Background

On 18 February 2017, China’s Ministry of Commerce and General Administration of Customs jointly issued Announcement [2017] No. 12 (“Announcement No. 12“), imposing a blanket suspension on imports of coal produced in North Korea for the rest of the year. The suspension includes imports for which applications have been made, but not yet processed by Customs. Announcement No. 12 takes effect from 19 February 2017, and will be effective till 31 December 2017.

Announcement No. 12 is yet another implementation of the U.N. Security Council Resolution 2321 (2016), following various measures that have already been taken by China, including the ban on exports to North Korea of certain items connected to weapons of mass destruction.

Announcement No. 12 is a departure from China’s previous position, encapsulated in Announcement [2016] No. 81 (“Announcement No. 81“). In Announcement No. 81, the Chinese authorities imposed certain restrictions on the import of coal from North Korea such as those related to North Korea’s nuclear programme. China had, in the past, taken the position that the importing of coal protected the livelihoods of the North Korean people.

While the Chinese authorities did not provide a reason for the imposition of the suspension, it is interesting to note that the Announcement came less than a week after North Korea’s latest missile tests. The latest missile launches were strongly condemned by the Security Council in a Press Statement released on 13 February 2017. In the Press Statement, the Security Council called on Member States to redouble their efforts to implement fully the measures imposed by the Security Council, including the measures contained in Resolution 2321 (2016).

What Companies Can Expect

As we have observed previously, further action from China could be expected if North Korea continues to defy the demands of the U.N. Security Council and the global community. This latest ban on imports of coal from North Korea is a strong warning from China that North Korea can expect swift retaliation if it continues with its missile tests or nuclear programme. With coal being a significant portion of China-North Korea trade, and China being one of North Korea’s top trading partners, it is likely that this ban would have a significant impact on North Korea’s economy.