[Senate Hearing 115-807]
[From the U.S. Government Publishing Office]


                                                       S. Hrg. 115-807

                   ASSESSING THE MAXIMUM PRESSURE AND 
                 ENGAGEMENT POLICY TOWARD NORTH KOREA

=======================================================================

                                HEARING


                               BEFORE THE

                       SUBCOMMITTEE ON EAST ASIA,
                     THE PACIFIC, AND INTERNATIONAL
                          CYBERSECURITY POLICY


                                 OF THE

                     COMMITTEE ON FOREIGN RELATIONS
                          UNITED STATES SENATE

                     ONE HUNDRED FIFTEENTH CONGRESS


                             FIRST SESSION


                               __________

                              JULY 25, 2017

                               __________


       Printed for the use of the Committee on Foreign Relations

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                   Available via the World Wide Web:
                         http://www.govinfo.gov

                               __________
                               

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
40-415 PDF                  WASHINGTON : 2020                     
          
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                 COMMITTEE ON FOREIGN RELATIONS        

                BOB CORKER, Tennessee, Chairman        
JAMES E. RISCH, Idaho                BENJAMIN L. CARDIN, Maryland
MARCO RUBIO, Florida                 ROBERT MENENDEZ, New Jersey
RON JOHNSON, Wisconsin               JEANNE SHAHEEN, New Hampshire
JEFF FLAKE, Arizona                  CHRISTOPHER A. COONS, Delaware
CORY GARDNER, Colorado               TOM UDALL, New Mexico
TODD YOUNG, Indiana                  CHRISTOPHER MURPHY, Connecticut
JOHN BARRASSO, Wyoming               TIM KAINE, Virginia
JOHNNY ISAKSON, Georgia              EDWARD J. MARKEY, Massachusetts
ROB PORTMAN, Ohio                    JEFF MERKLEY, Oregon
RAND PAUL, Kentucky                  CORY A. BOOKER, New Jersey
                  Todd Womack, Staff Director        
            Jessica Lewis, Democratic Staff Director        
                    John Dutton, Chief Clerk        



            SUBCOMMITTEE ON EAST ASIA, THE PACIFIC,        
             AND INTERNATIONAL CYBERSECURITY POLICY        

                CORY GARDNER, Colorado, Chairman        
JAMES E. RISCH, Idaho                EDWARD J. MARKEY, Massachusetts
MARCO RUBIO, Florida                 JEFF MERKLEY, Oregon
JOHN BARRASSO, Wyoming               CHRISTOPHER MURPHY, Connecticut
JOHNNY ISAKSON, Georgia              TIM KAINE, Virginia


                              (ii)        

  
                          C O N T E N T S

                              ----------                              
                                                                   Page

Gardner, Hon. Cory, U.S. Senator From Colorado...................     1

Markey, Hon. Edward J., U.S. Senator From Massachusetts..........    10

Portman, Hon. Rob, U.S. Senator From Ohio........................    18

Thornton, Hon. Susan A., Acting Assistant Secretary, Bureau of 
  East Asian and Pacific Affairs.................................     4
    Prepared statement...........................................     5

Klingner, Bruce, Senior Research Fellow, Northeast Asia, The 
  Heritage Foundation, Washington, DC............................    22
    Prepared statement...........................................    23

Sigal, Leon V., Director, Northeast Asia Cooperative Security 
  Project, Social Science Research Council, New York, NY.........    30
    Prepared statement...........................................    32

              Additional Material Submitted for the Record

Responses of Acting Assistant Secretary Susan Thornton to 
  Questions Submitted by Senator Edward J. Markey................    39

Letter Submitted for the Record by Leon V. Sigal, Director, 
  Northeast Asia Cooperative Security Project, Social Science 
  Research Council, New York, NY.................................    42

                           (iii)        

 
                     ASSESSING THE MAXIMUM PRESSURE
                         AND ENGAGEMENT POLICY
                           TOWARD NORTH KOREA

                              ----------                              


                         TUESDAY, JULY 25, 2017

                               U.S. Senate,
       Subcommittee on East Asia, The Pacific, and 
                International Cybersecurity Policy,
                            Committee on Foreign Relations,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 3:33 p.m. in room 
SD-419, Dirksen Senate Office Building, Hon. Cory Gardner, 
chairman of the subcommittee, presiding.
    Present: Senators Gardner [presiding], Portman, Markey, and 
Kaine.

            OPENING STATEMENT OF HON. CORY GARDNER, 
                   U.S. SENATOR FROM COLORADO

    Senator Gardner. This hearing will come to order. Let me 
welcome you all to the fifth hearing for the Senate Foreign 
Relations Subcommittee on East Asia, the Pacific, and 
International Cybersecurity Policy in the 115th Congress. On 
behalf of the committee, I apologize for the delay at the 
beginning of this hearing. To the witnesses who have been here, 
time away from work, as well as those attending the hearing 
today, the action on the Floor, including the return of Senator 
McCain, was a very poignant moment for the Senate.
    I would like to welcome all to today's hearing.
    North Korea has emerged as the most urgent national 
security challenge for the U.S. and our allies in East Asia. 
Secretary Mattis has said North Korea is the most urgent and 
dangerous threat to peace and security. Admiral Gortney, the 
former commander of U.S. Northern Command, stated that the 
Korean Peninsula is at its most unstable point since 1953, when 
the Armistice was signed.
    Last year alone, North Korea conducted two nuclear tests 
and a staggering 24 ballistic missile launches. This year, 
Pyongyang has already launched 17 missiles, including the July 
4th successful test of an intercontinental ballistic missile 
that is reportedly capable of reaching Alaska and Hawaii.
    Patience is not an option with the U.S. homeland in the 
nuclear shadow of Kim Jong Un. Our North Korea policy of 
decades of bipartisan failure must turn to one of bipartisan 
success, with pressure and global cooperation resulting in the 
peaceful denuclearization of the regime.
    President Trump has said the United States will not allow 
that to happen, and I am encouraged by the President's resolve.
    As Vice-President Pence stated during his recent visit to 
South Korea, ``Since 1992, the United States and our allies 
have stood together for a denuclearized Korean Peninsula. We 
hope to achieve this objective through peaceable means. But all 
options are on the table.''
    But time is not on our side.
    I believe U.S. policy toward North Korea should be 
straightforward: The United States will deploy every economic, 
diplomatic and, if necessary, military tool at our disposal to 
deter Pyongyang and to protect our allies.
    However, the road to peacefully stopping Pyongyang 
undoubtedly lies through Beijing. China is the only country 
that holds the diplomatic and economic leverage necessary to 
put the real squeeze on the North Korean regime.
    According to the South Korean state trade agency, China 
accounts for 90 percent of North Korea's trade, including 
virtually all of North Korea's exports. From 2000 to 2015, 
trade volume between the two nations has climbed more than 
tenfold, rising from $488 million in 2000 to $5.4 billion in 
2015.
    Beijing is the reason the regime acts so boldly and with 
relatively few consequences. China must now move beyond an 
articulation of concern and lay out a transparent path of 
focused pressure to denuclearize North Korea. A global power 
that borders this regime cannot simply throw up its hands and 
absolve themselves of responsibility.
    The administration is right to pursue a policy of maximum 
pressure toward North Korea, and we have a robust toolbox that 
is already available to ramp up the sanctions track, a track 
that has hardly been utilized to its fullest extent.
    Last Congress, I led the North Korea Sanctions and Policy 
Enhancement Act, which passed the Senate by a vote of 96 to 
nothing. This legislation was the first standalone legislation 
in Congress regarding North Korea to impose mandatory sanctions 
on the regime's proliferation activities, human rights 
violations, and malicious cyber behavior.
    According to recent analysis from the Foundation for the 
Defense of Democracies, ``North Korea sanctions have more than 
doubled since that legislation came into effect on February 
18th, 2016. Prior to that date, North Korea ranked eighth 
behind Ukraine/Russia, Iran, Iraq, the Balkans, Syria, Sudan, 
and Zimbabwe.''
    Even with the 130 percent sanctions increase after the 
legislation passed this Congress, North Korea is today still 
only the fifth most-sanctioned country by the United States.
    So while Congress has clearly moved the Obama 
administration from inaction to some action, the Trump 
administration has the opportunity to use these authorities to 
build maximum leverage with not only Pyongyang, but also with 
Beijing.
    I am encouraged by the actions the administration took last 
month to finally designate a Chinese financial institution. But 
this should just be the beginning. The administration, with 
Congressional support, should now make it clear to any entity 
doing business with North Korea that they will not be able to 
do business with the United States or have access to the U.S. 
financial system.
    A report released last month by an independent 
organization, C4ADS, identified over 5,000 Chinese companies 
that are doing business with North Korea. These Chinese 
companies are responsible for $7 billion in trade with North 
Korea. Moreover, the report found that only 10 of these 
companies, 10 of these companies, controlled 30 percent of 
Chinese exports to North Korea in 2016. One of these companies 
alone was responsible for nearly 10 percent of total imports 
from North Korea. Some of these companies were found to have 
satellite offices in the United States.
    According to recent disclosures, from 2009 to 2017, North 
Korea used Chinese banks to process at least $2.2 billion in 
transactions through the U.S. financial system.
    This should all stop now, and it must stop now. The United 
States should not be afraid of a diplomatic confrontation with 
Beijing for simply enforcing existing U.S. law. In fact, it 
should be more afraid of Congress if it does not.
    As for any prospect of engagement, we should continue to 
let Beijing know in no uncertain terms that the United States 
will not negotiate with Pyongyang at the expense of U.S. 
national security and that of our allies.
    Instead of working with the United States and the 
international community to disarm the madman in Pyongyang, 
Beijing has called on the United States and South Korea to halt 
our military exercises, in exchange for vague promises of North 
Korea suspending its missile and nuclear activities. That was a 
bad deal, and the Trump administration was right to reject it.
    Moreover, before any talks in any format, the United States 
and our partners must demand that Pyongyang first meet the 
denuclearization commitments it had already agreed to in the 
past and subsequently chose to brazenly violate.
    President Trump should continue to impress with President 
Xi that a denuclearized Korean Peninsula is in both nations' 
fundamental long-term interests.
    As Admiral Harry Harris rightly noted recently, ``We want 
to bring Kim Jong Un to his senses, not to his knees.'' But to 
achieve this goal, Beijing must be made to choose whether it 
wants to work with the United States as a responsible global 
leader to stop Pyongyang or bear the consequences of keeping 
him in power. I will turn it over to Senator Markey as soon as 
Senator Markey arrives. But in the meantime, he has agreed to 
allow our witness, who has waited patiently for an hour, to 
begin testimony, Susan Thornton on our first panel.
    Our first panel is the Honorable Susan Thornton, who serves 
as Acting Assistant Secretary of State for East Asia and 
Pacific Affairs.
    Susan Thornton assumed responsibility as Principal Deputy 
Assistant Secretary in February of 2016 after serving for a 
year-and-a-half as Deputy Assistant Secretary. Secretary 
Thornton joined the State Department in 1991 and is a career 
member of the Foreign Service.
    Welcome, Secretary Thornton, and thank you for your 
patience, and thank you for being here with us today. We will 
begin your testimony.

