Although it is not party to UN sanctions against Pyongyang, Taiwan has passed measures domestically which severely restrict economic exchanges with North Korea. Still, trade hasn’t ceased altogether, and some fear that this could give the rogue state opportunities to acquire banned goods.
With North Korea’s recent missile tests and continued military posturing, increased attention has fallen on China-North Korea ties, especially as trade has increased between the two despite international sanctions. Despite international condemnation and various actions, such efforts appear to have had little effect on North Korea, with economic growth in 2016 the highest in 17 years. China accounts for most of North Korean trade as well as foreign direct investment, the latter of which is primarily motivated by Chinese entrepreneurs and not the state. However, trade continues with other countries, including Taiwan.
Most of the United Nations resolutions imposing sanctions on North Korea focus on items relevant to its nuclear weapons program (see here and here), while later resolutions targeted the regime’s access to international banks. Expanded sanctions under UN Resolution 2270 in March of 2016 first attempted to limit North Korea’s ability to export various metals as well as coal, but initially allowed for exemptions for “livelihood purposes,” although this term remains vaguely defined (perhaps by intent). A later resolution (2321) in November of 2016 attempted to cap these exports. However, such sanctions largely rest on the willingness of individual countries to follow through, with mixed evidence so far in 2017. Additional sanctions passed unanimously on Saturday attempt to cut North Korean exports by a third, yet these too will rely heavily on states being willing to deny themselves mutually beneficial trade with the rogue state.
The hermit and the orphan
As Taiwan is not a member of the United Nations, it is therefore not a party to such sanctions, although it has frequently passed measures domestically similar to those agreed upon in international organizations. On Saturday, Taiwan’s Ministry of Foreign Affairs (MOFA) spokesperson Eleanor Wang also restated Taiwan’s stance in opposing North Korea’s continued actions that threaten regional security and Taipei’s support for the additional sanctions.
Remarkably little has been written about Taiwan’s relationship with North Korea, despite both being the result of Cold War hostilities that remain points of concern for both the U.S. and China. Among the few who have do so is Mycal Ford, who has explored commercial ties. In July 2012, according to news site Huanqiu Shibao, the North Korean Vice-Ministerial Tourism Bureau Deputy Secretary, Zhao Chengkui, traveled to Taiwan to secure tourist exchanges between the two countries.
The vast majority of attention (from a Taiwan perspective) focuses on how U.S.-China relations will either affect North Korea and Taiwan independently or how Sino-American decisions in regards to one influences the other. Dennis Halpin suggests that increased tensions on the Korean Peninsula could distract from cross-Strait tensions. More recent reports suggest that North Korea’s actions have placed U.S. and Chinese interests regarding Taiwan to the side. This could ultimately aid Taiwan’s interests by preventing Chinese efforts to curtail U.S. arms sales. For her part, Mainland Affairs Council Minister Katherine Chang has stated that, “If North Korea can be stabilized it can help Taiwan.”
Based on self-reporting from the Taiwanese government, total trade (imports and exports) with North Korea during this period was relatively small (US$558,927,841), compared to Taiwan’s total trade in the timeframe (US$9,589,016,689,906).
In a recent Washington Post article Bonnie Glaser, a senior adviser at the Center for Strategic and International Studies in Washington, D.C, stated that the US$1.4 billion arms sale between the U.S. and Taiwan, which was approved on June 29, “demonstrates that the Trump administration will not forgo necessary steps to bolster Taiwan’s defense to get China’s cooperation on North Korea.” The South China Morning Post echoes claims that President Trump’s intention to sell arms to Taiwan was meant as a leveraging point.
In the late 1990s, the cash-strapped North Korea agreed to take 200,000 barrels of Taiwanese nuclear waste from Taipower, in the process alarming South Korea. However, an inability to obtain the proper export permits for the waste, and North Korea’s refusal to allow Taipower associates to visit a processing site in Pyongsan, ultimately prevented implementation of the deal, with Pyongyang later threatening to sue (also see here). Ironically, in February 2017 Taiwanese media reported evidence of North Korean nuclear waste being dumped near Taiwan by a third party.
Taiwan’s Bureau of Trade website presents trade data for every country, including North Korea, providing one of the few ways to measure Taiwan-North Korea relations beyond disparate anecdotal accounts. Although it is only available from 1989 through April 2017, the data (disaggregated into 21 broad categories) nevertheless gives us a glimpse into not only the volume of imports and exports between Taiwan and North Korea over time. This also helps us overcome the problem of data on Taiwan, which is absent in many cross-national databases due to Taiwan’s lack of membership in most international organizations.
Based on self-reporting from the Taiwanese government, total trade (imports and exports) with North Korea during this period was relatively small (US$558,927,841), compared to Taiwan’s total trade in the timeframe (US$9,589,016,689,906) or even China-North Korea trade for 2016 alone (US$5,378,519,968) as reported in the United Nations Comtrade Database. That trade occurs between the two countries should not in and of itself be surprising. Even the United States, according to the Comtrade Database, exported US$139,334 in goods to North Korea in 2016, of which more than 80 percent was prepared meats, prepared seafood and beverages.
