DANDONG VANADIUM SEIZURE PART OF "CONTINUING

S E C R E T SECTION 01 OF 02 SHENYANG 000134

SIPDIS

E.O. 12958: DECL: 07/29/2019
TAGS: CH ECON KN KS PGOV PREF PREL RS
SUBJECT: DANDONG VANADIUM SEIZURE PART OF "CONTINUING
ENFORCEMENT EFFORT"

REF: KPP20090729032001

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


1. (S) Summary. Reports of a July 24 seizure of 70
kilograms of vanadium at the China-North Korea border at
Dandong were confirmed by Customs Officials, who portrayed
the event as business as usual. A key government contact,
however, took pains to tell us that in fact things have
tightened up substantially at the Dandong crossing in the
period following the DPRK's latest nuclear test, confirming
direct observations we made as early as May 27. Meanwhile,
trade continues. Contacts in the shipping business and in
the People's Liberation Army (PLA) nonetheless pooh-poohed
South Korean media reports that large vehicle shipments in
June had any military uses. End Summary

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Inspections*Business As(Un)Usual
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2. (C) A Senior Customs Official in the Dalian Customs
Office, which supervises the Dandong Customs Office, told
ConGenOff July 29 that the widely reported recent seizure of
70 kilograms of vanadium was part of a "continuing
enforcement effort" that "harmonizes" existing Chinese law
and the implementation of U.N. sanctions. The official
pointed out that, based on China's longstanding export
control regime, the shipment was illegal and subject to
seizure regardless of the current U.N. sanctions. He went on
to emphasize that China takes the U.N. resolutions very
seriously and will "continue to strictly enforce them." When
asked if the enforcement of export restrictions had had any
adverse impact on normal trade, the Customs Official
responded that trade in ordinary goods continues normally in
both directions. (Note: Our usual contacts in Dandong
deflected our inquiries and referred us to Dalian for the
final word.)

3. (S) A close contact of ConGenOff who has provided
extremely reliable information in the past painted a somewhat
different picture of Dandong than the "all in a days work"
spin provided by Dalian Customs. This contact, who regularly
ships items across the border, ostensibly for a major
State-owned enterprise (SOE) but actually on behalf of
China's central government, stated that things are much
stricter in Dandong now than they have been in the past. He
noted that virtually all outbound vehicles crossing the
border are subjected to relatively thorough inspections,
after which Customs seals are applied. The cabs and
undercarriages of the vehicles are checked as the vehicles
depart and, in the event that the seals show evidence of
tampering, the inside of the vehicle is rechecked. With
regard to vehicles coming in from the DPRK, he said the cabs
and undercarriages are checked as the vehicles come in.
Again, if the DPRK's Customs seals show evidence of
tampering, the vehicle is immediately subjected to
inspection; otherwise it goes into the yard for normal
Customs clearance.

4. (S) According to the contact, rail and sea shipments are
also receiving enhanced inspections. His cargo, which moves
primarily by rail, had until recently received only
perfunctory Customs scrutiny as long as he had the required
paperwork in order. Now, he reported, even his rail cars are
being inspected. He seemed somewhat hurt that inspectors
even went so far in one instance to make him open a crate
containing a piece of relatively heavy equipment.

5. (C) During a day trip to the Dandong Land Port on May 27,
just after the nuclear test, ConGenOff noted that things were
already much different than during his prior visits. New
x-ray equipment had been installed sometime in the first half
of the year and the truck terminal had installed what
appeared to be passive radiation monitors. (ConGenOff has
experience with such radiation monitors from previous
assignments.) During the period of observation, every driver
was made to dismount their vehicle, and every cab was
searched. Searches were also conducted of the undercarriage
of each vehicle, and Customs Inspectors seized a produce box
(about the size of a US book carton) full of plastic bags
containing white powder from a vehicle entering from the
DPRK. The x-ray equipment appeared to be in operation, but
there was no way to determine the status of the other devices.

6. (C) While the visit was unofficial and unannounced, it was
clear that local officials were aware of ConGenOff's

SHENYANG 00000134 002 OF 002


presence, and we suspected at the time that the seizure may
even have been staged for our benefit. While plainclothes
surveillance of ConGenOff was quite obvious, no effort was
made to discourage the observation. ConGenOff was able to
observe the seizure of the contraband and the inspection of a
truck with broken seals from a distance of less than ten
meters.

7. (C) The volume of traffic in both directions did not
appear significantly different than during previous
observations, but the flow was substantially slower due to
the enhanced inspections already in place at the time.
Contacts involved in shipping to the DPRK said at the time
that the port is now occasionally opened on weekends to deal
with any backlog. As has been the case in the past, most
outbound trucks appeared to be fully loaded, based on the
compression of their suspension, while at least one third of
the inbound trucks appeared to be empty or nearly so.

8. (S) Comment. The subject of the enforcement of U.N.
resolutions remains a touchy issue here, and our Customs and
Foreign Affairs Office contacts were plainly uncomfortable
discussing the subject when we contacted them in Dandong and
Dalian. The contact mentioned in paragraph three above
invited ConGenOff to a social outing just the day before the
story of the vanadium seizure was picked up by Reuters. He
is a government employee and spent a great deal of the time
"complaining" about how strict things are becoming in
Dandong. It seems likely that his aim was to convey the
message that China is doing its part, without appearing to
say so. End comment.
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Would You Buy A Used Car From This Country?
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9. (S) Recent reports in the South Korean media (principally
Chosun Ilbo) have made much of the shipment of a large number
of vehicles into the DPRK during June. Multiple sources in
Shenyang who have provided reliable information in the past
told ConGenOff that the vehicles included some ninety (90)
used Jiefang trucks and utility vehicles, all of which were
commercial vehicles equipped with gasoline engines, not the
diesel variety used by the PLA. The remaining vehicles were
used Volkswagen Jettas, reportedly retired from various taxi
fleets. The sources were quite in agreement with the Chosun
Ilbo that the vehicles were likely purchased by someone on
behalf of the DPRK military, since only the military has the
funds for such a large purchase. However, they pointed out
that it is not unusual for the DPRK military to be engaged in
such commercial transactions. The contacts said the vehicles
will likely be refurbished for sale in China,s used car
market. One PLA officer chided ConGenOff for even raising
the issue that the shipments might be military. He pointed
out that China is well aware of U.S. satellite technology and
said plainly that if China wanted to send military vehicles
to the DPRK they would be certain to choose a more secure
method than the Dandong bridge on a Saturday afternoon.

10. (C) Comment. Regarding reports that moving a large
number of vehicles on a Saturday is rare, mentioned above,
the bridge is more frequently opened on weekends as the
inspection procedures have consumed more time. However, the
bridge has always been made available for government
shipments on weekends, and only Jiefang and Brilliance
Automotive, both parts of Chinese SOEs, are authorized
vehicle exporters to the DPRK. Export permits for these
vehicles would have expiration dates, and it is natural that
overtime would be required to accommodate normal traffic
along with the large number of vehicles. End Comment.
WICKMAN