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Jul 14, 2017 | 19:44 GMT

2 mins read

U.S.: Hints Of New Secondary Sanctions Over North Korea

(Stratfor)

The United States is considering a new set of secondary sanctions against Chinese financial institutions and other entities with alleged roles in supporting North Korea's weapons programs, according to anonymous U.S. administration officials. The measures would not target large banks but would go after more marginal players included on a list that U.S. President Donald Trump shared with Chinese President Xi Jinping during his official visit in April (as part of a U.S. effort to pressure China to act on North Korea's weapon's program).

The two sides also agreed during that visit to a 100-day trade action plan to address the massive trade deficit that ends July 16. Soon after that deadline, the first U.S.-China Comprehensive Economic Dialogue will be held, on July 19, after which the U.S. administration is likely to decide the precise nature of the new sanctions and their timing. The Chinese foreign ministry condemned the prospect of further U.S. secondary sanctions, citing China's support in passing U.N. sanctions on North Korea.

The reported nature of the secondary sanctions is similar to the initial June 29 sanctions  targeting Chinese businesses and individuals allegedly acting as fronts for North Korean interests, including Dalian Global Unity Shipping Co. and two Chinese nationals. Most notably, the U.S. Treasury Department's Financial Crimes Enforcement Unit (FinCEN) issued a proposal to bar after a 2-month comment period U.S. institutions from transacting with the Chinese-run Bank of Dandong, which it accuses of money laundering for the North Korean government, under Section 311 of the USA Patriot Act.

The Trump administration is sending a signal to China ahead of the July 16 conclusion of the 100-day trade action period and ahead of the meeting next week. The secondary sanctions would have little tangible impact on China, however, and, like the previous sanctions, the North Koreans have many options to circumvent them. In some ways, the new sanctions are as symbolic as those before. If the United States truly wanted to make life difficult for China, it could sanction larger entities with deep ties in the U.S. financial system. The secondary set of sanctions is a signal by the U.S. that the current administration is willing and able to crack down on countries such as China and Russia that hesitant to heavily pressure Pyongyang and implies further measures related to trade are in reserve.

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