How the U.S. fishing industry can do its part to disarm Kim Jong-un

Long-time readers know that I’ve had many uncomplimentary things to say about the Associated Press’s North Korea coverage. Its still-undisclosed agreements with the North Korean government to open a bureau in Pyongyang sacrificed journalistic ethics for a dubious dividend of access. Since opening its bureau in 2012, AP and its state-supplied North Korean stringers have reported a great deal of North Korean government propaganda and almost no actual news, while ignoring major news stories (to include a hotel fire, a building collapse, the taking of at least a dozen foreign hostages, and multiple purge rumors).

Careful readers also know that I’ve singled out AP reporter Tim Sullivan as a bright spot in this dreary picture. Like most foreign reporters, Sullivan, who is not a part of AP’s Pyongyang bureau, does his best reporting from outside North Korea. The latest example is his outstanding investigative reporting, along with Seoul-based Hyung-Jin Kim and half a dozen others, finding evidence that Chinese fisheries are smuggling seafood packed by North Korean laborers into U.S. markets.

Through dozens of interviews, observation, trade records and other public and confidential documents, AP identified three seafood processors that employ North Koreans and export to the U.S.: Joint venture Hunchun Dongyang Seafood Industry & Trade Co. Ltd. & Hunchun Pagoda Industry Co. Ltd. distributed globally by Ocean One Enterprise; Yantai Dachen Hunchun Seafood Products, and Yanbian Shenghai Industry & Trade Co. Ltd.

They’re getting their seafood from China, Russia and, in some cases like snow crab, Alaska. Although AP saw North Korean workers at Hunchun Dongyang, manager Zhu Qizhen said they don’t hire North Korean workers any more and refused to give details. The other Chinese companies didn’t respond to repeated requests for comment.

Shipping records seen by the AP show more than 100 cargo containers of seafood, more than 2,000 tons, were sent to the U.S. and Canada this year from the factories where North Koreans were working in China.

Packages of snow crab, salmon fillets, squid rings and more were imported by American distributors, including Sea-Trek Enterprises in Rhode Island, and The Fishin’ Company in Pennsylvania. Sea-Trek exports seafood to Europe, Australia, Asia, Central America and the Caribbean. The Fishin’ Company supplies retailers and food service companies, as well as supermarkets.

American importers and retailers are already cutting their ties with these Chinese suppliers, which may be one reason why Chinese factories are sending their North Korean laborers home, despite the fact that new U.N. sanctions (see paragraph 17) allow the workers to serve out their (typically, three-year) contracts.

Often the seafood arrives in generic packaging, but some was already branded in China with familiar names like Walmart or Sea Queen, a seafood brand sold exclusively at ALDI supermarkets, which has 1,600 stores across 35 states. There’s no way to say where a particular package ends up, nor what percentage of the factories’ products wind up in the U.S.

Walmart spokeswoman Marilee McInnis said company officials learned in an audit a year ago that there were potential labor problems at a Hunchun factory, and that they had banned their suppliers, including The Fishin’ Company, from getting seafood processed there. She said The Fishin’ Company had “responded constructively” but did not specify how.

Some U.S. brands and companies had indirect ties to the North Korean laborers in Hunchun, including Chicken of the Sea, owned by Thai Union. Trade records show shipments came from a sister company of the Hunchun factory in another part of China, where Thai Union spokeswoman Whitney Small says labor standards are being met and the employees are all Chinese. Small said the sister companies should not be penalized.

Shipments also went to two Canadian importers, Morgan Foods and Alliance Seafood, which did not respond to requests for comment.

Boxes at the factories had markings from several major German supermarket chains and brands — All-Fish distributors, REWE and Penny grocers and Icewind brand. REWE Group, which also owns the Penny chain, said that they used to do business with Hunchun Dongyang but the contract has expired. All the companies that responded said their suppliers were forbidden to use forced labor. [AP]

The report is long and detailed, and well worth reading in full. The moral and national security hazards should be clear enough, so I’ll devote most of this post to the legal hazards for the companies involved in this trade. Let’s start with this one:

At a time when North Korea faces sanctions on many exports, the government is sending tens of thousands of workers worldwide, bringing in revenue estimated at anywhere from $200 million to $500 million a year. That could account for a sizable portion of North Korea’s nuclear weapons and missile programs, which South Korea says have cost more than $1 billion. [AP]

Of course, there is no direct evidence that the world’s most financially opaque regime is using its slave labor revenues to fund its nuclear program. As with the Kaesong Industrial Complex, however, the importer’s duty under UNSCR 1718, paragraph 8(d), is to know where its money goes, and to “ensure” that Pyongyang is not using it for nukes. Ignorance is no defense, and cash is fungible. A dollar in Pyongyang’s bank accounts can just as well be used for centrifuge parts, barbed wire, cognac, or cell phone trackers.

