January 15, 2020 | Policy Brief

U.S. Sanctions North Korean Companies for Profiting From Overseas Slave Labor

January 15, 2020 | Policy Brief

U.S. Sanctions North Korean Companies for Profiting From Overseas Slave Labor

The U.S. Treasury Department sanctioned a North Korean trading company and a China-based North Korean lodging facility on Tuesday for helping Pyongyang generate illicit revenue through overseas forced labor. Treasury’s latest action indicates that Washington continues to employ some elements of maximum pressure amid North Korea’s surge in demands for U.S. concessions to prolong nuclear diplomacy.

Treasury’s two targets were the Korea Namgang Trading Corporation (NTC) and Beijing Sukbakso. NTC is a North Korean trading company working on behalf of the North Korean government. Beijing Sukbakso is a housing facility in China that handles NTC personnel’s travel and lodging logistics.

Treasury sanctioned these targets pursuant to the North Korean Sanctions and Policy Enhancement Act, as amended by the Countering of America’s Adversaries Through Sanctions Act. The amended legislation obligates Treasury to sanction companies and individuals exploiting overseas North Korean workers to generate revenue on behalf of Pyongyang.

A U.S. government advisory from July 2018 found that the Kim regime’s exploitation of overseas laborers has yielded millions of dollars in revenue for the regime’s nuclear weapons and ballistic missile programs. North Korean overseas laborers work across 41 countries. Former overseas North Korean workers have highlighted the extremely abusive and inhumane conditions they faced in these jobs.

The Treasury sanctions come amid heightened uncertainty in U.S.-DPRK nuclear negotiations since the failed Hanoi summit last February. Last week, Kim Kye Gwan, a North Korean Foreign Ministry official and former chief negotiator at the Six Party Talks, stated that Pyongyang will pursue dialogue only when the U.S. meets all of its demands. These demands include sanctions relief and “an end to U.S. hostile policy,” a phrase Pyongyang often uses to refer to a significant reduction or full withdrawal of the U.S. military from Korea.

North Korea’s ongoing intransigence is a clear indication that the Kim regime still sees greater strategic benefit than risk in maintaining its nuclear weapons and ballistic missiles. Therefore, the United States and its allies should consider implementing a new multi-faceted pressure campaign aimed at pressuring Pyongyang to abandon its nuclear weapons. This renewed pressure campaign would integrate tools of diplomacy, military deterrence, cyber operations, information and influence activities, and robust sanctions enforcement.

In particular, Treasury should continue targeting both North Korean and non-North Korean companies and individuals exploiting overseas laborers. Treasury’s sanctions investigators should continue identifying non-North Korean companies that employ North Korean workers in any of the 41 countries listed in the July 2018 advisory.

U.S. sanctions investigators should also continue investigating prominent industries that employ North Korean workers in those 41 countries. Such industries include apparel, construction, footwear manufacturing, hospitality, logging, seafood processing, IT services, restaurant, textiles, and several others.

Specifically, Treasury should prioritize investigations in China and Russia. Some news reports have suggested that both Russia and China have kept their North Korean workers past the December 22, 2019, deadline the UN Security Council set for member states to expel all North Korean workers.

It is imperative that the United States build on today’s sanctions to remind the Kim regime of the risks and costs of its unrelenting desire for nuclear weapons. Although ramping up pressure will likely yield an increase in regional tensions, it is the only way to break the diplomatic deadlock between Washington and Pyongyang without conceding to Kim’s demands.

Mathew Ha is a research analyst focused on North Korea at the Foundation for the Defense of Democracies (FDD), where he also contributes to FDD’s Center on Economic and Financial Power (CEFP). For more analysis from Mathew and FDD, subscribe here. Follow Mathew on Twitter @MatJunsuk. Follow FDD on Twitter @FDD and @FDD_CEFP. FDD is a Washington, DC-based, nonpartisan research institute focusing on national security and foreign policy.


China North Korea Russia Sanctions and Illicit Finance