          STATEMENT OF HON. SUSAN A. THORNTON, ACTING 
         ASSISTANT SECRETARY, BUREAU OF EAST ASIAN AND 
                        PACIFIC AFFAIRS

    Ms. Thornton. Thank you very much, Chairman Gardner. It is 
great to see you. And thank you very much for inviting me to 
appear before you today on this really important, urgent issue 
for both the United States, our allies and regional security, 
and I would say global security.
    North Korea's July 4th intercontinental ballistic missile 
test is only the latest evidence of Kim Jong Un's desire to 
threaten the United States with nuclear weapons. It constitutes 
a serious escalation of the DPRK's nuclear and ballistic 
missile program.
    Our goal is to protect our country, our citizens, and our 
allies by halting and eliminating North Korea's development of 
nuclear weapons and the means to deliver them. The 
administration's strategy to achieve this goal uses diplomatic, 
economic, and other tools to build concerted global pressure on 
Pyongyang to abandon its internationally proscribed nuclear and 
missile programs.
    North Korea needs to understand that the only path to 
international legitimacy, regime security, and economic 
prosperity is a denuclearized Korean Peninsula.
    There are three components to our strategy. The first is 
U.N. action. In concert with our Asian allies, we have called 
on all U.N. member states to fully implement the strong 
sanctions required in the U.N. Security Council Resolutions 
2321, 2270, and 2356, and we will continue to work to increase 
international sanctions.
    The second component is diplomatic action by U.N. member 
states. We have urged countries around the world to take their 
own actions to express their condemnation, such as suspending 
or downgrading diplomatic relations with North Korea. Cordial 
ties with a country that threatens its neighbors and continues 
to violate numerous U.N. resolutions is completely 
inappropriate at this time. We have seen evidence that North 
Korea violates international norms by using its diplomatic 
missions to generate and transmit illicit resources for its 
weapons programs.
    The third component is economic pressure. We have asked all 
countries to cut trade ties with Pyongyang as a way of 
increasing North Korea's economic isolation and to prevent it 
from using the international financial system to support its 
illegal weapons programs. Secretary Tillerson has made clear in 
meetings with his foreign counterparts that nations can no 
longer operate in a business-as-usual approach. Our ambassadors 
have reinforced this message in capitals around the globe.
    Mr. Chairman, we are not seeking regime change, nor do we 
seek military conflict, or to threaten North Korea. Our 
pressure campaign is designed to make the cost of the regime's 
programs too exorbitant. As has been said, we want to bring 
North Korea to its senses and not to its knees. However, we 
will respond accordingly to threats against us or our allies. 
We remain open to talks with the DPRK, but it must first cease 
its unlawful nuclear and missile programs and bring an end to 
its pattern of dangerous, aggressive behavior in the region. We 
are not going to negotiate our way back to the negotiating 
table.
    While our partners around the globe have begun to take 
steps to increase pressure on North Korea, unfortunately we do 
not see any signs that North Korea is willing to engage in 
credible talks on denuclearization at this time. We will 
continue to appeal to countries around the world to take 
actions in opposition to North Korea's unlawful ballistic 
missile and nuclear programs to make clear to the DPRK that 
pursuing its unlawful programs will only increase its 
isolation.
    While addressing the threat to our homeland and our allies 
is our most pressing concern, we will not abandon the three 
U.S. citizens who have been unjustly detained by North Korea, 
nor will we be silent in speaking out against the regime's 
egregious human rights violations against its own people. The 
State Department will soon impose a travel restriction 
forbidding U.S. nationals to use an American passport to travel 
in, through, or to North Korea. We seek to avoid another 
tragedy like that which Otto Warmbier and his family endured.
    In very specific limited circumstances, American citizens 
can apply for a waiver to this travel restriction to allow them 
to perform humanitarian work. We do not wish to punish the 
North Korean people for the actions of their leadership and 
therefore plan to allow for some exceptions to our travel 
restriction.
    We appreciate the strong interest in this issue from 
Congress, and we look forward to continuing our cooperation and 
protecting our country from this grave threat to international 
stability.
    Thank you again for inviting me to testify today, and I 
look forward to any questions you may have.
    [The prepared statement of Ms. Thornton follows:]

               Prepared Statement of Hon. Susan Thornton

    Chairman Gardner, Ranking Member Markey and Members of the 
Subcommittee: Thank you for the opportunity to appear before you today 
for this timely hearing on North Korea.
    North Korea's July 4th Inter-Continental Ballistic Missile (ICBM) 
test is only the latest evidence of Kim Jong Un's resolve to 
successfully achieve a nuclear-tipped ballistic missile capable of 
reaching the United States mainland. It constitutes a serious 
escalation of the DPRK's nuclear and ballistic missile program.
    Yet, the threat posed by North Korea is not new. This is a problem 
set that has challenged five previous administrations. By examining 
their approach to this problem, we have gathered several lessons from 
painful experience. First--North Korea has no intention of abandoning 
its nuclear program in the current environment. North Korea will not 
give up its weapons in exchange for talks, even with economic 
concessions that provide sorely needed assistance to the North Korean 
people. Thus, while we continue to see a negotiated solution as the 
best chance at resolving this problem, we remain firm that the 
conditions at present are unconducive to dialogue. We will not 
negotiate our way to talks. Second--there is a chance we can change Kim 
Jong Un's calculus by increasing through economic and diplomatic 
pressure the cost of maintaining his nuclear and ballistic missile 
programs. North Korea has never faced a sustained period of intense 
international pressure on the regime. We aim to change that. Third--
While we continue to seek international cooperation on North Korea, we 
will not hesitate to take unilateral actions against entities and 
individuals who enable Kim Jong Un's regime's pursuit of strategic 
nuclear capabilities.
    These lessons guided us in developing our current strategy. Through 
this strategy, we are using all tools at our disposal to amass pressure 
on Pyongyang to bring the regime to understand that the only path to 
international legitimacy, regime security and economic prosperity is to 
abandon its internationally condemned, destabilizing weapons program. 
Three components serve as the pillars of this strategy: (1) We've 
called on all U.N. member states to fully implement the commitments 
they made regarding North Korea. These include the strong sanctions 
required in UNSCRs 2321, 2270 and 2356, (2) Second, we've urged 
countries to suspend or downgrade diplomatic relations with North 
Korea, recognizing that cordial ties with Pyongyang imparts respect to 
a country that shuns stability and international obligations. Simply 
put, this is a country that proceeds without any regards for rules, (3) 
Third, we asked all countries to cut trade ties with Pyongyang as a way 
of increasing North Korea's financial isolation.
    We have relentlessly implemented this policy. As Secretary 
Tillerson said in remarks to this Committee on June 13, he has 
highlighted North Korea in all his bilateral discussions with senior 
officials from countries around the world. He has made this a top 
priority for all State Department officials in their engagements with 
foreign counterparts. Countries that never considered North Korea's 
weapons programs as a priority issue in their bilateral relations with 
the United States now know otherwise and have been asked to closely 
examine their diplomatic and trade ties with North Korea. From Mali to 
Malaysia, we have made clear that applying greater pressure on North 
Korea is not only a talking point, it is an area where we expect 
continuing cooperation as a basis for strong bilateral relations.
    Trilateral cooperation with our South Korean and Japanese allies is 
also critically important, and we've ensured that we maintain a steady 
pace of high-level engagements to buttress the strength of our 
alliances and to synch up DPRK policy in Washington, Tokyo, and Seoul. 
On the margins of the recent G20 meeting in Hamburg, the President 
convened a trilateral meeting to discuss DPRK with President Moon and 
Prime Minister Abe. Through mechanisms like this, we have maintained 
policy coordination with our strongest allies in East Asia on the North 
Korean threat.
    On China, we recognize the continued importance of Beijing doing 
more to exert pressure on North Korea. We are also clear-eyed in 
viewing the progress--growing but uneven--that China has made on this 
front. We are conferring closely with our Chinese counterparts to 
ensure strict implementation of China's commitment to curb imports of 
North Korean coal, consistent with their declaration in February 
banning coal imports for the duration of the calendar year. In the four 
months since China's February 18 announcement to ban coal imports, our 
estimates indicate that the value of North Korean coal imports into 
China have been reduced to 26% and 31% of 2015 and 2016's levels, 
respectively, during the same time period and have deprived the regime 
of over $420 million in revenues at current market prices.
    With this in mind, we recognize that Beijing can and should do more 
to monitor financial activity within its own borders. Accordingly, we 
worked closely with our Department of the Treasury colleagues to 
designate two Chinese individuals and one Chinese entity on June 29, in 
response to North Korea's ongoing WMD development and continued 
violations of U.N. Security Council resolutions. The Treasury 
Department also found the Bank of Dandong, a Chinese bank that has 
acted as a conduit for illicit North Korean financial activity, to be a 
foreign financial institution of primary money laundering concern, 
pursuant to Section 311 of the USA Patriot Act. As a result, they 
proposed a rule prohibiting U.S. financial institutions from 
maintaining correspondent accounts for, or on behalf of, Bank of 
Dandong.
    Together, these actions all send a clear message to the 
international community--if you attempt to evade sanctions and conduct 
business with designated North Korean entities, you will pay a price. 
We will continue to fully exercise all of our standing sanctions 
authorities to choke off revenue streams to the DPRK.
                           signs of progress
    While we are only in the first few months of our new policy, we are 
encouraged by some signs of progress:

     Days after the North Koreans tested an ICBM, the G20 
countries meeting in Germany issued individual statements condemning 
the ballistic missile launch.

     We have seen countries expel sanctioned North Korean 
officials and North Korean diplomats engaged in illicit commercial or 
arms-related activities, and prevented certain North Korean individuals 
from entering or transiting their jurisdictions.

     Countries have reduced the size of the North Korean 
mission in their countries, and canceled or downgraded diplomatic 
engagements or exchanges with North Korea. Across the globe, countries 
are beginning to view visiting North Korean official delegations with 
caution, recognizing that welcoming these delegations come at a cost to 
their bilateral relations with the United States.

     Countries in the Middle East, Europe, and Southeast Asia 
halted visa issuances to North Korean laborers and are phasing out the 
use of these workers, whose wages are garnished to fund the regime and 
its unlawful nuclear and missile programs. While a small number of 
countries remain committed to this practice, we are working to ensure 
they are the exception to an international consensus against hiring 
DPRK laborers.

     Like-minded countries including the Republic of Korea 
(ROK), Japan, and Australia implemented their own unilateral sanctions. 
EU partners are augmenting autonomous restrictive measures to implement 
U.N. Security Council resolutions, and key European partners, 
particularly the UK, France, and Germany, are collaborating with us on 
maximizing pressure on the DPRK.

     Countries with special leverage on North Korea are 
committing to fully implement UNSCR obligations and are coordinating 
with us on pressing North Korea to return to serious talks.
                               next steps
    We will continue to appeal to countries around the world to take 
actions in shared opposition to North Korea's unlawful ballistic 
missile and nuclear weapon programs to make clear to the DPRK that it 
stands alone in its pursuit of the advancement of its unlawful 
programs. We will step up efforts to sanction individuals and entities 
enabling the DPRK regime, including those in China. China must exert 
its unique leverage over the DPRK. We will never recognize North Korea 
as a nuclear state.
    While addressing this imminent threat is our most pressing issue, 
we have not and will not lose sight of the plight of the three 
remaining American citizens who have been unjustly detained by North 
Korea or of the regime's egregious human rights violations. Due to 
mounting concerns over the serious risk of arrest and long-term 
detention, the Department will soon impose a travel restriction on all 
U.S. nationals' use of a passport to travel in, through, or to North 
Korea. We seek to prevent the future detentions of U.S. citizens by the 
North Korean regime to avoid another tragedy like that which Otto 
Warmbier and his family endured.
    We appreciate the strong interest in this issue from Congress and 
we look forward to continuing our cooperation. Thank you for inviting 
me to testify today. I am pleased to answer any questions you may have.

