NORTH KOREAN SANCTIONS VIOLATION: STAINLESS

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. -------------- KOBEQS FIRST SANCTIONS VIOLATION -------------- ¶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. -------------- -------------- 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