Trade overall between Taiwan and North Korea has increased notably from the early 1990s, peaking at over US$52,911,143 in 2012. Although there is limited data to explain this peak, various claims have been made. A 2012 China Post article claimed that following the election of Lee Myung-Bak in South Korea, trade between the North and South decreased by 17 percent in a four-year period. This significant decrease in trade with one of North Korea’s most significant trade partners and neighbors could have resulted in a trade increase between North Korea and Taiwan. Others theorize that the economic reforms of Kim Jong-Un, who assumed leadership of North Korea in 2012, contributed to this peak.
The trade volume in 2016 was the lowest since 2000, presumably as a result of increased international sanctions. Separating out imports and exports also shows that Taiwan maintained a trade deficit in that timeframe (US$21,464,431). A closer look finds no Taiwanese exports listed in 1989-1991 in Taiwan Bureau of Trade data, a trade surplus from 1996 through 2010, and a trade deficit peaking in 2014 at nearly US$37 million.
Trading in what?
The Commodity Classification Codes (CCC) allow us to disaggregate further this trade into broad categories. “Mineral Products” (CCC Code 05) constitutes the vast majority of imports from North Korea (72.58 percent), followed by “Base Metals and Articles of Base Metal” (CCC Code 15) at 12.86 percent, and “Vegetable Products” (CCC Code 02) at 7.28 percent.
As minerals and metals are North Korea’s main exports (see here and here), and that such resources would be desirable for a range of energy and manufacturing needs, these exports to Taiwan are not particularly surprising. That vegetable products constitute a sizable export of North Korea to Taiwan, however, is surprising, especially when North Korea continues to struggle with food security after the “Arduous March” (1994-1998) in which as many as 3 million citizens starved. Much of the malnourishment in North Korea is not caused by food shortages, but rather lack of access to food. Unfortunately, it is not unusual for countries with national food insecurity to export food, either out of ignorance of the scope of the insecurity or simply due to regime indifference. Additionally, some have theorized that North Korea exports more expensive food items, such as ginseng, which ordinary North Koreans simply cannot afford.
On the other side, Taiwanese exports are not as highly concentrated. The largest category was “Products of the Chemical and Allies Industries” (CCC Code 6), comprising over a third of exports to the “Hermit Kingdom” (37.99 percent). This is followed by “Textile and Textile Articles” (CCC Code 11) at 29.94 percent and CC Code 16 (“Machinery and Mechanical Appliances; Electrical Equipment; Parts Thereof; Sound Records and Reproducers, Television Image and Sound Recorders and Reproducers, and Parts and Accessories of Such Articles”) at 11.88 percent. On its face, and absent more detailed records from Taiwan, none of these categories suggests that Taiwanese exports to North Korea are items that the latter would not necessarily be able to procure elsewhere.
This disaggregation also sheds light on precisely what is generating the trade deficits. Comparing exports and imports by Commodity Classification Code finds that of the 20 designations, Taiwan only imports more than it exports in four of the categories. A nearly US$206 million deficit occurs within the category of “Mineral Products,” with a roughly US$30 million deficit in “Base Metals.” The other two deficit categories were more surprising: “Vegetable Products” (CCC Code 02) with nearly US$19 million and “Live Animals; Animal Products” (CC Code 01) with US$130,000. Again, the exporting of such products by North Korea in times of food insecurity suggests the possibility of another food shortage, albeit unlikely at levels of the “Arduous March.”
Unfortunately, further disaggregation is not possible with the data presented on the Bureau of Trade’s website, which may be cause for concern in a few areas. For instance, in the above example of exports to North Korea, the broad category of “Machinery and Mechanical Appliances” could include items crucial to the maintenance of factories and production in North Korea, but could also apply to items for Pyongyang’s elite. This is not to suggest that Taiwanese trade conflicts with UN sanctions or intentionally aids North Korean elite, but that such concerns should be addressed with greater transparency in regards to Taiwan’s trade relations. We have yet to receive a response to a recent request to the Bureau of Trade for greater elaboration on Taiwan-North Korea trade data.
Few countries wish to draw attention to their connections to North Korea, but what are the ramifications of such trade? Taiwan can certainly benefit from access to energy and mineral resources, and North Korea certainly provides an alternative to China. Meanwhile, North Korea undoubtedly benefits from access to hard currency. Trade with Taiwan also suggests North Korea’s potential to diversify countries with whom it interacts economically, although it is unlikely that any country will replace China. The same could be said for Taiwan and its trade dependence on China. However, Taiwan should be concerned about North Korea’s use of forced labor not only in the mining industry but more broadly as this action violates international human rights standards. The additional sanctions passed on Saturday further constrain opportunities for Taiwan-North Korea trade. Besides the potential domestic costs of a democracy engaging with a pariah state, increased Taiwan-North Korea trade has the potential to exacerbate cross-Strait tensions and raise concerns that such trade, by flying under the radar, could allow North Korea access to sanction-prohibited items.