    Senator Gardner. Thank you, Secretary Thornton.
    As I mentioned, when Senator Markey arrives, we will turn 
to him for his opening comments and questions as well.
    I just want to start with a couple of questions to you, 
Secretary Thornton, regarding the maximum pressure campaign. Do 
you think the administration needs additional tools, additional 
sanctions authorities from Congress to fully implement the 
maximum pressure campaign or policy?
    Ms. Thornton. I would say that there have been several 
things that the administration has done in light of the review 
that we conducted on North Korea policy and in implementing the 
strategy that we have in place right now.
    The first is to make North Korea the highest priority 
national security issue that we are facing, and you have heard 
Secretary Mattis and the President and the Secretary and others 
speak to this.
    The second thing that we are doing is we are making this a 
real global campaign and putting the onus on other countries in 
the international community to examine their relationships with 
North Korea, both diplomatic, economic, financial, trading, and 
asking them to make sure that not only are they implementing 
the very sweeping U.N. sanctions regime that has already been 
put in place but that they are going beyond that regime to 
initiate their own actions to show the North Koreans that they 
will not be able to seek solace or comfort in the international 
community anywhere, and this is part of maintaining a global 
network to show that we are unified in our efforts to thwart 
their ambitions.
    The third thing that we are doing is really working, 
putting the onus on China. As you said, 90 percent of the North 
Korean economy is flowing through China in one form or another, 
and I think this is a real departure from previous approaches 
on this issue, putting the onus on China to step up, as you 
said, be a responsible global player and really use its tools 
to up the pressure on the regime in North Korea and make clear 
that China will only accept a denuclearized Korean Peninsula 
and that they are prepared to impinge on the North Korean 
economy in ways that are much more serious than they have done 
in the past.
    I think as far as the tools that we have at hand for 
conducting this strategy, we do have very broad authorities 
already existing. We are already undertaking a sweeping 
assessment of all of the violations of sanctions that we can 
detect that are going on in various countries around the world, 
including in China. We have been working with some of those 
countries to take action against entities that we find that are 
violating these sanctions, and we have very broad authorities 
to do so.
    So I would say I do not think there is any lack of tools 
that are keeping us from prosecuting a very active sanctions 
campaign, both within the ambit of the U.N. Security Council 
resolutions sanctions, but also within our own unilateral kind 
of designations and secondary sanctions against entities that 
we find to be violative.
    Senator Gardner. And outside of this hearing, have you made 
that position known, that you have the authorities that you 
need, to both chambers of the Congress?
    Ms. Thornton. Not aware specifically, but I believe that 
that is our position, yes.
    Senator Gardner. Thank you. And have you had a chance to 
review some of the other pieces of legislation, either in the 
House or regarding North Korea sanctions? And in the Senate I 
have introduced, along with others on this committee, 
legislation regarding North Korea and sanctions, particularly 
relating to access to financial networks and systems. Could you 
comment a little bit on those pieces of legislation?
    Ms. Thornton. Sure, yes. There are quite a number of pieces 
of legislation, and we definitely appreciate the interest of 
Congress in this issue. I think what I would say is that the 
authorities that we have, again, I think they are quite 
sweeping. Authorities that were passed in the legislation from 
2016, the North Korea Sanctions Enhancement Act that you 
mentioned, and the executive orders that followed from that, 
gave us very broad authorities to go after entities that we 
find that are violating sanctions or U.S. laws or the U.N. 
sanctions.
    So I think the new pieces of legislation, there are various 
targets. One was on the travel restriction or travel ban. One 
is on North Korean human rights. So there are a number of 
different aspects that they touch on, and I think in general we 
have been consulting closely with staff on those and we 
appreciate the interest.
    Senator Gardner. The round of designations that you 
mentioned, you talked about sanctioning Chinese financial 
institutions, other measures, secondary sanctions. When can we 
expect the next round of designations that include Chinese 
entities and financial institutions?
    Ms. Thornton. We have been working on coming up with a new 
list of entities that we think are violating, and I think there 
is no specific timetable, but there is no specific hesitation 
to do that. We will be proceeding with those as soon as we can 
get target packages ready to go and get the sort of evidentiary 
standards and legal standards met that we need to meet.
    Senator Gardner. Can we expect additional sanctions within 
the next 30 days?
    Ms. Thornton. I would hesitate to predict exact timetables, 
but I think you will see something fairly soon, yes.
    Senator Gardner. And will these sanctions, will they be 
presented to China or others prior to the enactment of the 
sanctions to give them a chance to correct, or will they just 
be implemented immediately?
    Ms. Thornton. Well, we have been in running conversations 
with China and other countries about information that we have 
on entities, and in some cases we tried to coordinate on 
actions with them, with local law enforcement to our law 
enforcement actions, and in some cases we are unable to do 
that. So I cannot say specifically with regard to what we are 
considering, but we have done both in the past, and we are not 
bound by any particular arrangement.
    Senator Gardner. When you see a report like the C480 report 
that shows over 5,000 entities doing business with China, does 
that provide evidence that you can use? Does that go into a 
conversation with the Chinese government, and what is their 
response?
    Ms. Thornton. So, we have had a number of conversations, I 
myself have had multiple conversations with my Chinese 
counterparts, and whenever we have a report like this we bring 
it to them and ask them to look into it, and they have done 
that. Usually they come back to us with some kind of a 
response, which we either follow up on or not. But, I mean, 
usually we definitely share that kind of information.
    Senator Gardner. In your testimony you talk--and you 
mentioned it in the answer to your question--about three 
components of service, pillars of the strategy: call on U.N. 
member states to fully implement the commitments they have made 
regarding North Korea; you have urged countries to suspend or 
downgrade diplomatic relations with North Korea; and asked all 
countries to cut trade ties with Pyongyang.
    Could you give me an indication of the success of those 
requests? How many member nations of the United Nations have 
suspended or downgraded diplomatic relations with North Korea 
that you have requested to do so? How many have cut trade ties 
with Pyongyang that we have requested to do so?
    Ms. Thornton. I cannot give you specific numbers, but we 
have urged everybody to squeeze diplomatic representation or 
downgrade if they can. There are a number of countries that 
have expelled DPRK representatives from their capitals, who 
have diminished their presence in Pyongyang of diplomatic 
missions, have expelled representatives of commercial offices 
or other entities that were transacting illicitly with the host 
government and that we provided information on. So I cannot 
give you the exact number, but there are quite a number that 
have responded to our call for diminishing diplomatic presence.
    We have also had a number of countries respond to the call 
for diminishing commercial operations that are sponsored by 
diplomatic establishments, and I think we have had--for 
example, Germany has committed to take steps to close a hostel 
there that was being run by the North Korean diplomatic mission 
which provided revenue for the mission's operations. So we have 
had a number of successes on that front, as well.
    Senator Gardner. Could you talk a little bit about the 
timing of the travel ban?
    Ms. Thornton. Yes. So, we believe that in the coming week, 
within the coming week, we will publish a notice in the Federal 
Register outlining the period of consultation and what we are 
proposing, which is a general travel restriction. That will be 
in the Federal Register for a 30-day comment period, and the 
proposal is to, I think as you know, make U.S. passports not 
valid for travel into North Korea unless an application is made 
for a one-time trip and you get a license or permission to make 
that trip. So that will be in the Federal Register for 30 
days----
    Senator Gardner. Is that trip allowable under a 
humanitarian exemption? Is that the purpose of that allowance?
    Ms. Thornton. Right, right, for the subsequent--you would 
have to make an in-person application for a trip.
    Senator Gardner. And are we encouraging other nations to do 
the same, and have others made the same decision?
    Ms. Thornton. We have encouraged other people to make 
decisions about restricting travel, because tourism is 
obviously a resource for the regime that we would like to see 
diminished. I do not think so far there are other people that 
have pursued this, but this will be sort of the initial one, 
and we will keep talking to others about that.
    Senator Gardner. I thank you, Secretary Thornton.
    As promised, I will turn to Senator Markey for any opening 
comments you would make. Secretary Thornton has already given 
her testimony, and so proceed into questions if you would like 
to immediately.

