Navigating the North Korean Sanctions

Monday morning, October 9, 2017, President Trump expresses his growing lack of patience with North Korea tweeting, “Policy didn’t work.” Later that day, the UN seized four vessels including the Petrel 8 registered in Comoros, Hao Fan 6 in Saint Kitts and Nevis, and Tong San 2 in North Korea. Although US sanctions against North Korea are nothing new, the latest sanctions and escalating tension may impact US importers in unexpected ways.
Commodity-specific sanctions are what most importers in the US are familiar with, and they are therefore not surprised by the prohibitions on oil, coal, and seafood. The new rules enacted by the US in August, however, include a strict prohibition on the use of North Korean labor. Chinese production of textiles, wood flooring, and seafood uses this newly prohibited labor pool. Seafood importers are therefore impacted in two ways. First, by sanctions on North Korea seafood products, and next by prohibitions on the use of North Korean labor which is often used in Chinese seafood products.

Recently, the Associated Press tracked packages of snow crab, salmon fillets, squid rings and other seafood products which employed North Korean labor imported to distributors within the US. These distributors included Sea-Trek Enterprises in Rhode Island, and The Fishin’ Company in Pennsylvania. Companies that supply retailers, food service companies, supermarkets, and export seafood to Europe, Australia, Asia, Central America and the
Caribbean.

To ensure you are not inadvertently caught up in sanctions violation, monitor the OFAC sanctions lists for suppliers or customers. Make sure this check is performed routinely to ensure a surprise appearance by your supply chain on one of the prohibited list. Next, request certification from members of your supply chain that they do not employ North Korean labor. If you import goods from Hunchun in China, be extremely cautious since over 3000 North Koreans are working in this region. Attempt to find alternate sources for your products to ensure no interruptions occur within your supply chain, Last if you have any questions or concerns, contact your Edward J. Zarach & Associates partner for additional ways to protect you and your business from this or potential new threats out of North Korea.