourself with North Korean import guidelines.

• You should be sure to make whatever agreements you reach with prospective customers in North Korea contingent on your receiving an appropriate U.S. Department of Commerce export license for the particular export transaction, if goods require a license.

Don’t

• Don't assume that North Korea is like a Western environment for business and investment.

• Don't expect there to be any real infrastructure for your proposed production or assembly venture in North Korea, or assume that basic industrial resources like water, electricity, roads or airports, will be available.

• Don't mix controlled and non-controlled goods in shipments to North Korea.

• Be wary of doing non-cash deals, at least until you are comfortable with the payment performance of your North Korean customer.

• Don't expect your customer to obtain the necessary import, export or tariff permits for doing business in North Korea, unless this is required. You are better off to approach North Korea government officials directly with your request.

• Don't ship anything on the Commerce Control List. There is a presumption of denial for all controlled goods to North Korea. The current liberalization affects a broad range of consumer goods and Iow-level industrial items. If you don't know if your item is EAR99, please seek a commodity classification. Also note that some items that are EAR99 for most world destinations have actually been controlled and brought into the CCL for the purposes of North Korea.

For further information regarding the export of US products or services, please contact your nearest office of the US Commercial Service.

Additional Information

Please see our companion publication: North Korea WebGuide.

Date Updated: March 27, 2007