American Club Circular No. 01/1 8 1 JANUARY 3, 2018 CIRCULAR NO. 01/18 TO MEMBERS OF THE ASSOCIATION Dear Member: THE UNITED NATIONS IMPOSES ADDITIONAL SANCTIONS ON NORTH KOREA As Members may already be aware, on December 22, 2017, the United Nations Security Council adopted yet another resolution (UNSCR 2397) imposing additional economic sanctions on North Korea. This Circular summarizes these new sanctions. It should be read in conjunction with earlier Club Circulars on this subject. Summary of the new sanctions UNSCR 2397 imposes new sanctions on North Korea’s energy, export, and import sectors. It also creates new maritime-related authorizations to shut down North Korea’s smuggling activities. UNSCR 2397 builds on UNSCR 2375 (2017) and prior resolutions. The new resolution imposes the following measures: 1. Refined petroleum products: Reduces UNSCR 2375 annual cap on refined petroleum exports by 75% to allow a maximum of 500,000 barrels/year to North Korea. 2. Crude oil: Strengthens UNSCR 2375 freeze on crude oil by establishing a 4 million barrels/year or 525,000 tons/year annual limit. Increases transparency of sources of supply of crude oil provided to North Korea by requiring supplying member states to provide quarterly reports to the 1718 Sanctions Committee on amounts of crude oil provided to North Korea. 3. Commitment to future oil reductions: Commits the Security Council to reduce further petroleum exports to North Korea following another nuclear test or an ICBM launch. 4. Countering maritime smuggling: Provides additional tools to address smuggling and sanctions evasion, including a new requirement for countries to seize and impound ships caught smuggling items including oil and coal. 5. North Korean overseas workers: Requires countries to expel all North Korean laborers earning income abroad within 24 months (i.e. by the end of 2019). 6. Banning of DPRK exports: Bans all remaining categories of major DPRK exports. The previous Security Council resolutions banned North Korea’s export sectors covering around 90% of its export revenue (e.g., coal, textiles, seafood, iron). The remaining major export sectors now banned include food, agricultural products, minerals, machinery and electrical equipment. 7. Banning of DPRK imports: Bans North Korea from importing heavy machinery, industrial equipment, and transportation vehicles, but exempts the provision of spare parts for civilian passenger aircraft for air safety reasons. 8. Protects humanitarian and diplomatic activities in North Korea: Imposes new measures aimed at the North Korean regime by targeting industrial and other major economic activities while preventing North Korea from exporting food and agricultural products. Provides a number of American Club Circular No. 01/ 18 2 exemptions aimed at protecting the delivery of humanitarian assistance to the North Korean people and not impeding the work of diplomatic and consular missions operating in North Korea. 9. Sanctions designations (annexes): Adds 16 new individuals and one entity connected to the financing and development of North Korea’s nuclear and ballistic missile programs to the UN’s sanctions list. Source: United States Mission to the United Nations: https://usun.state.gov/remarks/8238, December 22, 2017 Implementation of the new sanctions by member states of the UN Member states of the UN are required to implement and enforce UN Security Council Resolution 2397. Where required, and where UN resolutions are not dir