Pressuring Pyongyang
Is ASEAN Enabling North Korea?

When it comes to North Korea, President Trump has consistently sounded a core message: Beijing is the regime’s top economic enabler, and the Chinese have not done enough to ratchet up economic pressure over Pyongyang’s nuclear program. That assessment has been the centerpiece of Trump’s North Korea policy and his early attempts to compel China into turning up the heat.

But as a new Peterson Institute analysis shows, China is hardly the only Asian country whose trade, illicit or otherwise, is giving Pyongyang a lifeline:

Is the overall ASEAN-DPRK trade picture part of the problem too? As we noted in March when looking at DPRK-Malaysia trade, licit trade is not the main story. Indeed, DPRK-ASEAN trade is relatively small pickings, but $181 million per year is not nothing. More, in the Philippines case there is actually a trend upward, and as Greitens noted, the Philippines is North Korea’s third largest trading partner after China and India—even eclipsing Russia. But beyond simply looking at the overall trade figures, the trade deficit that North Korea is running every year with ASEAN countries is noteworthy…. That North Korea can regularly fund such large trade deficits suggests greater inflows into North Korea than show up in the trade data. Although it is unclear exactly how North Korea can sustain these deficits, it is clear that illicit trade is a crucial part of the equation and an area where ASEAN countries are a hub.

To be sure, North Korea’s trade flows with ASEAN are tiny compared with China, which accounts for about 90% of trade with Pyongyang. But the insights here about unreported illicit trade—and the upward trend in the Philippines—are significant, and help to explain some of the Trump Administration’s other recent moves.

Earlier this month, Rex Tillerson called for ASEAN members to crack down on funding streams to North Korea, threatening further sanctions if they did not take action. The same week, Trump invited Philippine President Rodrigo Duterte to the White House, saying that he would seek the Philippines’ cooperation against North Korea. That claim generated skepticism, if not ridicule, in the media. But Trump has a point: China is not North Korea’s only economic pressure point, and his Administration is trying to leverage relationships with other Asian countries in isolating Pyongyang.

It remains to be seen whether this full-court press to tighten the screws will produce results. But given China’s dubious record in squeezing Pyongyang so far, it’s worth not putting all one’s eggs in one basket.

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