China throws wrench into flour exports to NK

China has thrown up obstacles for North
Korean flour imports, sending trading companies across the border scrambling to
secure shipments through illicit means in the face of a looming deadline to
produce children’s treats for Kim Il Sung’s birthday [April 15]. 

Although flour is not on the list of goods
banned from trade with North Korea, China, which has remained cooperative in
implementing stronger sanctions against Pyongyang thus far, has refused to
issue flour export permits, slamming the brakes on shipments into the North.

“Food factories have been in a war around
the clock to complete production of sweets and biscuits to be handed out as
gifts for children on Kim Il Sung’s birthday. The Party has ordered this
increased rate to continue until the end of March,” a source in North Pyongan
Province reported to Daily NK on Monday. “There’s also a battle on the import
front because trading companies have been handed down ‘loyalty projects’ requiring them to secure all the raw materials required by food manufacturers [for the snacks].”

Ingredients like sugar, soybean oil, and
plastic packaging–for which no export permit is required–are
sailing through customs unchecked. But another main component of the treats,
flour, requires a Chinese-government issued export license and is considered a
controlled good [supply is relatively thin in China], which has presented
significant setbacks for North Korean traders looking to move it through official channels. According
to the source, China typically issues flour export permits once every six
months, “but [during the recent renewal period] the government refused
to issue extensions, rendering existing licenses void.”

Naturally, this development has caught
trading entities, which have imported hundreds of tons of flour over the years
and enjoyed a seamless license renewal process, by surprise. Fearing what fate
may await them if they fail to secure the raw materials required to manufacture
the holiday snacks, trading personnel have turned to illegal tactics such as
wrapping flour in fake packaging to carry it back into the North.

“To get the materials in, trading companies
have been putting bags of flour into sacks and disguising them as animal feed,”
she explained. “Refined flour can only get through customs with an export
permit, but animal feed has cheap tariffs and is not a controlled good–a
winning combination for hassle-free customs processing.”

Other trading firms are opting to smuggle
in the flour via boat rather than dealing with the burdens and complications
repacking it present, though any and all smuggling methods are said to be treated with
impunity on the North Korean end of the customs chain due to their integral
role in “gift production” to memorialize the nation’s late founder, Kim Il
Sung’s. Moreover, traders’ troubles, in this regard, at least, will be
comparatively short–the need for heavy flour shipment will end following
production of the special snacks–and hence people have
adapted quickly with only passing complaints.

“Flour isn’t a staple for North Koreans,
meaning these measures will not directly impact people’s diets,” a different
source in North Pyongan Province reported. “China recognizes this; by clamping
down on flour, Beijing hopes to demonstrate to the international community that
it is being ‘proactive’ and moving to get Pyongyang back into line.”

North Korea has been importing over 10,000
tons of flour each year through the customs house straddling China’s Dandong
and North Korea’s Sinuiju. In 2014, it also began importing in flour from
Russia to sell within the country’s flourishing network of markets, but its
popularity has remained well below that of Chinese variants.