White House spokesman Josh Earnest said yesterday that the President will sign H.R. 757, the “North Korea Sanctions and Policy Enhancement Act of 2016,” which imposes new sanctions on North Korea in the wake of a recent nuclear test and missile launch. The bipartisan bill passed the Senate unanimously (96-0) on February 10.

The initial text of the bill, in section 104(e), imposed a strict ban on all dealings in any property located in North Korea, originating from North Korea, or owned by the Government of North Korea. Because the bill did not define “property,” this provision could potentially have been read to impose a near-total embargo on the Norks. This was scaled back, no doubt due to the U.S. concerns that China, which the U.S. is currently seeking to bring on board for new U.N. sanctions, would object to the potential regional destabilizing effects of any measures that would have a significant impact on the North Korean economy.  The last thing China wants is a bunch of North Korean refugees pouring across its common border.

The only remaining export ban is a provision which appears to reimpose those export restrictions that are normally imposed on State Sponsors of Terrorism without actually putting North Korea back on that list. Section 203(a) provides:

A validated license shall be required for the export to North Korea of any goods or technology otherwise covered under section 6(j) of the Export Administration Act of 1979 (50 U.S.C. 4605(j)).

It is not immediately clear that this will change any of the extensive restrictions imposed by section 742.19 of the EAR beyond expanding the general policy of license denial beyond those items controlled for NP and MT reasons to all items controlled by the CCL.

The secondary sanctions of the bill are likely to have a broader impact. Section 104(a) defines activities that, if engaged in by any person, including a foreign person, require mandatory blocking of that person. This is a departure from the usual practice of granting the President the discretion to block persons who have engaged in prohibited conduct. The categories of prohibited conduct include import or export of goods from or to North Korea that are controlled on the Commerce Control List for CB, NP or MT reasons. Import of luxury goods into North Korea is also a ground for mandatory designation. So, if we ever find out who put that MacBook Pro into Kim Jong Un’s pudgy little hands, they’re going to be in big trouble.

The new sanctions bill also introduces an interesting wrinkle into the blocking rules for those designated under the new law. Under current OFAC guidance, entities owned 50 percent or more by a blocked person are also blocked. Under section 104(d), the automatic blocking extends to any entity “owned or controlled by, or to have acted or purported to have acted for or on behalf of, directly or indirectly” any party blocked under this act. That, of course, is a screening nightmare. Normally it is hard enough to determine ownership. Determining whether a party is controlled by, or, worse, acting on behalf of, a blocked party will be next to impossible.