PRC-DPRK: BORDER INSPECTIONS AND TRADE ISSUES IN

C O N F I D E N T I A L SECTION 01 OF 03 SHENYANG 000126

SIPDIS

SIPDIS

DEPARTMENT FOR INR, EAP/CM, EAP/K

E.O. 12958: DECL: TEN YEARS AFTER KOREAN UNIFICATION
TAGS: PREL PINR PGOV ECON KN KS CH
SUBJECT: PRC-DPRK: BORDER INSPECTIONS AND TRADE ISSUES IN
JUNE 2007


Classified By: CONSUL GENERAL STEPHEN B. WICKMAN. REASONS:
1.4(b)/(d).


1. (C) SUMMARY: Official Chinese scrutiny of land-based
PRC-DPRK cargo/passenger traffic continues to range along
the border into mid-2007. Land ports in Nanping (conduit
for the many tons of iron ore extracted from North Korea's
Musan mine) and Dandong are sites of significant levels of
activity. Yanbian-based contacts with recent experience in
shipping goods across the border report that they have not
encountered any changes in Chinese procedures or slowdowns
in land shipments this year. Sources elsewhere in Yanbian
dismiss recent media reports about the impending
establishment of a PRC-DPRK "free trade zone" in Tumen;
they note instead the growing frustration of Tumen
officials, who sense the DPRK is stalling on--and possibly
obfuscating about--the proposal, which in actuality calls
for a barter-trade area. END SUMMARY.


2. (C) Poloff traveled to a number of key points along the
PRC-DPRK border, including Dandong, Donggang and Hushan
(June 25-27),as well as Yanji, seat of the Yanbian Ethnic
Korean Autonomous Prefecture; Nanping, across from Musan,
home to the largest iron mine in North Korea, also among
Asia's largest; and Chongshan, which abuts Samjang (June
18-21). This is the first of two cables; the second
examines several discrete issues, including North Korean
border-crossers and narcotics, among others.

CROSS-BORDER TRADE AND INSPECTIONS: THREE PORTS
-------------- --

3. (C) DANDONG/SINUIJU. Activity at the Dandong Land Port
on the morning of June 27 appeared more robust than
Poloff's recent visits during the same periods of the day.
Between 1000 and 1030, nearly 30 mostly large, closed
Japanese-made North Korean container trucks crossed from
Sinuiju into Dandong, where 40-50 North Korean trucks that
had crossed earlier that morning sat parked, queuing to
exit the port. Quarantine personnel sprayed a disinfectant
on the tires of incoming trucks; PRC customs officials
inspected North Korean drivers' paperwork and quickly gazed
into many cargo holds. Another quarantine official waved
what appeared to be a small, hand-held meter/gauge outside
the holds of a handful of trucks. Poloff also observed one
North Korean driver that had just cleared customs quickly
stop just two meters away from PRC customs and People's
Armed Police (PAP) personnel, extract two large metal
cylinders and a bag hidden near his tires and slyly pass
them to a waiting Chinese partner who quickly sidled off
with the goods. No one took any notice. PRC scrutiny
seemed to decrease when, between 1030 and 1130,
approximately 175 mostly large, closed Chinese container
trucks--perhaps half of them sporting pre-clearance tags--
crossed into Sinuiju virtually uninspected. The few open-
bed Chinese trucks among this group carried everything from
heavy machinery to fruit and electronics; three Chinese
also drove over the border in new ROK-made forklifts.
Customs performed no visible inspections of most Sinuiju-
bound cargo traffic, but a quarantine official did pull
over the sole North Korean truck Poloff spotted crossing
back home that hour.


4. (C) CHONGSHAN/SAMJANG. Cross-border traffic proved
almost incomparably lighter many hundreds of kilometers
north at Chongshan--a small border locality nearly 150
kilometers south of Yanji and across the Tumen River from
Samjang in the DPRK. Between 1015 and 1030 on June 21,
three large, empty North Korean container trucks crossed
back into North Korea from Chongshan's Guchengli Land Port,
subject to no visible inspections by the sole Chinese PAP
guard stationed on the Chinese side of the short bridge
connecting the two countries. North Korean border guards
on the other side proved far more interested in the
returning trucks and searched each of the cabs for several
minutes. Poloff observed a fairly heavy security (i.e.,
PAP) presence in Chongshan, which without the land port is
essentially a compact assemblage of homes and shops.


