Cablegate: North Korean Sanctions Violation: Stainless

VZCZCXRO3918
OO RUEHFK RUEHGH RUEHKSO RUEHNAG RUEHNH
DE RUEHOK #0087 0940702
ZNR UUUUU ZZH
O 040702Z APR 07
FM AMCONSUL OSAKA KOBE
TO RUEHC/SECSTATE WASHDC IMMEDIATE 0751
INFO RUEHKO/AMEMBASSY TOKYO IMMEDIATE 7905
RUEHKSO/AMCONSUL SAPPORO IMMEDIATE 0181
RUEHNAG/AMCONSUL NAGOYA IMMEDIATE 2286
RUEHFK/AMCONSUL FUKUOKA IMMEDIATE 0169
RUEHNH/AMCONSUL NAHA IMMEDIATE 0192
RUEHBJ/AMEMBASSY BEIJING IMMEDIATE 0408
RUEHUL/AMEMBASSY SEOUL IMMEDIATE 1114
RUEHSH/AMCONSUL SHENYANG IMMEDIATE 0049
RUEHGH/AMCONSUL SHANGHAI IMMEDIATE 0018
RUEHGZ/AMCONSUL GUANGZHOU IMMEDIATE 0110
RUEHHK/AMCONSUL HONG KONG IMMEDIATE 0195
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUEAIIA/CIA WASHDC PRIORITY
RUYNJDK/COMNAVFORJAPAN YOKOSUKA JA PRIORITY
RHHMUNA/CDR USPACOM HONOLULU HI PRIORITY
RUEKJCS/SECDEF WASHDC PRIORITY

UNCLAS OSAKA KOBE 000087

SIPDIS

DEPT OF TREASURY FOR AMIT SHARMA
DEPT OF TREASURY FOR BILL MURDEN
DEPT OF TREASURY FOR IVY KOSIMIDES

SENSITIVE

SIPDIS

E.O. 12958: N/A
TAGS: ETRD EFIN EFIS PREL KN JA
SUBJECT: NORTH KOREAN SANCTIONS VIOLATION: STAINLESS
STEEL PIPES SEIZED IN WESTERN JAPAN

1. (U) On March 29, the Hyogo Prefectural Police
Department, after receiving a tipoff from Kobe Customs,
launched an investigation into two firms in Western
Japan for alleged violations of Japanese sanctions
prohibiting all imports from the DPRK. The sanctions
were enacted in response to last yearQs nuclear tests
by North Korea. QFitting Kuse,Q a small-scale
stainless steel producer in Ishikawa Pefecture, and
QKoyo Shoji,Q a Kyoto trading company, are under
scrutiny for allegedly importing stainless steel pipes
manufactured under contract in North Korea and claiming
that the products originated in China. The purpose of
the fitted pipes is unclear, but these products can be
potentially used in heavy industry, plumbing, and
textile manufacturing, to name a few examples. Police
have not alleged that the pipes would be used for
illicit purposes.

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KOBEQS FIRST SANCTIONS VIOLATION
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2. (SBU) Media reports claim Fitting Kuse has had a
contractual relationship with a North Korean metal
processing company since 2000. Fitting Kuse provided
the North Koreans with the raw materials required for
the project. (Note: Exports of non-luxury goods to the
DPRK are not prohibited under the Japanese sanctions
regime. End note.) Citing the ongoing nature of the
investigation, Kobe Customs declined to discuss the
case with Econ FSN; however, the authorities
acknowledged this would be the first sanctions
violation in KobeQs jurisdiction since sanctions were
enacted last October. In March, the Japanese Coast
Guard arrested several crew members from a Chinese ship
for attempting to illegally import North Korean clams
into Shimonoseki Port, Yamaguchi Prefecture.

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BICYCLE EXPORTS UP, SEAFOOD IMPORTS OFF THE TABLE
--------------------------------------------- ----

3. (SBU) Takuma Nagai, Manager of the Airport and
Harbor Management Section of Sakaiminato City, Tottori
Prefecture, home to Sakai Port, the Japanese port with
the highest volume of DPRK trade, said that there have
been no illegal imports from North Korea into
Sakaiminato as of yet, but that exports of used
bicycles, not classified as luxury items, have doubled
since sanctions were enacted. Since North Korean
vessels are currently prohibited from docking in Japan,
Japanese exporters use vessels flagged in places like
Russia and Cambodia. Nagai said SakaiminatoQs
canneries and seafood processors, long dependent on
cheap DPRK imports, switched from DPRK to third country
seafood even before sanctions were enacted.

RUSSEL

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