KOREA TO ENHANCE CONTROL OF STRATEGIC PRODUCT

UNCLAS SECTION 01 OF 02 SEOUL 000954

SIPDIS

SIPDIS
SENSITIVE

STATE FOR ISN, EB AND EAP/K

E.O. 12958: N/A
TAGS: ETTC KSTC PARM PREL KS
SUBJECT: KOREA TO ENHANCE CONTROL OF STRATEGIC PRODUCT
EXPORTS

SUMMARY
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1. (SBU) According to the Ministry of Commerce, Industry and
Energy (MOCIE),Korea plans to tighten controls over the
export of strategic products that could be used for weapons
development. MOCIE's planned measures, which will go into
effect in the latter part of 2006, call for tougher legal
action against offenders and clarification of what products
should not be exported. The measure is in compliance with
United Nation resolution 1540, which calls for a concerted
effort to prevent the spread of strategic items that can be
used to make weapons of mass destruction.


2. (SBU) MOCIE, under the revised rules, will be able to
prosecute offenders with maximum jail sentences of seven
years (up from five) and fines up to five times (up from
three times) that of the transaction value. In addition,
MOCIE will now be providing timely responses to export
control inquiries and will make information on what cannot be
sold to certain countries more freely available. End Summary.

KOREA'S EXPORT CONTROL PLANS
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3. (SBU) EconOff met on February 8 with Shim Soung-kun,
Director of the Export Policy Control Division at MOCIE, to
discuss Korean export control policy. Shim explained that
although Korea's export controls lag behind those of the
United States, the EU and Australia, Korea would make great
strides in catching up in 2006. MOCIE expects Korea to reach
full compliance with UN 1540 before the year's end. Shim
made it clear that he believes that without rigorous export
controls, the country that will suffer the most is Korea.
Shim stated that if Korean companies cannot fully comply with
international export control rules, Korean companies would
suffer sanctions which in turn would heavily damage exports,
Korea's main economic activity.


4. (SBU) Director Shim explained that MOCIE will be
implementing a vigorous public relations campaign on export
controls in 2006. Shim said that in 2005, only five percent
of Korean companies surveyed understood the rules regarding
export controls. By the end of 2006, MOCIE expects a minimum
of eighty percent of all Korean companies to understand
export controls, making it easier for them to comply.


5. (SBU) MOCIE has proposed an upgrade to the Korean
Strategic Trade Information Center (STIC),the current Korean
government funded center in charge of implementing export
controls, raising it to become to an agency-level government
entity called the Strategic Material Management Agency (SMMA)
-- with the number of employees increasing from the current
level of thirteen to fifty full-time employees. In addition,
MOCIE plans to publish an Export Controls Handbook for all
Korean government employees, and initiate systematic private
company employee training for 10,000 people. MOCIE's goal is
to increase the number of Korean "International Compliance
Companies" (ICC's) from the current four up to fifty
companies, also within 2006. The four companies that are
already compliant are alll very large Korea-based
multinational corporations. However, this year Shim says
MOCIE will focus more on helping small and medium-sized
companies become ICCs.

MORE RESOURCES NEEDED
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6. (SBU) Using MOCIE's 2006 budget as a lever, Shim plans to
spend funds to build consensus within the government and
among private companies and the general public to make sure
Korea can comply with global export control standards. He
predicted that MOCIE would compile one core database to build
a user-friendly implementation system for both government and

SEOUL 00000954 002 OF 002


private companies. Moreover, MOCIE will continue training
programs for STIC employees in Korea, as well as sending
employees to the United States, EU, Australia and Japan for
overseas training. Shim expects to send employees to at
least twenty international conferences in 2006.


7. (SBU) Shim also plans to increase export control
cooperation with countries throughout the world. Not only is
Korea reaching out to the EU, the United States, Japan and
Australia, but Shim, in order to strengthen overall
cooperation on export control, also intends to pursue an
export control MOU with China.


8. (SBU) Shim cited one example of international cooperation
of which he is particularly proud. On December 31, 2005, the
shipment of a Korean export company was apprehended in
Singapore on its way to Iran. The shipment contained
dual-use items whose sale to Iran is prohibited under Korean
law. The shipment was stopped and returned to Korea, where
the company concerned is now being prosecuted to the full
extent of the law.

COMMENT
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9. (SBU) Director Shim seems to have accomplished much since
MOCIE began revamping Korea's export control regime in 2003.
Fortunately, MOCIE and Director Shim are not satisfied with
the results so far, but intend to continue to press forward.
Shim's understanding of why export controls are necessary is
commendable. His unending drive to teach Koreans is
impressive. Although Shim personally appears to be the
driving force behind the rapid improvement in Korean export
controls -- which is no doubt linked to his own career
ambitions -- Shim appears to have gotten his timing right,
and has been able to convince the Korean government in
general to get on board. End Comment.

VERSHBOW