Axis of Evil

Trump Considering Embargoing China Over North Korea
By Gordon G. Chang

Late Sunday morning, President Trump tweeted an extraordinary statement. 

“The United States” he announced, “is considering, in addition to other options, stopping all trade with any country doing business with North Korea.”
And the president’s tweet does not appear to have been an off-the-cuff blast. 

Treasury Secretary Steve Mnuchin continued the theme in his “Fox News Sunday” interview later in the day when he announced he was preparing a sanctions package that will sever “all trade and other business” with North Korea. 

“I will draft a sanctions bill and send it to the president,” Mnuchin said to Chris Wallace. 

“We will work with our allies. We will work with China. But people need to cut off North Korea economically.”
Cutting off North Korea economically sounds like an embargo. 

And North Korea’s No. 1 trading partner—the country that accounts for slightly more than 90% of Pyongyang’s two-way trade when illicit commerce is counted—is China.
An American embargo almost surely will result in friction with Beijing and Moscow, but discord could be the price for denying Kim Jong Un the resources for his weapons programs.
There are many ways an embargo can be put in place. 

The Trump administration could simply declare one and then go about enforcing it on its own.
An alternative route would be for the White House to tell Chinese and Russian leaders that the U.S. intended to submit an embargo resolution to the Security Council and then demand they accept it without delay.
Why would Beijing and Moscow accept an embargo when they have consistently resisted far less strict measures? 

With regard to China, Russia’s senior partner in crime when it comes to North Korea, the Trump administration retains overwhelming leverage.
Chinese banks, for instance, are vulnerable to U.S. criminal prosecution and, more important, sanctions. 

Bank of China, named in a 2016 U.N. report for money laundering for Pyongyang, is especially at risk. 

The U.S. Treasury could fine the bank or even designate it a “primary money laundering concern” pursuant to Section 311 of the Patriot Act.
Such a designation would deny the bank access to dollar accounts. 

In other words, a Bank of China would, as a practical matter, be cut off from the global financial system. 

Call it, in essence, a death sentence.
Up to now, China has not had an incentive to cooperate with the United States with regard to North Korea because American presidents were loath to impose costs on the Chinese state. 

The feeling was that Washington could appeal to the better instincts of China’s leaders, or at least convince them it was in their long-term interest to support American efforts.
This generous approach, unfortunately, has not in fact worked. 

So it is time to make sure that the Chinese, even though they do not see things the same way as Trump officials, have no choice but to be cooperative.
Unplugging a major Chinese bank is one of the few acts that can motivate Beijing to accept and enforce an embargo. 

And so could a severe remedy imposed as a result of the ongoing Section 301 investigation into China’s theft of American intellectual property. 

One “301” remedy would be an across-the-board tariff on Chinese goods. 

Another would be an import ban on any enterprise benefitting from stolen IP.
Chinese officials, of course, can retaliate against the U.S. for a Section 311 designation or a Section 301 remedy, but Beijing might decide not to take on a far-stronger America, which is in a better position to wage an intensified trade war.
In ordinary times, drastic remedies like an embargo would not be necessary. 

Yet Kim Jong Un has not in fact been deterred by the relatively mild penalties now in place. 

China and Russia have signed on to Security Council sanctions, like those contained in Resolution 2371, precisely because they know they would be ineffective.
Kim is making such fast progress in building his arsenal that sanctions that were considered extraordinary just a few months before are now beginning to look politically feasible today.
As Trump and Mnuchin made clear on Sunday, America is about to cut off the flow of funds to the Kim regime.
Washington, I believe, goes a long way to disarming North Korea when it convinces Chinese leaders they finally have to make a choice, that they cannot support the North and do business with the U.S. at the same time.