              STATEMENT OF HON. EDWARD J. MARKEY, 
                U.S. SENATOR FROM MASSACHUSETTS

    Senator Markey. Okay. Beautiful. Thank you, Mr. Chairman.
    We apologize to everyone. It is a very unusual day here in 
the Congress, historic. So we apologize, but we think this is 
as well an historic issue that has to be dealt with in the very 
near term.
    So I thank you, Mr. Chairman, for convening this hearing, 
and to our three witnesses for being here.
    Assistant Secretary Thornton, you are the first Trump 
administration official to testify on North Korea in an open 
hearing before the Senate Foreign Relations Committee. Since 
taking office, President Trump and his policymakers have made 
inconsistent and sometimes conflicting public comments on this 
sensitive matter. I hope your testimony will provide needed 
clarity.
    North Korea continues to develop its nuclear and missile 
programs without constraint. Over the past 18 months it has 
conducted its fourth and fifth nuclear tests, tested over 20 
ballistic missiles, and launched a satellite into orbit.
    On July 4th, North Korea tested an intercontinental 
ballistic missile, or ICBM. This represents a startling advance 
in Pyongyang's arsenal. And just hours ago, the Washington Post 
reported that the Defense Intelligence Agency now assesses 
North Korea could field a reliable nuclear-capable 
intercontinental ballistic missile as early as next year, 2 
years sooner than previously thought.
    We and our allies must remain resolute and united to deter 
this threat. Kim Jong Un's reckless brutality leaves no doubt 
that he is homicidal, but at the same time his calculated 
survival strategy shows that he is not suicidal. Like his 
father and grandfather before him, Kim knows that an attack on 
the United States or our allies will bring an immediate and 
devastating military response. For that reason, so far 
deterrence has worked. But as Kim builds nuclear weapons and 
the situation continues to drift without diplomatic resolution, 
he may eventually misread our deterrent military posture as 
preparation for an imminent attack to topple his regime.
    I believe that continued diplomatic drift only increases 
the risk of unintended war, with potentially grave 
consequences. Just 3 days ago, General Joe Dunford, the 
Chairman of the Joint Chiefs, said that war on the Korean 
Peninsula would be, quote, ``horrific, a loss of life unlike 
any we have experienced in our lifetimes, and I mean anyone who 
has been alive since World War II.'' This echoed comments by 
Secretary of Defense, Jim Mattis, earlier this year.
    It is clear that there is no military solution to this 
problem, and pressure without direct diplomatic engagement will 
bring only continued drift. We need a bold new approach. I 
believe that only direct diplomatic engagement backed by 
unprecedented economic pressure will bring a peaceful solution 
to the North Korea problem.
    That is why I have joined with Chairman Gardner in leading 
the North Korean Enablers Accountability Act. We believe that 
the United States needs to make it crystal clear that our 
country will impose unprecedented economic pressure on North 
Korea and its enablers, and we need to give the administration 
potent diplomatic tools with which to bring the North Korean 
regime to the table for serious, direct negotiations.
    But no matter how many sanctions tools we give the 
President, pressure cannot bring North Korea to the table 
unless we are willing to talk to them. Now is the time for the 
administration to clearly state its diplomatic engagement 
strategy, the circumstances under which it will agree to direct 
engagement with North Korea, and how it intends to use 
sanctions and other tools to bring Kim to the table for serious 
talks. So this is, without question, Mr. Chairman, a very 
important hearing, and I do have a question.
    Senator Gardner. Please proceed to your questions.
    Senator Markey. Thank you, Mr. Chairman, I appreciate it.
    So, Secretary Thornton, part of the North Korea challenge 
at present is that the administration has announced a policy of 
maximum pressure and engagement but has not articulated as of 
yet what that means or the strategy for implementing it, 
specifically with respect to diplomatic engagement. President 
Trump has spoken of the chances of ``a major, major conflict 
with North Korea,'' quote unquote, but has also said he would 
be honored to meet with Kim Jong Un and that he was ``a smart 
cookie.''
    Other administration officials, including Vice President 
Pence and Secretary Tillerson, have given similarly 
contradictory statements. And frankly, Secretary Thornton, your 
opening statement still has not clarified exactly where the 
administration has to be or is today.
    You mentioned lessons that guided us in developing our 
current strategy which has three components that serve as the 
pillars but did not elaborate on what that strategy or the 
pillars are. Calls for U.N. member states to fully enforce 
sanctions and urging countries to isolate North Korea all sound 
like things that previous administrations have also done.
    So, can you explain to us what the administration's current 
strategy is and how it is bringing us closer to the ultimate 
goal of peacefully denuclearizing the Korean Peninsula?
    Ms. Thornton. Thank you very much, Senator Markey, for your 
statement and for these questions. I mean, this is obviously a 
very difficult issue. Some of us have been working on this 
issue for more years than we care to count, and I think in the 
room here we probably have millennia of experience on this 
issue. Unfortunately, we have not come up with a solution that 
has allowed us to solve this issue in the way that we hope to 
see it solved, which is the denuclearization of the Korean 
Peninsula.
    The denuclearization of the Korean Peninsula is the 
administration's goal here. That is what we are going after. I 
think the Secretary and others have made clear that it is our 
preference to resolve this issue peacefully, to denuclearize 
the Korean Peninsula in a peaceful manner. That said, it seems 
that Kim Jong Un and the North Korean regime are quite 
dedicated to developing these weapons and have not so far 
demonstrated any inclination to join us for negotiations on the 
dismantling and abandonment of the nuclear weapons.
    Senator Markey. So what the administration is saying, then, 
is that you believe in a negotiated settlement of this issue of 
the development of nuclear weapons and intercontinental 
ballistic missiles by North Korea, but thus far the 
administration has been unwilling to actually negotiate with 
North Korea.
    Ms. Thornton. Well, thus far we have not had a partner--
sorry to interrupt, but thus far we have not had a partner with 
whom we could negotiate, and we have had----
    Senator Markey. Have you asked for negotiations with the 
North Koreans?
    Ms. Thornton. We have asked--the North Koreans know how to 
get in touch with us when they are----
    Senator Markey. I appreciate that, but do you know how to 
get in touch with them?
    Ms. Thornton. We do know how to get in touch with them.
    Senator Markey. Have you asked for negotiations to commence 
with the North Koreans, in conjunction with the Chinese or the 
Japanese? Have you asked for that specific negotiation to occur 
and for us to actually construct a framework by which we can 
begin to resolve this issue?
    Ms. Thornton. I mean, at this point, all of our allies, 
partners, and others that are involved in trying to help and 
cooperate to address this issue and solve this problem, none of 
us have gotten a positive response from North Korea when the 
topic of a serious conversation, a serious negotiation about 
their nuclear program has come up. So in the face of that 
intransigence, our strategy is to increase the pressure on the 
North Korean regime to try to change its calculus, to change 
the cost/benefit analysis in Pyongyang surrounding these 
programs, and at the same time we are constantly evaluating and 
probing to see if we are having that desired effect.
    I think that it is certainly the case that ratcheting up 
sanctions pressure is not like a cobra strike. It is definitely 
a slow squeeze, a slow tightening of the screws, and I think we 
are definitely in the process of trying to elevate that 
pressure and change the calculus. We have not gotten there yet, 
which I think is what I mentioned in my statement, but I think 
we also think that sanctions over time and pressure over time, 
unified global network over time can have the effect of 
changing that calculation on the part of the DPRK regime, and 
that is what we are seeking to do.
    I mean, some people say this will not work, but I say we 
have to test this hypothesis and test it at the point where we 
bring the maximum amount of pressure.
    Senator Markey. Well, Senator Gardner and I and other 
members of this committee, we clearly want to intensify the 
level of pressure on North Korea. They enjoyed a 37 percent 
increase in trade with the Chinese from year to year, from 2016 
to the beginning of 2017. When we began the deployment of the 
THAAD, that has now led to a $10 billion-a-year economic 
sanction that China is imposing on South Korea and its tourism 
sector.
    So from our perspective, the strategy which we have is not 
working. We need legislation that will ensure that there is a 
tightening of the sanctions, but it can only work if it is done 
in conjunction with negotiations that begin but with the sure 
and certain knowledge that these sanctions are arriving so that 
you can extract the strongest possible result.
    Mr. Chairman, I see that Senator Kaine has arrived, so I 
will end my questions right now so that Senator Kaine can be 
recognized.
    Senator Gardner. Senator Kaine is recognized.
    Senator Kaine. Thank you to my colleagues, and thank you 
for your testimony, and forgive me if I ask questions that were 
asked while I was coming from an Armed Services Committee 
hearing.
    It was, I think, on the 21st of June that the U.S. and 
China held the first iteration of the Diplomatic and Security 
Dialogue. What steps did the administration take during that 
dialogue with China to urge them to increase pressure on North 
Korea?
    Because when we met with the administration at the White 
House, that was in a classified setting, so I am not going to 
go into it in any detail, but I think we all realized the 
leverage that China has is not being deployed sufficiently to 
change North Korean behavior. There is much more leverage that 
can be deployed. And when we hear about China sanctioning South 
Korea over efforts that South Korea is taking just to defend 
itself, it seems like not only are we not using our leverage, 
we may be going backwards.
    So can you tell me about the dialogue between the U.S. and 
China on June 21 about the North Korea issue?
    Ms. Thornton. Yes, sure. Thank you very much, Senator, for 
that question. First let me start off by saying that we deplore 
and have spoken out publicly about how disappointed we are 
about China's actions with respect to South Korea over the 
THAAD deployment. Of course, the THAAD deployment is merely a 
defensive system that is going to be used to protect South 
Korea, protect our troops, and it is certainly within the 
rights of South Korea to deploy a defensive system, and we 
have, in the context of the diplomatic and security dialogue, 
raised our disappointment again over that issue and insisted 
with the Chinese that we continue to discuss it and that they 
retract all of the negative ramifications that flowed from that 
decision.
    With regard to the sanctions on North Korea, and with 
regard to the discussions on North Korea in general, I think 
what we had hoped to do in the Diplomatic and Security Dialogue 
in the period running up to that, when there was a lot of 
active diplomacy, was convince the Chinese to take serious 
action against their own entities that we found that were in 
violation of some sanctions provisions. And once, after the 
Diplomatic and Security Dialogue, we had a chance to talk 
through with the Chinese how we saw it, then I think you saw 
following from that discussion the decision to proceed with the 
sanctioning of a number of Chinese entities.
    We have had a number of conversations with China where we 
said we would prefer to work through the U.N. sanctions, 
because obviously if you have a U.N. Security Council 
resolution, it is an international sanction that sweeps up the 
entirety of the global network that we are trying to build, and 
we would prefer to cooperate with China on going after entities 
that we see in violation of those sanctions, but that we are 
perfectly prepared to act on our own to target entities that we 
find it necessary to target that are in violation of the 
sanctions.
    So I think the Chinese are now very clear that we are going 
to go after Chinese entities if need be, if we find them to be 
in violation; and if the Chinese feel they cannot cooperate in 
going after those targets, that there is no block on us acting 
on our own.
    Senator Kaine. This committee acted in 2016 to do sanctions 
that were followed on pretty quickly. I mean, not only through 
the body to be signed by the President, but then they were 
followed on pretty quickly by the U.N. Security Council, and 
China did not choose to exercise its veto in those.
    But I am curious, are there major differences in the way 
they interpret the sanctions and we interpret them? Do we run 
into interpretive disagreements where we think it should be 
more maximal and they are claiming that it is not? Tell me a 
little bit about the relationship with China, even over 
understanding what these sanctions mean.
    Ms. Thornton. So, we have had six U.N. Security Council 
resolutions against North Korea since 2006, five of those with 
sanctions, all of them adopted by consensus in the Security 
Council, so no vetoes, which shows the degree to which North 
Korea is a complete flagrant outlier in the international 
system.
    A Chinese vote for these U.N. Security Council resolutions. 
They are opposed to all of North Korea's violative behavior. 
But in the details of the sanctions--and there is a U.N. panel 
of experts that monitors the sanctions and the implementation 
and interprets--we work very closely with the panel of experts, 
and the Chinese also work very closely with them. I mean, the 
Chinese have a lot more trade going on with North Korea. They 
have a very long border with North Korea. And so they have, 
first of all, differences in interpretations of some of the 
sanctions and more tangible differences in how they can 
implement the sanctions. They have a lot more work to do to 
implement the sanctions, obviously at the borders with 
inspections of Customs, with tracking financial transactions, 
et cetera.
    So, they are both having a difference with regard also to 
their domestic laws and how they enact domestic laws to 
implement U.N. sanctions than what the system is that we have.
    Senator Kaine. If I could ask one more question, Mr. 
Chairman. I am just about up against my time.
    These guys who have been on the subcommittee are far more 
expert than me. I am a Middle East and Latin America guy just 
added to this subcommittee, so I always ask questions that 
others know about already, but help me understand Chinese 
behavior on this.
    They did not veto the sanctions, the sanctions as you 
mentioned. They disagree on application issues, but that may 
not be quite so unusual. They are on the border and they are 
doing trade with them. It affects them more than it does us, so 
we would have a different point of view. But then they would 
sanction South Korea for taking steps that are clearly 
defensive in nature. I mean, that seems so much more extreme 
even than babbling about what does the U.N. Security Council 
resolution mean.
    When South Korea is taking steps that are clearly defensive 
in nature to protect itself against what everybody agrees is 
sanctionable behavior within the U.N. context that should cause 
grave concern by a border neighbor, as well as other nations in 
the region, I have a hard time understanding what this sanction 
on South Korea is about. I cannot interpret it in any light 
other than a really hostile and unhelpful one. So, help me 
understand it.
    Ms. Thornton. I think your interpretation is perfectly 
legitimate. I mean, we have the same conversation, which is 
this is a defensive system. The Chinese do not believe it is a 
defensive system, but we have tried to explain that we can have 
a technical conversation and explain to you exactly why you are 
wrong, but they have not come to the same conclusion on that.
    So I think we continue to point out to them that this is a 
completely unjustified kind of behavior, and I think on the 
reaction to the THAAD system I cannot explain exactly why they 
are doing what they are doing, but I think seeing it as 
unreasonable is perfectly legitimate.
    Senator Kaine. Thank you, Mr. Chairman.
    Senator Gardner. Thank you, Senator Kaine.
    Secretary Thornton, just another round of questions. I will 
be brief in my comments and questions here.
    Just make it clear: There will be additional sanctions 
issued on Chinese entities and others who are violating our 
sanctions and U.N. sanctions. Is that correct?
    Ms. Thornton. Yes.
    Senator Gardner. And those will be issued shortly. Is that 
correct? Shortly within the next----
    Ms. Thornton. I mean, it is not the State Department that 
issues them. So, yes, within----
    Senator Gardner. Thank you.
    Ms. Thornton. Yes.
    Senator Gardner. I wanted to follow up on human rights. 
Will any of these actions include violations of human rights by 
the North Korean regime?
    Ms. Thornton. I'm sorry?
    Senator Gardner. Do any of these sanctions or any other 
measures address the violations of human rights by North Korea?
    Ms. Thornton. It is possible. I am not exactly sure which 
ones are going to be included in the next tranche, but it is 
possible. Certainly we still have the North Korea human rights 
sanctions provided for in legislation, and we have the 
authority to do that.
    Senator Gardner. The other and final question before I turn 
it over to Senator Markey, cyber capabilities. We, in the last 
Congress, passed legislation requiring mandatory cyber 
sanctions when we find a violation by North Korea under the 
terms of the legislation. In the conversations over the past 
several months we have talked about some of the ransomware 
attacks that have gone viral around the globe. Does the United 
States plan to utilize--the State Department, Treasury 
Department, plan to utilize the cyber sanctions authority under 
the previous legislation?
    Ms. Thornton. Yes. I believe that, of course, we are well 
aware of malicious cyber activity emanating from North Korea, 
and we are very concerned about it. I think when we have the 
opportunity to use the authority, we certainly would use it and 
would not hesitate.
    Senator Gardner. Thank you.
    Senator Markey.
    Senator Markey. Thank you, Mr. Chairman, again.
    And we thank you for being here, Secretary Thornton. This 
is a very important discussion. And again, I continue my line 
of questioning, again referencing back to the Washington Post 
story of just two hours ago saying that our own Defense 
Intelligence Agency now believes that they could deploy a 
reliable nuclear-capable intercontinental ballistic missile 
next year. So, time is of the essence. This is the last best 
chance we are going to have to deter them.
    So the legislation pending before this committee and that 
we intend on moving and is the subject of this hearing is to 
impose broad sanctions on 10 Chinese companies identified 
specifically as doing the largest amount of business with the 
North Korean government, and we want to move on this rapidly so 
that the Chinese know that we are serious and the North Koreans 
know that we are serious. We now know that time is running out. 
Once they have that intercontinental ballistic missile, 
nuclear-capable ability, it will be very difficult to roll that 
back.
    So again, what is the administration's views on this 
legislation that we have pending before the committee? Does the 
Trump administration support it, oppose it, or are you neutral?
    Ms. Thornton. Well, we certainly would support going after 
entities that are violating the sanctions, and I cannot say 
without knowing what the list of entities exactly is and having 
a lot more information about what they have been doing, what 
kinds of violations they are looking at. But we would certainly 
not hesitate to go after companies that we have that kind of 
information on.
    So I think we are sort of in the same mode of wanting to 
ratchet up the pressure on the North Korean regime quickly. As 
far as signaling to North Korea about what it is we are trying 
to do, since they do not seem willing to enter into a serious 
negotiation, we are trying to let them know through other means 
what it is that our goal is, what it is that we are trying to 
do, and what it is that we are not trying to do.
    I think the Secretary has been very clear that we are not 
pursuing regime change in North Korea, we are not pursuing a 
collapse or an accelerated reunification, that we are genuinely 
focused on the denuclearization of the Korean Peninsula. We 
have done our part in South Korea. There are no nuclear 
weapons, and it is now up to North Korea to come to the table, 
hopefully encouraged by the sanctions and also encouraged by 
other incentives.
    Senator Markey. But my question goes to what is the 
conversation between the Trump administration and the Chinese 
government. What are you saying to the Chinese government about 
the intention of the United States to tighten, in a vise-like 
grip, sanctions on those companies that are cooperating with 
the North Korean government, including the 10 companies that we 
include in this legislation, towards the goal of moving to 
direct negotiations with the North Koreans, having the Chinese 
working with us? What is that conversation? That is what we are 
trying to elicit. Because, obviously, when there is a 37 
percent increase in trade with North Korea and China, and a $10 
billion-a-year hit on the South Korean economy as they 
cooperate with the United States in the deployment of the 
THAAD, right now they are not feeling any pressure. It is just 
business as usual, coasting towards that moment when they have 
a nuclear weapons program that is successful in being able to 
reach our country.
    So what exactly are you saying to the Chinese leaders?
    Ms. Thornton. We have had the conversation about our 
intention to tighten the vise grip of sanctions with regard to 
companies that are violating. We are also, of course, working 
on new international sanctions through the U.N., and I think 
U.S.-U.N. Ambassador Haley had a statement about that this 
morning, that the Chinese have proposed some additional 
measures and that things were positive in the conversations we 
are having with China about instituting additional 
international sanctions as a response to the ICBM launch on 
July 4th.
    But we are also telling them quite up front that we will 
not hesitate to take additional actions against Chinese 
companies that are violating the sanctions with North Korea. I 
have not told them the list of 10 companies that are in your 
bill, but we have been talking to them about a lot of other 
entities and companies that we have information about that are 
involved with North Korea and that we are proceeding to try to 
move against.
    Senator Markey. So what are you telling the Chinese are the 
conditions under which we are willing to engage in direct talks 
with the North Koreans? The Chinese have asked us to engage in 
direct negotiations with the North Koreans. What have you said 
to China about what those conditions would be that would bring 
us to direct talks? What are the conditions you have given to 
the Chinese?
    Ms. Thornton. We have not given them a list of conditions, 
but we have told them, as I think I mentioned in my statement, 
that a start would be a moratorium on testing of missiles and 
nuclear devices and a diminishing of provocative behavior. That 
would be the first sort of step in moving toward a negotiation. 
We would like to see some seriousness on the part of North 
Korea about abandoning its weapons programs.
    Senator Markey. So you are saying North Korea has to make 
some concessions before we will begin negotiations. Is that the 
position of the Trump administration?
    Ms. Thornton. Well, North Korea does not have to make 
concessions. It has to stop its U.N. Security Council 
resolution violative illicit behavior, and we do not see that 
as a concession.
    Senator Markey. I appreciate that, but we have to look at 
it from the perspective of the North Koreans as well, which is 
why going to direct negotiations with a much tougher sanctions 
program surrounding its economy, in cooperation with the 
Chinese, is from my perspective the correct formula to get a 
result before next year, when it becomes irreversible.
    Thank you, Mr. Chairman.
    Senator Gardner. Thank you, Senator Markey.
    Senator Portman.

