North Korea Orders Establishment of ‘Emergency Trade System’ to Acquire Food – The Diplomat

The Koreas | Economy | East Asia

North Korea’s Ministry of External Economic Relations recently instructed central government-affiliated trade enterprises to establish an “emergency trade system” by the end of this year, Daily NK has learned. The emergency system would set up a “safety net” for foreign currency conversions and payments to each country engaged in trade with North Korea.

Speaking on condition of anonymity for security reasons, a source in the country told Daily NK that the orders to establish an emergency trade system were issued on October 2, alongside instructions to expand food imports from friendly nations like China and Russia. 

The source said that the sudden push to establish an emergency trade system is part of plans to import large amounts of food amid predictions that North Korea’s agricultural output will fall short of expectations again this year.

“The trade ministry’s orders to establish an emergency trade system are focused on setting up a ‘safety net’ abroad so that central government-affiliated trade enterprises will be able to import grain at any time.” 

Up until now, state-affiliated trade enterprises have exported items requested by overseas traders and then used the money earned from these transactions to purchase food. Alternatively, the trade companies have pooled payments of U.S. dollars or Chinese yuan inside North Korea and conducted money transfers through local banks and individual brokers to purchase food for import. 

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However, North Korean enterprises have often faced difficulties while trying to receive payments for exports or when converting earnings to dollars through international banks. Despite amicable political relations with countries like China and Russia, international banks in these countries and elsewhere remain party to or at least sensitive to international sanctions against North Korea. 

The trade ministry appears to be acknowledging the reality that sanctions against North Korea have effectively cut the country off from the international banking system. The recent trade ministry order emphasized the necessity of being able to reliably and conveniently carry out foreign currency-based transactions, including a call to drastically increase the number of North Korean-held foreign bank accounts under assumed local aliases.

In short, the trade ministry’s order is aimed at circumventing international sanctions and securing safe channels for foreign trade. 

“This order is designed to ensure that state-affiliated trade enterprises can reliably import food from anywhere at any time in accordance with the government’s demands, which goes to show that the government is keen to resolve the country’s chronic food shortage issues,” the source said.

Presently, trade officials at Pyongyang Taehung Fur Trading Company and Yonghung Trade Company have passed down orders internally to their trade representatives overseas to begin carrying out preparations to convince citizens in China and other countries to set up bank accounts for North Korean companies under their own names. 

This article first appeared in Daily NK, which contacts multiple sources inside and outside North Korea to verify information. The Diplomat was not able to verify the claims independently.