Second, the U.N. Security Council has recently banned North Korean exports of seafood, and the KIMS Act authorizes sanctions against transactions in North Korean food exports or fishing rights. Transactions in North Korean forced labor are subject to mandatory sanctions under the NKSPEA, as “severe human rights abuses.” By exposing this latest example of China violating U.N. sanctions, the legal and diplomatic pressure on Beijing to enforce the sanctions it voted for increases.

Third, although these authorities are relatively recent, smuggling any North Korean products into the United States has long been a felony. Executive Order 13570, signed by President Obama in 2011, banned all imports of products made with North Korean goods, services, or technology. Because the authority for this executive order is the International Emergency Economic Powers Act, violations of this order are punishable by 20 years in prison, a $1 million fine, a $250,000 civil penalty, and even the forfeiture of any property “involved in” that transaction. The exporter also faces the risk of designation by the Treasury Department, which would freeze any assets that enter or transit the United States.

Fourth, Chinese fisheries that use North Korean laborers may face additional sanctions under the Trafficking Victims Protection Act.

The workers wake up each morning on metal bunk beds in fluorescent-lit Chinese dormitories, North Koreans outsourced by their government to process seafood that ends up in American stores and homes.

Privacy is forbidden. They cannot leave their compounds without permission. They must take the few steps to the factories in pairs or groups, with North Korean minders ensuring no one strays. They have no access to telephones or email. And they are paid a fraction of their salaries, while the rest — as much as 70 percent — is taken by North Korea’s government.

This use of North Korean labor also puts a powerful sanction in the hands of the U.S. fishing industry. Recall that in this post, I wrote about the similar problem of Chinese textile factories smuggling clothing made by North Korean workers, or using North Korean materials, into the United States, and noted how U.S. textile manufacturers have taken advantage of an obscure Customs regulation to bar Uzbek cotton* exports from entering U.S. commerce if those products may be made by convict or forced labor.

It’s unknown what conditions are like in all factories in the region, but AP reporters saw North Koreans living and working in several of the Hunchun facilities under the watchful eye of their overseers. The workers are not allowed to speak to reporters. However, the AP identified them as North Korean in numerous ways: the portraits of North Korea’s late leaders they have in their rooms, their distinctive accents, interviews with multiple Hunchun businesspeople. The AP also reviewed North Korean laborer documents, including copies of a North Korean passport, a Chinese work permit and a contract with a Hunchun company.

When a reporter approached a group of North Koreans — women in tight, bright polyester clothes preparing their food at a Hunchun garment factory — one confirmed that she and some others were from Pyongyang, the North Korean capital. Then a minder arrived, ordering the workers to be silent: “Don’t talk to him!” [AP]

Under section 321 of the KIMS Act, products made with North Korean labor now face a rebuttable presumption that they are made with forced labor, which means that Chinese seafood exports made with North Korean labor (whether inside or outside North Korea) could end up spoiling in warehouses or running up storage charges while the petition process runs its course. That, in turn, will incentivize bankers and insurers to do due diligence to ensure that Chinese exporters cleanse their supply chains of North Korean labor.

The reputational cost of using North Korea labor or materials may be just as effective as any legal sanction.

Every Western company involved that responded to AP’s requests for comment said forced labor and potential support for North Korea’s weapons program were unacceptable in their supply chains. Many said they were going to investigate, and some said they had already cut off ties with suppliers.

John Connelly, president of the National Fisheries Institute, the largest seafood trade association in the U.S., said his group was urging all of its companies to immediately re-examine their supply chains “to ensure that wages go to the workers, and are not siphoned off to support a dangerous dictator.”

“While we understand that hiring North Korean workers may be legal in China,” said Connelly, “we are deeply concerned that any seafood companies could be inadvertently propping up the despotic regime.” [AP]

And lastly, lest this point be missed amid the other reasons to be outraged, North Korea’s poor have a severe protein deficiency in their diet. Why is Pyongyang allowed to export its main source of protein for cash while most of its people are malnourished?

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* Previously said “Chinese seafood.” Since corrected.