                STATEMENT OF HON. ROB PORTMAN, 
                     U.S. SENATOR FROM OHIO

    Senator Portman. Thank you, Mr. Chairman.
    As Senator Markey has described, we have big challenges 
with North Korea, and over the period of the last couple of 
decades, a few different administrations, we have tried 
different things which have not worked.
    I wanted to talk, if I could for a moment, about the 
possibility of re-designating North Korea as a state sponsor of 
terrorism. I raise this because you will recall that the 
designation was actually removed as part of a negotiation. My 
understanding is that the North Koreans did not keep their end 
of the bargain on that negotiation.
    I know that you are currently pursuing a strategy of 
maximum pressure, as it is called, against the regime, and I 
just wonder why this is not one of the things you are looking 
at. The Perry Initiative during President Clinton's 
administration was where this was removed. It was discussed 
during the Clinton administration. The Bush administration's 
removal of the regime from the list in 2008 was based upon an 
agreement by North Korea to disable its plutonium factory and 
for the complete and correct declaration of its nuclear 
program. None of those things happened.
    Today we understand that plutonium production continues at 
Yongbyon, and it is an important part of the North Korean 
nuclear program. If I am wrong about that, I would like to hear 
from you, Ms. Thornton. We are nowhere near having a complete 
and correct understanding of their nuclear program, of course.
    So the removal from the list in 2008 was closely linked to 
negotiating limitations on the program and changes in 
international behavior by the regime, and it never happened. 
Director Coates has now outlined in his worldwide threat 
assessment that just came out a couple of months ago that North 
Korea's record of sharing dangerous nuclear and missile 
technology with state sponsors of terrorism, including Iran and 
Syria, continues to pose a serious threat not just to the U.S. 
but to the security environment in East Asia and elsewhere.
    So sharing dangerous nuclear weapon technology with Iran, a 
state sponsor of terrorism, should seem to be an important link 
to terrorism. In addition, the regime has built a long record, 
of course, of kidnapping and murder. Its treatment of Japanese 
nationals was an important part of their designation 
previously.
    Unfortunately, they have made a habit now of detaining 
Americans. As you know, one of my constituents, Otto Warmbier, 
was one of those who was detained. That detention, in essence, 
turned into a death sentence for him, improperly detained. So 
my question to you would be whether you all are weighing the 
re-designation of North Korea as a state sponsor of terrorism 
and what the status of that decision-making is; and if you are 
not doing that, why are you not doing that?
    Ms. Thornton. Thank you. Thank you, Senator, very much for 
that question. Of course, let me just start by saying that our 
hearts really do go out to the family of Otto Warmbier. It was 
a reprehensible tragedy and something that no one should have 
to go through. I certainly appreciate the sentiment behind your 
question, and I think we all are very concerned about 
humanitarian conditions inside North Korea and about actions by 
the regime that are very much outside the bounds of any kind of 
responsible state actor.
    I think on the issue of the state sponsors of terrorism, we 
are reviewing that issue right now. It is an issue that the 
Secretary has taken an interest in. There are a lot of 
technical and legal aspects to it, so I cannot tell you with 
great specificity where we are in the review right now, but we 
are looking at the issue of designation. I could give you more 
information perhaps at a later date.
    Senator Portman. Well, I appreciate that information, but I 
would like to ask that you get back to me, and I assume the 
Chairman and Ranking Member will be interested as well as to 
what your thinking is and what the considerations are. You said 
it is a highly technical decision. I know you have to meet 
certain requirements. Again, providing missile technology to 
countries that we consider some of the top state sponsors of 
terrorism would seem to be a link, and then, of course, not 
just how they treated other countries' citizens but ours.
    By the way, with regard to Otto Warmbier, I want to thank 
you again. I have done this before this committee a couple of 
times, including when Deputy Secretary Sullivan was here. I 
appreciate his personal involvement. As you know, Ambassador 
Joe Younes was critical to us in being able to ultimately bring 
Otto home. So we appreciate the State Department's increased 
and highly personal efforts over the last couple of months. 
Again, the process that we have gone through in the last 18 
months with the DPRK with regard to Otto Warmbier indicates to 
me the level of depravity that exists within that regime.
    One final question, if I could, Mr. Chairman. This has to 
do with economic sanctions. Many of us have talked about the 
imposition of broader sanctions by checking more Chinese 
companies brought into the sanctions regime, because there are 
hundreds, if not thousands, of Chinese companies, as I 
understand it, still doing business with North Korea, some of 
whom are involved with dual technology that has had an effect 
not just on their commercial activities but also their military 
activities.
    But let me ask you about the sanctions that are in place. 
Are they working? Are they affecting the pace with which the 
country of North Korea has been able to develop and test its 
nuclear and ballistic missile programs? And to what sources of 
funding has the regime resorted in order to get around some of 
these sanctions?
    Ms. Thornton. Thank you very much for that question. I 
think that what we see is, as we build this kind of global 
network to try to increase the pressure on the regime and 
prevent proliferation, especially of illicit technology going 
to North Korea, that there has been some effect. We are 
affecting their ability to get things that they need. It has 
not, unfortunately, slowed down their missile testing program, 
but we do see them needing to resort to new avenues of access 
to get imports and other things. I think that is one of the 
desired goals of the sanctions regime, is to make things more 
difficult for them, obviously, to proceed with their weapons 
programs.
    I think one aspect of this is as the pressure on the 
regime, on sanctions, on their inability to transact financial 
transactions and move things easily across borders without 
being subject to inspection, et cetera, they will start to look 
for new avenues of outlet, and that is one of the reasons why 
we have been so insistent on traveling out to countries that 
you would not normally think of as being partners of North 
Korea to try to shore up the resolve of countries all over the 
world to keep North Korea from accessing markets that they may 
now be turning to when things get more difficult in the nearby 
neighborhood.
    But I think, unfortunately, we have not seen their missile 
program slowed down. In fact, it seems that they are testing at 
the same rapid rate that they have been testing at lately. So 
we are continuing to talk to China about that. We are 
continuing to try to impinge on sources of particularly hard 
currency financing. But we do find that a lot of their 
production has gone now indigenous, and it has become harder 
and harder to stop this kind of activity in North Korea.
    I think as we work with China--I mean, everybody in the 
U.N. sanctions network is conscious, and it is one of the 
things that the U.N. panel of experts is doing, keeping 
particular track of items and dual-use items that may be of use 
to North Korea and trying to make sure that we close down those 
avenues. But we have also just started to work on this and we 
have a lot of conversations and capacity building to do with 
other countries. Some countries have more capacity to catch 
these things at Customs than others, et cetera, and that is one 
of the things in our conversations with our Chinese colleagues 
that we have talked about, is providing customs assistance for 
them on the border to catch a lot of this stuff that goes into 
North Korea, and we are working with them on that, as are some 
of our other like-minded allies in the region.
    Senator Portman. Well, Ms. Thornton, I hope we will 
redouble our efforts to work on that, because the alternative 
is frightening, not just for the region, and certainly Japan 
and South Korea recognize that now, but also for the broader 
region, including China, and what could happen on their border 
with DPRK, and now with this new testing of intercontinental 
ballistic missiles, really for the whole world.
    So I would hope that we would not only put more pressure on 
these countries but that we would apply that pressure in a way 
that is clear that it is in their self-interest to avoid the 
potential calamity that could occur if we do not more 
effectively through sanctions and peaceful means curtail what 
they are able to do in their nuclear program and in their 
missile program.
    So I know the Chairman is holding this hearing in part to 
put attention on this issue, and I would certainly hope that is 
a top priority of the administration and, again, in the self-
interest of these other countries to avoid a much more drastic 
result.
    Thank you, Mr. Chairman.
    Senator Gardner. Thank you, Senator Portman.
    Before we turn to the next panel, Secretary Thornton, I 
would just like to add that if we could get a timeframe from 
the State Department on the designation of state-sponsored 
terror, I think it is important. It is clear, whether it is the 
murderous actions the regime has taken against its own people, 
others, the imprisonments that they continue to be responsible 
for, whether it is the missile launches they continue, the 
interaction with Iran, this decision needs to be made soon, and 
it needs to be, I believe, a re-designation of that state 
sponsor of terror.
    So, thank you, Secretary Thornton, for your testimony 
today, and again, apologies for the late start.
    Ms. Thornton. Thank you.
    Senator Gardner. I am going to bring up the second panel to 
begin their testimony.
    The first witness on our second panel today is Bruce 
Klingner, who serves as a Senior Research Fellow at the 
Heritage Foundation. Prior to joining Heritage in 2007, Mr. 
Klingner spent 20 years serving at the Central Intelligence 
Agency and the Defense Intelligence Agency, focusing on the 
Korean Peninsula, including as Chief of the CIA's Korea Branch 
and as CIA's Deputy Division Chief for Korea.
    Welcome, Mr. Klingner.
    Our second witness and final witness of the second panel is 
Mr. Leon Sigal, I believe, who currently serves as Director of 
the Northeast Asia Cooperative Security Project at the Social 
Science Research Council in New York. He is an author of 
numerous books on nuclear non-proliferation issues, has taught 
at Columbia University and Princeton University, and has also 
served as a member of the editorial board of the New York Times 
from 1989 to 1995.
    Welcome, Mr. Sigal, and thank you for being with us today.
    Mr. Klingner, if you would begin. Thank you.

