Taiwan Takes Economic Action Against North Korea

Taiwan Takes Economic Action Against North Korea

Taiwan Takes Economic Action Against North Korea

As North Korea continues to test nuclear weapons of increasingly higher yields and missiles with farther ranges, with the declared intent to target the United States and US partners, Taiwan has moved in concert with the United States and its partners to phase out all trade with North Korea, in accordance with United Nations sanctions. Yet, Taiwan is not bound by the same United Nations commitments as the 193 member countries since Taiwan no longer has a seat in the UN. Taiwan is voluntarily standing in solidarity with the United States and the majority of the world to take measures aimed at “denouncing North Korea’s recent successive nuclear tests and actions that jeopardize regional security,” as stated by Taiwan’s Ministry of Economics.

The Growing North Korea Threat in Taiwan’s Vicinity

Over the past year, North Korea has tested advanced nuclear weapons, along with a large series of missiles that could deliver those weapons to ever greater distances. North Korea tested its most powerful atomic weapon to date on September 3, which it claimed to be a hydrogen bomb. The South Korean government measured a 5.7 magnitude earthquake to correspond with that test. A year earlier, in 2016, North Korea conducted two other nuclear warhead explosions.  

Missiles go hand in hand with nuclear warheads, and in the defense industry, missiles are also called “delivery vehicles.” As North Korea develops nuclear weapons, it becomes a threat to the United States when they are integrated with missiles that can reach US territory. Missiles travel at great speeds and can transport a payload—such as a nuclear warhead—over a long distance within minutes. When North Korea publicly stated that it was drawing up plans to fire long range missiles at Guam’s exclusive economic zone (EEZ), those missiles would have made a journey of over 2,000 miles in just around 20 minutes.  

As nuclear tests have proven successful, the focus has turned to improving delivery vehicles. Therefore, in recent years, the number of North Korean nuclear warhead tests pales in comparison to the number of its missile tests. There have been at least 13 missile tests in 2017. If North Korea has already tested its missiles by flying them over Japan, and if North Korea threatens to target Guam’s EEZ, then by logic Taiwan is also within range of an attack. Taiwan’s officials have thus voiced concerns.  

Taiwan’s Concerns and Sanctions Against North Korea

Taiwan’s leaders are taking the North Korean nuclear issue very seriously. Immediately following North Korea’s sixth nuclear test on September 3, 2017, President Tsai called a lengthy 70 minute national security meeting at the Presidential Office. Participants included then-Premier Lin Chuan (林全), Chief of the General Staff Lee Hsi-ming (李喜明), Deputy Foreign Minister Paul Chang (章文樑), National Security Bureau Director-General Peng Sheng-chu (彭勝竹) and Mainland Affairs Council Minister Chang Hsiao-yueh (張小月).  

Taiwan is right to be concerned and should be more involved when it comes to the North Korean threat because its security interests are also at stake. After the September 3 emergency meeting at the Presidential Office, Tsai publicly condemned North Korea for its actions, and urged Pyongyang to cease any moves that could undermine security in the region. She added that Taiwan will work closely with the international community on efforts to help maintain order and stability in the region.

The helpful economic measures that Taiwan has taken against North Korea are encouraging. On September 26, Taiwan’s Executive Yuan announced a comprehensive ban on all trade with North Korea that would come into force immediately. A week before that, on September 19, Taiwan suspended exports of its liquefied natural gas, crude oil, and refined oil; it also suspended clothing and textile imports from North Korea.  

Taiwan’s actions were taken to compliment new United Nations sanctions against North Korea levied on September 11, 2017 that imposed a ban on North Korea’s textile exports and capped trade of crude oil to 2 million barrels a year. The UN decision could cost North Korea US $1 billion a year, which is a third of its income from foreign sources. Even China’s Foreign Minister warned North Korea: “Do not violate the UN’s decision or provoke the international society’s good will by conducting missile launching or nuclear tests.”

Since Taiwan is not a member of the United Nations, it is not technically party to the sanctions. Taiwan’s recent actions demonstrate that, when it comes to North Korea, Taiwan has gone above and beyond UN sanctions levied on the regime even when it is not obligated to do so.

Cutting Off a Legacy of Trade with North Korea

Taiwan’s trade with North Korea was previously very limited, but has now been completely eliminated. Taiwan imported $1.2 million in goods from North Korea in the first half of 2017, and exported $36,000 in goods in the same time period. According to all available data from Taiwan’s Bureau of Foreign Trade (經濟部國際貿易局) reported to the United Nations Trade Statistics Database, Taiwan’s total trade with North Korea was $559 million, cumulative over the time period from 1989 to mid-2017 (a fraction of Taiwan’s total global trade at $9.6 trillion during the same time period). Such actions show that Taiwan stands in solidarity with the majority of countries in the world in condemning North Korea.

Last year, Taiwan was North Korea’s fourth largest trading partner in the world, judging by North Korea’s global exports. Based on 2016 data, North Korea’s top export destination was China, to which it exported $2.6 billion in goods, and with India in second at $87.4 million, and the Philippines third, at $51.8 million. Taiwan was fourth at $12.2 million.

Taiwan’s Bureau of Foreign Trade indicates that North Korea’s top exports to Taiwan were mineral products at 73 percent of items, vegetable products at seven percent, base metals at 13 percent, textiles at three percent. In the opposite direction, Taiwan’s exports to North Korea were composed of 37 percent chemical products, 30 percent textiles, 12 percent machinery, and three percent plastic and rubber articles.

North Korea even operated a [North] Korea International Chamber of Commerce (KICC) office in Taipei to facilitate trade. Its website stated that the office conducted “business activities, but also acts as a facilitator between DPRK and the outside world for important international events.” When asked about KICC, former Director of the American Institute in Taiwan Bill Stanton said, “I didn’t know the North Koreans had an office here.”  He continued, “I am pretty sure Washington was unaware or I would have thought it would have become an issue. If nothing else, people would have wondered why.”  

Reporters visited the KICC office in February, and news articles appearing as recently as May have mentioned KICC as operational. However, KICC’s official website has since been shut down and its operating status is now in question, especially in light of Taiwan’s new comprehensive ban on all trade with North Korea.

It is unlikely that Taiwan’s new comprehensive trade sanctions will provoke a backlash from North Korea since the trade between Taiwan and North Korea was already low, at 1.6 million US dollars in the first half of 2017. Also, Taiwan does not stand out to North Korea since Taiwan is acting in unison with the international community.  

Taiwan has also cooperated in interdicting contraband trade shipments to North Korea in the past. In 2003, Taiwan acted on a US request to seize 158 barrels of a dual-use phosphorus pentasulfide contraband shipment at the port of Kaohsiung that was bound for North Korea.

Taiwan is in lock step with the international community when it comes to implementing economic and trade sanctions against North Korea. As North Korea becomes more desperate, Taiwan could benefit by working with North Korea even more; yet, Taiwan has wisely chosen to join the international community to sanction North Korea in condemnation of its nuclear tests and missile launches, which destabilize the region.  

My next article on North Korea will address the puzzle of why Taiwan does not appear as worried about the North Korean nuclear and missile threat as their neighbors, and will also examine the implications Taiwan’s future defense posture.

The main point: Taiwan is playing a helpful role in voluntarily enforcing trade sanctions against North Korea, even though Taiwan is not technically bound by United Nations commitments.