Trades are classified as a direct trade, in which an exporter and an importer directly conclude a contract to execute a transaction, and an indirect trade, in which a transaction is conducted through a third party. A license issued by NSSC is required for the indirect trade of Trigger List Items although the items do not cross the Korea’s borders. This study would summarize characteristics for each type of the indirect trade, and suggest things considered from the perspective of regulations. Sensitive items such as weapons of mass destruction could be illegally transferred through black trade, and the role of brokers is important. Therefore, Korea controls indirect trade of Trigger List Items in a more conservative approach, although NSG guidelines does not include it as a control scope. Advanced countries in export control field such as the US, UK, and Canada also controls on indirect trade. One of the indirect trade types is an intermediate trade in which the goods are imported from a foreign country and exported to another foreign country without being brought into the trader’s country. Another type is a merchandising trade which is a form of brokerage between exporter from a foreign country and importer from another foreign country. Both types have one thing in common that the goods are not crossed the trader’s country. The difference is that an intermediate trader directly participates in the contract and earn a difference between import and export amount, whereas a merchandising trader just arranges the transaction and earns a brokerage fee. The profits from the intermediate trade are considered as export records, while merchandising trade profits are not considered export records. In other words, only the intermediary trade is considered as an export. Also, the license types are different for each of them. An export license should be issued for the intermediate trade of Trigger List Items, whereas a brokerage license should be issued for the merchandising trade of Trigger List Items. The definition of export in the Foreign Trade Act includes intermediate trade for only goods, but technology is missing, although the sub-regulation specifies the intermediate trade including both. The technology need to be added as it can be the subject of intermediate trade in spite of intangible characteristics. Also, outreach activities are more needed as nuclear industry awareness on export control for both trades is low.

From 1970 to 1990, North Korea’s trade mainly carried out maritime trade through ports for countries around the world. This trend is due to UN sanctions against North Korea, and after the third nuclear test in 2016, North Korea gradually became isolated from the outside world as it expanded to include maritime sanctions in the form of comprehensive sanctions targeting an unspecified majority of North Korea. The logistics structure of North Korea is due to the logistics infrastructure left during the Japanese colonial period in the 1950s and the political structure of the country, with railroads being the main source of logistics and passenger transportation, and roads being secondary. North Korea faced rapid deterioration and lack of facilities after 1990 due to the lack of investment in facilities and improvement of the operating system despite the advanced logistics infrastructure and operating system compared to the South. In particular, the power shortage in North Korea hindered the operation of the railroad and accelerated the aging of the railroad facilities, which has continued to this day. In the 2010s, 96% of cargo transportation in North Korea’s logistics infrastructure depended on railroads and roads, and ports that were developed until the 1980s have deteriorated with little investment since the economic crisis of the 1990s. Although some ports have been developed since 2010, North Korea’s east and west coasts are separated and there is no function of shipping to connect ports, so it did not have a significant impact on enhancing the nation’s port capacity. As North Korea’s trade dependence on China has increased, North Korea has largely relied on land transport, except for some cargoes that are advantageous for marine transport, such as coal. This structure again leads to a decrease in investment in ports, and the current vicious cycle of causing problems with North Korean port facilities is repeated. In this study, North Korea’s land and marine trade logistics system such as railway, road, and shipping and the trend of foreign trade due to sanctions against North Korea were analyzed. Through this analysis, it is planned to be used as a basis for developing the routes and scenarios through which major nuclear items can be transferred in the event of denuclearization of North Korea in the future.

In the previous study, the types of North Korea’s strategic items, foreign trading partners, and export items were investigated. From North Korea’s typical trade paths, it is possible to predict the paths through which North Korea’s strategic items are illegally exported upon denuclearization. Trading partners of North Korea are the potential importing countries or end-users of strategic items, which can be disguised or concealed as if it is general export items during typical export procedures. So, in this study, transfer paths of North Korea’s export items are examined by utilizing KOTRA statistics, including item type HS code and its total price. Also, AnyLogic, a comprehensive simulation modeling tool, the simulation will be conducted to identify the paths for illegal transfer and calculate the time required. The information on North Korea’s trading partners and items is used for establishing export scenarios in which strategic items are transferred to other countries through North Korea’s ports, airports, railroads, and roads. To be specific, China, Russia, and South Korea, countries that share a border with North Korea, export items transported only by land; the items will arrive first in the referred three countries. Since the types of items, North Korea transacts with each country are different, the total amount and frequency of transactions are different; the probability of strategic items being included in general export items and transferred during customs clearance also varies. Even if it does not border North Korea, North Korea can export items through ports to countries adjacent to the coastline, and North Korea can even export items to any country by airspace even if it is not adjacent to the coastline. So, all publicly open ports, airports, railways, and roads are surveyed. Their geographic information, such as EPSG 4326 and EPSG 3857 coordinate system, are applied to confirm and visualize valid export paths starting from North Korea. In conclusion, effective export paths in North Korea are identified based on North Korea’s each major transportation hub by using AnyLogic simulation. It is possible to predict the paths through which North Korea’s strategic items will be transferred by combining information on major export items and countries that North Korea mainly transacts with.

