Taiwan’s Uneasy Relationship with North Korea

Taiwan’s Uneasy Relationship with North Korea

Taiwan’s Uneasy Relationship with North Korea

As recently as May 19 of this year, Tsai Ming-yen (蔡明彥), then-deputy secretary-general of Taiwan’s National Security Council (國家安全會議), reportedly told the US State Department’s Deputy Assistant Secretary for North Korea Alex Wong that Taiwan is still abiding by United Nations (UN) Security Council sanctions on the Democratic People’s Republic of Korea (DPRK). Taipei’s emphasis on its adherence to international sanctions on North Korea comes after several Taiwanese nationals have been accused in recent years of engaging in illicit trade activities with North Korean entities in violation of UN sanctions imposed since 2017. Despite the Tsai Ing-wen (蔡英文) administration’s decision to suspend all trade with North Korea in late 2017, such incidents involving Taiwanese citizens highlight the tension in Taiwan’s policy towards the DPRK, which seeks to balance existing trade links with its desire to play a responsible role in international affairs.

Taiwan’s Trade with North Korea

Prior to the Tsai administration’s September 2017 announcement that Taiwan would end all trade with North Korea, economic and trade relations between the high-tech, industrialized economy and the isolated, totalitarian state were surprisingly solid. The upper levels of Taiwan-North Korea trade over the past decade hovered between USD $21 million in 2010 and USD $30 million in 2015, reaching a peak of USD $53 million in 2012. Beginning in 2016, bilateral trade began to drop precipitously to USD $12.7 million that year. In 2017, bilateral trade fell to USD $2.75 million, with Taiwan’s imports from North Korea (USD $2.7 million) far surpassing its meager exports to its northern neighbor (USD $45,465). North Korea ranked as Taiwan’s 173rd largest trading partner, 139th importing partner, and 216th exporting partner in 2017. By contrast, Taiwan was North Korea’s fourth-largest export destination in 2016, trailing only China, India, and the Philippines. Taiwan’s main imports from North Korea consisted of mineral products, followed by base metals, vegetable products, and textiles. The island’s main exports to North Korea included chemical products, textiles, machinery, mechanical appliances, and electrical equipment. For instance, North Korean leader Kim Jong-un was photographed using a Taiwanese HTC mobile phone.

In 2009, the Taiwan-DPRK Trade Association (台灣朝鮮經貿協會) was established to promote economic, trade, culture, and tourism exchanges between the two sides. Its major objective is to help Taiwanese manufacturers gain a foothold in the North Korean market. According to its website, the association is overseen by Taiwan’s interior and economic affairs ministries and is the only Taiwanese economic and trade organization with a counterpart in North Korea, the DPRK-Taiwan Exchange Promotion Association (朝鮮台灣交流促進協會), a unit presumably under North Korea’s trade ministry. In the absence of diplomatic relations between the two sides, the Taiwan-DPRK Association is reportedly the only Taiwanese counterpart recognized by North Korea. However, Taiwanese businesses have still been restricted in their economic and financial activities with North Korea due to the stringent international and US sanctions regime targeting North Korea’s nuclear and missile programs. Huang Yen-lang (黃延朗), chairman of the Taiwan-DPRK Economic and Trade Association, has argued that more and more trade barriers have been erected between the two sides in recent years and that past trade cooperation has almost disappeared.

Taiwan’s Policy on UN Sanctions on North Korea

In September 2017, following Pyongyang’s sixth nuclear weapons test, the UN Security Council passed Resolution 2375, requiring member states to export no more than 500,000 barrels of refined petroleum products to North Korea from October 1 to December 31 of that same year, and then no more than 2 million barrels per year starting in 2018. The resolution also banned natural gas sales, exports of textiles (Pyongyang’s second-largest export), and work authorizations for DPRK nationals. US Ambassador to the UN Nikki Haley maintained that the resolution’s sanctions, aimed at striking Pyongyang’s ability to fuel and fund its nuclear program, “would only work if they were observed strictly by all states.” Although Taiwan is not a UN member, and thus not obligated to follow UN resolutions, Taipei subsequently announced a comprehensive ban on imports and exports with North Korea, stating that North Korean actions violated past UN resolutions and affected regional stability. Following this announcement, Taiwan officially suspended refined oil and liquefied natural gas exports to North Korea, along with textile imports, in line with UN requirements.

Later, in June 2018, Taiwan’s Ministry of Foreign Affairs (MOFA) announced that Taiwanese fishing boats would no longer employ North Korean nationals as crew members to comply with the UN ban on hiring DPRK nationals. The move also came after the US Departments of State, Treasury, and Homeland Security listed Taiwan in the North Korea Sanctions & Enforcement Actions Advisory as one of 41 countries and jurisdictions that had employed North Korean laborers in 2017 and 2018, mostly in Taiwan’s seafood industry. As of July 2018, Taiwanese fishing boats only had three North Korean crew members who were set to return to North Korea later that month, compared to the nearly 278 North Korean workers employed in August 2016.

