Procurement: South Korea Sanctions North Korea


April 13, 2023: South Korea is a major developer, manufacturer and exporter of high-tech equipment used in space satellites and ballistic missiles. Recently South Korea discovered that North Korea was importing some of these South Korean components via smuggling networks it has long used to obtain key components for its ballistic missile and more recent space satellite programs. In response, South Korea imposed new sanctions to block the north from obtaining South Korean tech. The new approach includes a lot more dual-use items that are sold to legitimate customers but somehow end up in North Korea. That’s because many customers for South Korean tech are distributors who resell items to a larger number of customers. Some of those customers turn out to be fronts for the North Korean smuggling network. Now South Korea will check further down the distribution chain to seek out who is diverting items to North Korea.

This is not a new problem because sanctioned nations like North Korea, Iran and others have often paid higher prices to obtain sanctioned items via smugglers who set up fake buyers and then divert items, for an added fee, to sanctioned customers. The additional fees are often substantial if the movement of some items is closely scrutinized and there is a risk of detection and prosecution of the offenders. The new South Korea sanction enforcement will make it more difficult to obtain items on a watchlist of 77 South Korean products. This will either increase what cash-starved North Korea has to pay or prevent them from obtaining some items.

South Korea has long applied their stricter sanction rules to military items but the 77 items on the new sanctions list are all dual-use items that normally end up in commercial equipment but can be used for military applications North Korea is known to be working on.




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