STATEMENT OF BRUCE KLINGNER, SENIOR RESEARCH FELLOW, NORTHEAST 
         ASIA, THE HERITAGE FOUNDATION, WASHINGTON, DC

    Mr. Klingner. Thank you, Mr. Chairman, Ranking Member 
Markey. It is truly an honor to be asked to appear before you 
on such an important issue to our national security.
    The imminence of Pyongyang's crossing of the ICBM threshold 
has triggered greater advocacy by some for a U.S. preemptive 
military attack to prevent North Korea from obtaining its 
objective. But preemptive attacks on test flights that do not 
clearly pose a security risk could trigger an all-out war with 
catastrophic consequences. So while the U.S. should be 
steadfast in its defenses of its territories and its allies, it 
should save a preemptive military strike for indications of 
imminent North Korean attack.
    Conversely, others push for a return to negotiations, but 
we have been down that path many times before and all were 
unsuccessful. North Korea pledged in several international 
agreements to never develop nuclear weapons, and, once caught 
with its hand in the nuclear cookie jar, acceded to several 
subsequent agreements to give up the weapons they promised 
never to build in the first place. The U.S. and its allies have 
offered economic benefits, developmental assistance, 
humanitarian assistance, diplomatic recognition, declaration of 
non-hostility, turning a blind eye to violations, and not 
implementing U.S. laws. By word and deed, North Korea has 
repeatedly and emphatically shown it has no intention of 
abandoning its nuclear weapons under present circumstances.
    It is also difficult to have a dialogue with a country that 
shuns it. North Korea closed the New York channel in July 2016, 
severing the last official link between our governments, until 
allowing dialogue recently to facilitate the return of the 
comatose and dying Otto Warmbier. North Korea literally refuses 
to pick up the phone both in the joint security area in the DMZ 
and the inter-Korean military hotline in the West Sea. And 
North Korea has already rejected several attempts at engagement 
by South Korean President Moon Jae-in. They have dismissed them 
as nonsense. So South Korea has also tried engagement, having 
240 inter-Korean agreements.
    Proposals for returning to negotiations such as the freeze-
for-freeze option all share a common theme in calling for yet 
more concessions by the U.S. in return for a commitment by the 
North to undertake a portion of what it is already obligated to 
do under numerous U.N. resolutions, and the best way to engage 
in negotiations would be after a comprehensive, rigorous, and 
sustained international strategy. Such a policy upholds U.S. 
laws and U.N. resolutions, imposes a penalty on those that 
violate them, puts in place measures both to make it harder for 
North Korea to import items that they need for their new 
prohibited programs, as well as constrain proliferation.
    So North Korea must be held accountable for its actions, 
and to refrain from doing so would be to condone illegal 
activity and give de facto immunity from U.S. and international 
law and undermine U.N. resolutions.
    Successive U.S. administrations have talked tough about 
pressuring North Korea but instead engaged in timid 
incrementalism in imposing sanctions and defending U.S. law; 
and U.S. officials responsible for sanctions, when you talk to 
them privately, will say, yes, they have lists and evidence of 
North Korean, Chinese, and other entities that are violating, 
but they were prevented from implementing and enforcing those 
laws.
    Although President Trump has criticized President Obama's 
strategic patience policy as weak and ineffectual, he has yet 
to distinguish his North Korea policy from his predecessor's. 
Trump's policy of maximum pressure to date has been anything 
but, and he continues to pull American punches against North 
Korean and Chinese violations of U.S. law. However, the Trump 
administration recently expressed frustration with Beijing's 
foot-dragging on pressuring North Korea and took actions 
against the Bank of Dandong and a few other entities. We are 
hearing, again, that there are indications that they will be 
sanctioning additional Chinese violators, and I certainly hope 
that is the case.
    We also have to highlight and condemn Pyongyang's crimes 
against humanity. Advocacy for human rights must be a component 
of U.S. policy. Americans were rightly appalled by the death of 
Otto Warmbier, but we must not lose sight of the brutal and 
reprehensible human rights violations that the regime imposes 
on its own citizens, which the U.N. Commission of Inquiry 
assessed constituted crimes against humanity.
    In July 2016, the Obama administration, for the first time, 
imposed human rights sanctions on a handful of North Korean 
entities, but since then the U.S. has not taken any further 
action.
    So, in conclusion, the most sensible policy is to increase 
pressure in response to Pyongyang's repeated defiance of the 
international community while ensuring the U.S. has sufficient 
defenses for itself and its allies, and leaving the door open 
to diplomatic efforts. But at present, any offer of economic 
inducements to entice North Korea to abandon its nuclear 
arsenal has little to no chance of success.
    Thank you again for the privilege of appearing before you.
    [The prepared statement of Mr. Klingner follows:]