Taiwanese Nationals Involved in Illicit Trade with North Korea

However, several incidents involving Taiwanese nationals in illicit weapons procurement and trade activities with North Korea have complicated the perception that Taipei is committed to the international sanctions regime. In 2013, the US Treasury Department sanctioned one Taiwanese entity, the Taichung-based Trans Multi Mechanics Co. Ltd. (鳳笙公司), and one Taiwanese citizen for their active roles in the procurement of dual-use machinery for the DPRK. In August 2017, a former Taiwanese judge and his son allegedly purchased and shipped four tons of coal from North Korea to Vietnam after the UN Security Council implemented a full ban on coal, iron, and iron ore exports from the DPRK earlier that month. Then, in November 2017, South Korean authorities seized a Hong Kong-owned cargo ship that was delivering oil to North Korean vessels in contravention of UN sanctions. Kaohsiung businessman Chen Shih-hsien (陳世憲) was suspected of renting the Lighthouse Winmore (方向永嘉號) cargo ship in order to sell more than 600 tons of refined oil to a North Korean tanker on the high seas. After being spotted by US satellites, Chen was handed over to Taiwanese authorities for prosecution.

The UN Security Council issued new sanctions in late December 2017 aimed at restricting the supply of crude oil and refined petroleum products to North Korea. Less than a week later, US President Donald Trump accused China on Twitter of secretly providing oil to North Korea. In response, Beijing stated that it had been enforcing all UN resolutions against North Korea, though South Korean spy satellites found at least 30 instances of ship-to-ship oil transfers between Chinese and North Korean vessels since October. The US pressure on China to sever all economic ties with the DPRK also put Taiwan in a tight spot. In the years prior to the 2017 resolutions, Taiwan was suspected of providing nearly 80 percent of North Korea’s refined oil products. If China indeed took substantive steps to comply with UN sanctions on North Korea, then Taipei, which aspires to join the UN and other international organizations, would also need to decouple economically from North Korea. Furthermore, Taipei’s calculus is quite clear: the economic and strategic relationship with the United States disproportionately outweighs the benefits of trade with North Korea. Also, Taiwanese businesses do not want to become targets of US sanctions on third parties doing business with North Korea.

In February 2018, Taiwan publicly urged local companies to comply with international sanctions after an independent report to the UN implicated a Taiwan-based network of ships for participating in illicit ship-to-ship transfers of petroleum products to the DPRK. Taiwan “again calls on our people and companies not to carry out any financial or commercial activities that contravene relevant resolutions of the United Nations Security Council, to avoid facing sanctions,” stated its foreign ministry. However, the government’s pleas, coupled with tougher financial sanctions against perpetrators, did not deter some Taiwanese citizens from continuing to engage in unsanctioned activities with the DPRK. More recently, in August 2019, the US Treasury Department’s Office of Foreign Assets Control (OFAC) announced the designation of two Taiwanese individuals and two Taiwanese shipping companies, Jui Pang Shipping Co Ltd (瑞邦海運股份有限公司) and Jui Zong Ship Management Co Ltd (瑞榮船舶管理有限公司)—both based in Kaohsiung—for conducting ship-to-ship transfers of petroleum products to North Korea during the previous year.

Despite the numerous incidents involving Taiwanese nationals and companies, Washington has praised the Taiwan government’s commitment to the international sanctions regime targeting North Korea. “The United States acknowledges and is grateful for Taiwan’s continued efforts to combat the DPRK’s efforts to evade sanctions and to obtain resources for its WMD and missile programs,” stated a US Treasury press release in 2019. Indeed, Taipei has chosen to forgo its economic and trade links with North Korea not only to demonstrate its commitment to UN sanctions on North Korea, but also to uphold the perception that it is a responsible member of the international community, despite being barred from participating in many international organizations. For Taiwan, not being a UN member does not provide a justification to ignore UN resolutions. Taipei also has the additional imperative to show that it is doing a better job than China at adhering to UN resolutions on North Korea.

When tensions have flared between Washington and Pyongyang, the Tsai administration has been inclined to avoid any sort of exchange or contact with North Korea. However, during the warming of relations leading up to the historic Trump-Kim summit meeting in Singapore in June 2018, some Taiwanese businesses hoped that barriers to trade between Taiwan and North Korea would be dismantled. Indeed, Taiwanese businesses stand to indirectly benefit from North Korea’s domestic economic reforms and opening up if there is also parallel progress towards reducing tensions and fostering peace on the Korean Peninsula. However, as long as US-DPRK tensions remain at heightened levels and China continues to play a less than supportive role in reining in North Korea’s nuclear program, Taipei will likely continue to take a hardline position against any new economic activity with the Hermit Kingdom.

The main point: Taipei has forgone its trade and economic relations with North Korea amid its desire to become a responsible international stakeholder.