5. (C) NANPING/MUSAN. Nearly 50 kilometers north of
Chongshan in Nanping--across from Musan--PAP guards on June
21 requested that Poloff leave the port facility after just

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five minutes of observation starting at 0915. The bridge
had no traffic at the time, and one PAP guard said
Poloff had just missed the morning rush. But earlier that
morning between 0830 and 0900 on the small, two-lane road
from Yanji to Nanping, Poloff spotted at least ten of the
Yanbian Tianchi Industrial Trade Company's distinctive red,
open-container trucks that cart Musan's ore across the
border to Tianchi's nearby processing facility. Later in
the morning, looking across into Musan proper while on the
road to Chongshan, Poloff also observed at least ten
(empty) Tianchi trucks slowly winding their way toward the
Musan mine. A high-level Chinese official in the office
overseeing the administration of Yanbian's ports told
Poloff later on June 21 that the outflow from Musan
continues to be significant, though flows often vary on any
given day.

INSPECTIONS IN YANBIAN: A FOREIGNER'S EXPERIENCE
-------------- ---

6. (C) A Yanbian-based Western NGO worker who periodically
ships construction supplies and humanitarian goods to the
DPRK told Poloff on June 21 about inspection procedures
near Hunchun. When shipping large quantities of goods to
Rason via container truck, our source has been required to
hire a local customs agent who helps prepare the requisite
paperwork and (nebulously) "facilitate" the shipment. Once
loaded but before heading to the border, the cargo truck
must appear at an official facility approximately 40
kilometers outside of Hunchun. The truck is met by the
customs agent--with paperwork in hand--and must then drive
through a large detector/scanning machine of sorts before
being considered "sealed." No additional physical
inspection takes place, and the truck is then directed to
the Quanhe Land Port, where the paperwork is checked, and
then passes into the DPRK and on to Rason. In our source's
experience, transporting goods by van/car is far easier
because passenger vehicles have not been subject to the
comparatively more rigorous procedures for cargo trucks.
Pro-forma paperwork is required, for example, but hiring a
customs agent is not.


7. (C) Echoing remarks by other contacts recently involved
in cross-border shipping, our source had encountered no
changes in procedures on the Chinese side, nor any
slowdowns in shipments over the past few months. North
Korean border officials, in our source's experience, have
proven far more scrupulous than the Chinese side. Upon
arriving on the DPRK side, for instance, North Korean
border officials have actually climbed into her cargo
truck, eyeballing goods and then (presumably) logging their
findings into a computer system. Our source noted, too,
that North Korean quarantine officials have at times proven
surprisingly fussy about accepting certain agricultural
products. A fellow NGO worker recently attempted to bring
large quantities of crop seeds--to grow food--into the
North via Quanhe, only to have them refused by North Korean
quarantine authorities at the PRC-DPRK border, our source
recalled.

DIM OUTLOOK FOR PRC-DPRK TRADE ZONE IN TUMEN/NAMYANG
-------------- --------------

8. (C) Contacts in Yanbian claim that recent ROK press
reports about the impending establishment of a PRC-DPRK
"free trade zone" in Tumen/Namyang are incorrect. Yanbian
University DPRK experts GAO Jingzhu and LIAN Changhao on
June 20 told Poloff that Tumen's actual proposal, made to
DPRK authorities between 2006 and 2007, merely envisions a
barter-trade zone. The high-level official overseeing
Yanbian's ports on June 21 confirmed this and dismissed the
proposed zone as something that will probably never
actually be realized. Local DPRK officials' promises about
the possibility of establishing the zone are not
"credible," the official grumbled, and Pyongyang's approval
has not been forthcoming. Several Tumen officials were
recently taken aback during a recent bilateral negotiating
session when they discovered that the North Koreans seemed
to have greatly exaggerated the likely speed of Pyongyang's
approval of--and the amount of preparatory work they had
actually been doing for--the zone, Gao Jingzhu noted.
Tumen officials remain hopeful that a PRC-DPRK barter-trade
zone could help stimulate the local economy, but Gao, Lian

SHENYANG 00000126 003.2 OF 003


and others cautioned that these types of proposals often
turn out to be local PRC officials' attempts to pad their
resumes with non-substantive, prestige projects.
WICKMAN