                  Prepared Statement of Bruce Klingner

    My name is Bruce Klingner. I am the Senior Research Fellow for 
Northeast Asia at The Heritage Foundation. It is an honor to appear 
before this distinguished panel to discuss the North Korean threat to 
our nation. The views I express in this testimony are my own, and 
should not be construed as representing any official position of The 
Heritage Foundation.
    North Korea's test launch of an ICBM that could eventually threaten 
the American homeland has energized debate over both how the U.S. 
should respond to the launch as well as the parameters of President 
Trump's long-term policy toward Pyongyang.
    The imminence of Pyongyang's crossing of the ICBM threshold has 
triggered greater advocacy for a U.S. preemptive military attack to 
prevent North Korea from attaining its objective. But preemptive 
attacks on test flights that do not clearly pose a security threat 
could trigger an all-out war with catastrophic consequences. While the 
U.S. should be steadfast in its defense of its territory and its 
allies, it should save preemptive attack for indications of imminent 
North Korean attack.\1\
    Conversely, other experts continue to push for a return to the 
failed approach of negotiations, insisting it is the only way to 
constrain Pyongyang's growing nuclear arsenal. But there is little 
utility to such negotiations as long as Pyongyang rejects their core 
premise, which is the abandonment of its nuclear weapons and 
programs.\2\
    Dialogue requires a willing partner. But, by word and deed, North 
Korea has repeatedly and emphatically shown it has no intention of 
abandoning its nuclear weapons. Pyongyang has made clear in both public 
statements and private meetings that denuclearization is off the table 
and there is nothing that Washington or Seoul could offer to induce 
Pyongyang to abandon its nuclear arsenal.\3\
    The best way to engage in negotiations would be after a 
comprehensive, rigorous, and sustained international pressure strategy. 
Such a policy upholds U.S. laws and U.N. resolutions, imposes a penalty 
on those that violate them, puts in place measures to make it more 
difficult for North Korea to import components--including money from 
illicit activities--for its prohibited nuclear and missile programs, 
and further constrain proliferation.
    Successive U.S. administrations have talked tough about imposing 
pressure on the North Korean regime but instead engaged in timid 
incrementalism in imposing sanctions and defending U.S. law.
    There are, of course, no easy solutions to the long-standing North 
Korean problem. But the most sensible is to increase pressure in 
response to Pyongyang's repeated defiance of the international 
community while ensuring the U.S. has sufficient defenses for itself 
and its allies and leaving the door open for diplomatic efforts.
                    the growing north korean threat
    The security situation on the Korean Peninsula is dire and 
worsening. North Korea's growing nuclear and missile capabilities are 
already an existential threat to South Korea and Japan and will soon be 
a direct threat to the continental United States. Pyongyang's decades 
long quest for an unambiguous ability to target the United States with 
a nuclear-tipped inter-continental ballistic missile may be entering 
endgame.
    North Korea has likely already achieved warhead miniaturization, 
the ability to place nuclear weapons on its medium-range missiles, and 
a preliminary ability to reach the continental U.S. with a missile.\4\
    ICBM. Pyongyang crossed the mobile ICBM threshold on July 4th by 
launching a missile that could range the United States. North Korea's 
first launch of the Hwasong 14 ICBM was flown on a high trajectory so 
as not to overfly Japan and also potentially test a reentry vehicle 
which would protect a nuclear warhead during its flight.
    The missile flew 930 kilometers but could have traveled 7000 km or 
further had it been flown on a normal trajectory. The regime brags of 
its capability to directly threaten the United States with nuclear 
weapons.
    An ICBM is classified as any missile longer with than 5500 km 
range--Anchorage is 5500 km from North Korea. It is not currently known 
if the missile was tested its full potential. But expert analysis of 
previous North Korean static rocket engine tests assessed the missile 
may be able to reach New York or Washington when deployed.
    The successful ICBM launch is the latest breakthrough in the 
regime's robust nuclear and missile test program. Last year, Pyongyang 
successfully conducted two nuclear tests, a long-range missile test, 
breakthrough successes with its Musudan road-mobile intermediate-range 
missile and submarine-launched ballistic missile, re-entry vehicle 
technology, a new solid-fuel rocket engine, and an improved liquid-fuel 
ICBM engine.
    IRBM. This year, North Korea revealed several new missiles during a 
military parade, some of which experts have still not yet been 
identified. Pyongyang successfully tested a second IRBM, the Hwasong-
12, which flew even further than the Musudan. Both missiles can now 
threaten U.S. bases in Guam, a critical node in the defense of the 
Pacific, including the Korean Peninsula. During meetings in Europe last 
month, North Korean officials told me that both the Hwasong-12 and 
Musudan will be deployed to military units soon.
    MRBM. Last year, North Korea conducted No Dong medium-range missile 
flights and announced that they were practicing preemptive air-burst 
nuclear attacks on South Korea and U.S. forces based there. A North 
Korean media-released photo showed the missile range would encompass 
all of South Korea, including the port of Busan where U.S. 
reinforcement forces would land.
    In 2017, North Korea fired a salvo of four extended-range Scud 
missiles and then announced it had been practicing a nuclear attack on 
U.S. bases in Japan. The regime also launched the new KN-15 medium-
range ballistic missile--its first successful solid-fueled missile 
fired from a mobile launcher.
    SLBM. In August 2016, North Korea conducted its most successful 
test launch of a submarine-launched ballistic missile which traveled 
500 kilometers (300 miles). South Korean military officials reported 
that the missile was flown at an unusual 500-km high trajectory. If 
launched on a regular 150-km high trajectory, the submarine-launched 
missile might have traveled over 1,000 km.
    South Korea does not currently have defenses against submarine-
launched ballistic missiles. The SM-2 missile currently deployed on 
South Korean destroyers only provides protection against anti-ship 
missiles. South Korea has recently expressed interest in the U.S.-
developed SM-3 or SM-6 ship-borne systems to provide anti-submarine 
launched missile defense.
   negotiations with north korea: abandon hope all ye who enter here
    Advocates for engagement will insist that the only way to constrain 
Pyongyang's growing nuclear arsenal is to rush back to nuclear talks 
without insisting on preconditions. But there is little utility to such 
negotiations as long as Pyongyang rejects their core premise, which is 
abandonment of its nuclear weapons and programs.
    Ninth time the charm? Promoting another attempt at a negotiated 
settlement of the North Korean nuclear problem flies in the face of the 
collapse of Pyongyang's previous pledges never to develop nuclear 
weapons or, once caught with their hand in the nuclear cookie jar, 
subsequent promises to abandon those weapons.
    Pyongyang previously acceded to the 1992 North-South 
Denuclearization Agreement, the Non-Proliferation Treaty, the 
International Atomic Energy Agency (IAEA) safeguards, the Agreed 
Framework, three agreements under the Six-Party Talks and the Leap Day 
Agreement--all of which ultimately failed. A record of zero for eight 
does not instill a compelling sense of confidence about any future 
attempts.
    For over 20 years, there have been official two-party talks, three-
party talks, four-party talks and six-party talks to resolve the North 
Korean nuclear issue. The U.S. dispatched government envoys on numerous 
occasions for bilateral discussions with North Korean counterparts. The 
U.S. and its allies offered economic benefits, developmental 
assistance, humanitarian assistance, diplomatic recognition, 
declaration of non-hostility, turning a blind eye to violations and 
non-implementation of U.S. laws.
    Seoul signed 240 inter-Korean agreements on a wide range of issues 
and participated in large joint economic ventures with North Korea at 
Kaesong and Kumgangsan. Successive South Korean administrations offered 
extensive economic and diplomatic inducements in return for Pyongyang 
beginning to comply with its denuclearization pledges.
    It is difficult to have a dialogue with a country that shuns it. 
North Korea closed the ``New York channel'' in July 2016, severing the 
last official communication link, until allowing dialogue recently to 
facilitate the return of the comatose and dying U.S. citizen Otto 
Warmbier.
    Pyongyang walked away from senior-level meetings with South Korean 
counterparts in December 2015, precipitating the collapse of inter-
Korean dialogue. In the Joint Security Area on the Demilitarized Zone 
(DMZ), North Korea refuses to even answer the phone or check its 
mailbox for messages from the U.S. and South Korea. North Korea has 
already repeatedly rejected several attempts at engagement by newly-
elected South Korean President Moon Jae-in, dismissing them as 
``nonsense.''
    Hope springs eternal. Despite these failures, there has been a 
renewed advocacy by some experts to negotiate a nuclear freeze. The 
proposals all share a common theme in calling for yet more concessions 
by the U.S. to encourage Pyongyang to come back to the negotiating 
table in return for a commitment by the North to undertake a portion 
what it is already obligated to do under numerous U.N. resolutions.
    A nuclear freeze was already negotiated with the February 2012 Leap 
Day Agreement in which the U.S. offered 240,000 tons of nutritional 
assistance and a written declaration of no hostile intent. In return, 
North Korea pledged to freeze nuclear reprocessing and enrichment 
activity at the Yongbyon nuclear facility, not to conduct any nuclear 
or missile tests and to allow the return of International Atomic Energy 
Association inspectors to Yongbyon.
    That agreement crashed and burned within weeks. Indeed, all eight 
denuclearization agreements with North Korea were variants on a nuclear 
freeze. Yet that does not seem to deter freeze proponents from 
advocating another try. Hope is a poor reason to ignore a consistent 
track record of failure.
    Too High a Price. What would the U.S. and its allies have to offer 
to achieve a freeze? Those things that were previously offered to no 
effect? Or would Washington and others have to provide even greater 
concessions and benefits? The regime has an insatiable list of demands, 
which include:

     Military demands--the end of U.S.-South Korean military 
exercises, removal of U.S. troops from South Korea, abrogation of the 
bilateral defense alliance between the U.S. and South Korea, cancelling 
of the U.S. extended deterrence guarantee, postponement or cancellation 
of the deployment of THAAD to South Korea and worldwide dismantlement 
of all U.S. nuclear weapons;

     Political demands--establishment of formal diplomatic 
relations with the U.S. signing of a peace treaty to end the Korean 
War, and no action on the U.N. Commission of Inquiry report on North 
Korean human rights abuses;

     Law enforcement demands--removal of all U.N. sanctions, 
U.S. sanctions, EU sanctions and targeted financial measures; and

     Social demands against South Korean constitutionally 
protected freedom of speech (pamphlets, ``insulting'' articles by South 
Korean media, and anti--North Korean public demonstrations on the 
streets of Seoul).

    Consequences of a bad agreement. A freeze would be a de facto 
recognition and acceptance of North Korea as a nuclear weapons state. 
Doing so would undermine the Non-Proliferation Treaty and send the 
wrong signal to other nuclear aspirants that the path is open to 
nuclear weapons. Doing so would sacrifice one arms control agreement on 
the altar of expediency to get another.
    A nuclear freeze agreement without verification would be worthless. 
North Korea's grudging admission of its prohibited highly enriched 
uranium program made verification even more important and difficult. 
The more easily hidden components of a uranium program would require a 
more intrusive verification regime than the one that North Korea balked 
at in 2008.
    A freeze would leave North Korea with its nuclear weapons, which 
already threaten South Korea and Japan. Such an agreement would trigger 
allied concerns about the U.S. extended deterrence guarantee, including 
the nuclear umbrella, to South Korea and Japan. Allied anxiety over 
U.S. reliability would increase advocacy within South Korea for an 
independent indigenous nuclear weapons program and greater reliance on 
preemption strategies.
    Pyongyang may be willing to talk--but not about the topic of 
paramount U.S. concern: the denuclearization required by U.N. 
resolutions to which Pyongyang previously committed several times, but 
failed to fulfill.
    sanctions: an important and variable component of foreign policy
    Critics of coercive financial pressure question its effectiveness 
because they have not yet forced Pyongyang to abandon its nuclear and 
missile programs, but neither did repeated bilateral and multilateral 
negotiations or unconditional engagement. Adopting such a narrow 
viewpoint overlooks the multifaceted utility of sanctions, which:

    1. Show resolve to enforce international agreements and send a 
resolute signal to other nuclear aspirants. If laws are not enforced 
and defended, they cease to have value;

    2. Impose a heavy penalty on violators to demonstrate that there 
are consequences for defying international agreements and transgressing 
the law and sent a signal to other potential violators that prohibited 
nuclear programs comes with high economic and diplomatic costs;

    3. Constrain North Korea's ability to acquire the components, 
technology, and finances to augment and expand its arsenal by raising 
the costs and slow the development of North Korea's development of 
nuclear and missile arsenals;

    4. Impede North Korean nuclear, missile, and conventional arms 
proliferation. Targeted financial and regulatory measures increase both 
the risk and the operating costs of North Korea's continued violations 
of Security Council resolutions and international law;

    5. Disrupt North Korean illicit activities, including illegal drug 
manufacturing and trafficking, currency counterfeiting, money-
laundering, and support to terrorist group;

    6. Raise the risks for entities doing business with Pyongyang by 
eliminating their ability to access the U.S. financial network;