Investigating major trading partners and items with North Korea is informative in terms that it can predict the path through which North Korea’s strategic items will transfer to non-nuclear-weapon states when North Korea denuclearizes. By analyzing North Korea’s trading partners and the items, it is possible to identify the relevant countries through which items arrive from the first importing country to the end-user in the process of exporting items and to predict the way how North Korea disguise or conceal their strategic items among general items during normal export procedures. As of 2020, North Korea’s major trading partners are China, Russia, Vietnam, India, Nigeria, and Switzerland. Compared to 2019, Mozambique, Tanzania, Ghana, and Thailand entered the top 10, while Brazil, Bangladesh, Pakistan, and South Africa pushed out of the top 10. North Korea’s trade dependence on China accounts for 88.2%, making it the largest trading partner for years, and it shows that North Korea is mainly conducting trade with Asian and African countries. North Korea’s most important export items are mineral products (HS 25-27) and steel & metal products (HS 72-83) and the most significant import items are mineral products (HS 25-27) and oils & fats & prepared foods (HS 15-24). In 2017, due to UN Security Council sanctions for North Korea’s international ballistic missile (ICBM) test-fire, North Korea’s exports from 3 billion dollars fell by 90% to less than 300 million dollars. This is the result of most of North Korea’s major export items included in the export ban, and changes have occurred in its export items. In 2020, export fell to less than 100 million dollars due to border lockdown measures to prevent the spread of COVID-19, which also affected the change of North Korea’s major export items. Although North Korea does not officially publish its foreign trade statistics, in order to review North Korea’s trade information, KOTRA statistics are utilized. KOTRA statistics provide only two digits of HS code number, so it is challenging to identify detailed item classification. Moreover, these statistics are based on the export amount, so it is difficult to determine the exact quantity of export items. It is expected that information on North Korean trading partners and items will be used to predict potential transferable export methods of North Korea’s strategic items when North Korea denuclearizes.

The License on Technology Export of Nuclear Plant is a system that permits the export of strategic technologies for large-scale NPP projects collectively during the project period. So, an issuance of the export license could be omitted for each transfer of technology, but Post Strategic Items Confirmation must be performed before the transfer as a follow-up obligation. Sometimes, transfers of technology have been urgently required during the project. As Post Strategic Items Confirmation process takes up to 15 working days, it may be difficult to respond to urgent situations timely, which may cause setbacks on the project. Therefore, Urgent Technology Transfer System, which allows to transfer technology without prior Post Strategic Items Confirmation, was established to reduce a burden on licensee and improve the efficiency of regulation. This system applies only to the License on Technology Export of Nuclear Plant. In other words, the technology transferred through Urgent Technology Transfer System (hereinafter referred as Urgent Transfer Technology) does not pose any problem with regard to export control because it is already licensed. In addition, the Urgent Transfer Technology should be considered as a strategic technology until Post Strategic Items Confirmation, which means that the Urgent Transfer Technology is more strictly controlled than the generally transferred technology. Also, the Urgent Technology Transfer System does not apply to intangible technology transfers such as technical support through personnel dispatch. The system could be only used in specific conditions which are stipulated for each licensed project in advance in order to prevent indiscriminate abuse of the system by licensee. Licensees are required to report quarterly the stipulated condition corresponding to each Urgent Technology Transfer case, and it would be checked through post-site inspection whether the actual reason for the transfer meets the consulted condition. Moreover, the deadline of application on Post Strategic Items Confirmation after the Urgent Technology Transfer is stipulated for licensee so as not to omit the classification procedure. This Urgent Technology Transfer System does not apply to dual-use items. If the Urgent Transfer Technology is classified as a non-Trigger List Item through the Post Strategic Items Confirmation, it is outside the scope of the NSSC’s export license. In this case, the technology may be subject to an export license of the Ministry of Trade, Industry and Energy (MOTIE). However, if the technology is classified to be a dual-use item after Urgent Technology Transfer, it may result in unauthorized transfer because it has already been transferred. Licensee must apply to classification of MOTIE before Urgent Technology Transfer if the technology being transferred may be related with Dual-use Items. It is easy for licensee to overlook due to the low awareness about this system. Therefore, outreach activities are necessary to raise licensee’s awareness by explaining the Urgent Technology Transfer System and current issues in detail. Consultation with MOTIE may be needed for the improvement on issues.