    7. In conjunction with other policy tools, seek to modify North 
Korean behavior and persuade the regime to comply with U.N. resolutions 
and its previous denuclearization commitments.
    tightening the economic noose--targeting north korea's cash flow
    North Korea must be held accountable for its actions. To refrain 
from doing so is to condone illegal activity and give de facto immunity 
from U.S. and international law and to undermine U.N. resolutions. The 
U.S. must employ a comprehensive, integrated strategy that goes even 
beyond sanctions and diplomacy to include a full-court press against 
North Korean regime's actions and indeed its stability.
    Washington should lead a world-wide effort to inspect and interdict 
North Korean shipping, aggressively target all illicit activity, 
sanction entities including Chinese banks and businesses that are 
facilitating Pyongyang's prohibited nuclear and missile programs, 
expand information operations against the regime, highlight and condemn 
Pyongyang's crimes against humanity, and wean away even North Korea's 
legitimate business partners.
    Successive U.S. presidents have declared North Korea is a grave 
threat to the United States and its allies. The U.S. Treasury 
Department has called North Korea a ``threat to the integrity of the 
U.S. financial system.'' \5\ Yet, the U.S. has not backed up its 
steadfast words with commensurate actions.
    Increased financial sanctions, combined with the increasing pariah 
status of the regime from its human rights violations, are leading 
nations to reduce the flow of hard currency to North Korea. While 
sanctions only apply to prohibited activities, even legitimate North 
Korean enterprises are becoming less profitable.
    Each individual action to constrict North Korea's trade may not be 
decisive, but cumulatively these efforts reduce North Korea's foreign 
revenue sources, increase strains on the regime, and generate internal 
pressure. Collectively, the sanctions and measures to target North 
Korea's financial resources are forcing the regime to switch to less 
effective means to acquire and transfer currency as well as increasing 
stress on elites and the regime.
    Only such a long-term principled and pragmatic policy provides the 
potential for curtailing and reversing North Korea's deadly programs. 
Returning to over-eager attempts at diplomacy without any North Korean 
commitment to eventual denuclearization is but a fool's errand. 
Everything that is being advocated by engagement proponents has been 
repeatedly tried and failed.
    The U.N., the U.S. and the European Union have not yet imposed as 
stringent economic restrictions on North Korea as it did on Iran. There 
is much more that can be done to more vigorously implement U.N. 
sanctions as well as what the U.S. can do unilaterally to uphold and 
defend its own laws.
    North Korea is more vulnerable than Iran to a concerted sanctions 
program since it has a smaller, less functioning economy that is 
dependent on fewer nodes of access to the international financial 
network.
    U.S. officials responsible for sanctions will tell you privately 
that they have lists and evidence of North Korea, Chinese, and other 
violators but were prevented from implementing them during the Obama 
administration.
       trump not yet distinguished his policy from that of obama
    As many U.S. presidents had done, President Trump initially placed 
his hopes on Chinese promises to more fully implement U.N. sanctions. 
As a candidate, Trump had strongly criticized China for not pressuring 
North Korea to denuclearize.
    Yet, after the U.S.-China summit meeting, Trump heaped praise on 
Chinese President Xi Jinping for his perceived assistance. He adopted a 
softer tone on Xi's help with North Korea: ``I believe he is trying 
very hard. . . . He is a very good man, and I got to know him very 
well. . . . I know he would like to be able to do something; perhaps 
it's possible that he can't.'' Trump even claimed that ``nobody has 
ever seen such a positive response on our behalf from China.''
    As a result of his changed perception of China, Trump backed off 
pledged actions against China. He walked back a campaign promise, 
declaring, ``Why would I call China a currency manipulator when they 
are working with us on the North Korean problem?'' Trump also postponed 
enforcing U.S. law against Chinese violators, including secondary 
sanctions, and signaled reduced trade pressure on China while 
concurrently threatening greater trade pressure against our ally South 
Korea.
    Although Trump has criticized President Barack Obama's ``strategic 
patience'' policy as weak and ineffectual, he has yet to distinguish 
his North Korea policy from his predecessor's. Trump's policy of 
``maximum pressure'' to date has been anything but, and he continues to 
pull his punches against North Korean and Chinese violators of U.S. 
law.
    But the Trump administration subsequently expressed frustration 
with Beijing's foot dragging on pressuring its troublesome ally North 
Korea and took action against the Bank of Dandong--the first U.S. 
action against a Chinese bank in 12 years--and three other Chinese 
entities.
    Recently the State Department introduced a ban on U.S. travel to 
North Korea but refused to return North Korea to the state sponsors of 
terrorism list. There are indications that the administration will 
sanction more Chinese violators of U.S. law. I certainly hope that is 
the case.
    The Trump administration has also sent conflicting signals about 
whether it would negotiate with North Korea or potentially conduct a 
military attack to prevent the regime from mastering an 
intercontinental ballistic missile.
    chinese policy toward north korea: mix of sanctions and support
    Faced with a stronger international consensus for greater pressure 
on North Korea, the Chinese government, as well as Chinese banks and 
businesses, undertook a number of promising actions early in 2016. 
Beijing accepted more comprehensive sanctions in U.N. Resolution 2270 
that went beyond previous U.N. resolutions. Chinese banks and 
businesses reduced their economic interaction with North Korea, though 
it is unclear whether it was due to government direction or anxieties 
over their own exposure to sanctions.
    However, Beijing took similar action after each previous North 
Korean nuclear test. Each time, China temporarily tightened trade and 
bank transactions with Pyongyang and reluctantly acquiesced to 
incrementally stronger U.N. resolutions, only to subsequently reduce 
enforcement and resume normal economic trade with North Korea within 
months.
    China as Enabler of North Korean Misbehavior. In the U.N., China 
has acted as North Korea's defense lawyer by:

     Repeatedly resisting tougher sanctions;

     Watering down proposed resolution text;

     Insisting on expansive loopholes;

     Denying evidence of North Korea violations;

     Blocking North Korean entities from being put onto the 
sanctions list; and

     Minimally enforcing resolutions.

    Even when the U.N. passed stronger resolutions last year by 
imposing bans on the export of key North Korean resources, China 
insisted on an exemption for ``livelihood purposes.'' In implementing 
the U.N. resolution, Beijing simply requires any Chinese company 
importing North Korean resources to simply sign a letter pledging that 
it ``does not involve the nuclear program or the ballistic missile 
program'' of North Korea.'' The reality is that the loophole is larger 
than the ban, making the sanction largely ineffective.
    Even after the latest U.N. resolution sanctions, China remains a 
reluctant partner, fearful that a resolute international response could 
trigger North Korean escalatory behavior or regime collapse. Beijing 
resists imposing conditionality in trade because it believes it could 
lead to instability and unforeseen, perhaps catastrophic, 
circumstances.
    China's reluctance to pressure its ally provides Pyongyang a 
feeling of impunity which encourages it toward further belligerence. 
North Korea is willing to directly challenge China's calls for peace, 
stability, and denuclearization by repeatedly upping the ante to 
achieve its objectives including buying time to further augment its 
nuclear and missile capabilities.
    China's timidity, and the international community's willingness to 
accommodate it, only ensures continual repetition of the cycle with 
ever-increasing risk of escalation and potential catastrophe. The 
effectiveness of international sanctions is hindered by China's weak 
implementation.
    The North Korea Sanctions and Policy Enhancement Act mandates 
secondary sanctions on third-country (including Chinese) banks and 
companies that violate U.N. sanctions and U.S. law. It forces them to 
choose between access to the U.S. economy and the North Korean economy.
    The U.S. should penalize entities, particularly Chinese financial 
institutions and businesses, that trade with those on the sanctions 
list or export prohibited items. The U.S. should also ban financial 
institutions that conduct business with North Korean violators from 
access to the U.S. financial network.
    While sanctions opponents assert that Beijing will not go along 
with U.S. sanctions, Washington can influence the behavior of Chinese 
banks and businesses that engage with North Korea through the use of 
targeted financial measures. When Washington took action against Macau-
based Banco Delta Asia in 2005, labeling it a money-laundering concern, 
U.S. officials traveled throughout Asia, inducing 24 entities--
including the Bank of China--to cease economic engagement with North 
Korea.
    U.S. officials indicate that the Bank of China defied the 
government of China in severing its ties with North Korea lest the bank 
face U.S. sanctions itself. The action showed that U.S. government 
actions can persuade Chinese financial entities to act in their self-
interest even against the wishes of the Chinese government.
      advocacy for human rights must be a component of u.s. policy
    The death of Otto Warmbier dramatically underscored to Americans 
the heinous nature of North Korea's legal system and the risk that 
foreigners face by traveling there. But we must not lose sight of the 
brutal and reprehensible human rights atrocities that the regime 
imposes on its citizens. The U.N. Commission of Inquiry concluded in 
2014 that Pyongyang's human rights violations were so widespread and 
systemic that they constituted ``crimes against humanity.''
    In July 2016, the Obama administration imposed sanctions on North 
Korean leader Kim Jong Un and 15 other individuals entities ``for their 
ties to North Korea's notorious abuses of human rights.'' It was the 
first time that the U.S. had designated North Korean entities for human 
rights abuses.
    Sanctioning Kim Jong Un and others will not only have a direct 
financial impact on the North Korean regime, but could also have 
powerful secondary reverberations for the pariah regime. Concern over 
potential secondary liability, or of keeping company with perpetrators 
of crimes against humanity, has begun to galvanize other nations and 
business partners to reduce or sever their economic interaction with 
Pyongyang.
    But since that action, the U.S. has yet to expand the list of human 
rights violating entities subject to sanctions. While North Korea's 
nuclear and missile threats have garnered world attention, the Trump 
administration must include advocacy for human rights, including 
expansion of information operations into North Korea, in its overall 
North Korea policy.
                               conclusion
    At present, any offer of economic inducements to entice North Korea 
to abandon its nuclear arsenal is an ill-conceived plan with little 
chance of success. Instead, the international consensus is that tougher 
sanctions must be imposed on North Korea for its serial violations of 
international agreements, U.N. resolutions, and U.S. law.
    Washington must sharpen the choice for North Korea by raising the 
risk and cost for its actions as well as for those, particularly 
Beijing, who have been willing to facilitate the regime's prohibited 
programs and illicit activities and condone its human rights 
violations. Little change will occur until North Korea is effectively 
sanctioned, and China becomes concerned over the consequences of 
Pyongyang's actions and its own obstructionism.
    Sanctions require time and the political will to maintain them in 
order to work. In the near-term, however, such measures enforce U.S. 
and international law, impose a penalty on violators, and constrain the 
inflow and export of prohibited items for the nuclear and missile 
programs.
    While there are additional measures that can and should be applied, 
more important is to vigorously and assiduously implement existing U.N. 
measures and U.S. laws. We must approach sanctions, pressure, and 
isolation in a sustained and comprehensive way. It is a policy of a 
slow python constriction rather than a rapid cobra strike.
    The difficulty will be maintaining international resolve to stay 
the course. Already, some have expressed impatience with the recent 
sanctions and advocated a return to the decades-long attempts at 
diplomacy which failed to achieve denuclearization.
    The Heritage Foundation is a public policy, research, and 
educational organization recognized as exempt under section 501(c)(3) 
of the Internal Revenue Code. It is privately supported and receives no 
funds from any government at any level, nor does it perform any 
government or other contract work.
    The Heritage Foundation is the most broadly supported think tank in 
the United States. During 2016, it had hundreds of thousands of 
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state in the U.S. Its 2016 income came from the following sources:

     Individuals 75.3%

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    The top five corporate givers provided The Heritage Foundation with 
1.0% of its 2016 income. The Heritage Foundation's books are audited 
annually by the national accounting firm of RSM US, LLP.

------------------
Notes

    \1\ Bruce Klingner, ``Save Preemption for Imminent North Korean 
Attack, The Heritage Foundation, March 1, 2017.
    \2\ Bruce Klingner, ``The Trump Administration Must Recognize the 
Dangers of Premature Negotiations with North Korea,'' The Heritage 
Foundation, May 11, 2017.
    \3\ Bruce Klingner and Sue Mi Terry, ``We participated in talks 
with North Korean representatives. This is what we learned,'' The 
Washington Post, June 22, 2017.
    \4\ Bruce Klingner, ``Allies Should Confront Imminent North Korean 
Nuclear Threat,'' Heritage Foundation Backgrounder No. 2913, June 3, 
2014.
    \5\ U.S. Department of Treasury, Financial Crimes Enforcement 
Network, ``Finding that the Democratic People's Republic of Korea is a 
Jurisdiction of Primary Money Laundering Concern,'' 81 Federal Register 
35441, June 2, 2016.

    Senator Gardner. Thank you, Mr. Klingner.
    Mr. Sigal, we will begin with your testimony.
    I forgot to mention to you how sorry we are for the late 
start, as well. So thank you both for being here.
    Mr. Sigal.

     STATEMENT OF LEON V. SIGAL, DIRECTOR, NORTHEAST ASIA 
COOPERATIVE SECURITY PROJECT, SOCIAL SCIENCE RESEARCH COUNCIL, 
                          NEW YORK, NY

    Mr. Sigal. Thank you, Chairman Gardner, Ranking Member 
Markey. Thanks for inviting me to appear before you today.
    The current unbounded North Korea weapons program poses a 
clear and present danger to the U.S. and allied security. That 
makes it a matter of great urgency to negotiate a suspension of 
its nuclear missile testing and fissile material production, 
even if the North is unwilling to recommit to complete 
denuclearization up front.
    Have no doubt about it: complete denuclearization remains 
the goal. But demanding that Pyongyang pledge that now will 
only delay a possible agreement, enabling it to add to its 
military wherewithal and bargaining leverage in the meantime.
    Now, soon after taking office, President Trump wisely 
resumed diplomatic engagement with Pyongyang. Those talks are 
now in abeyance. Restarting them is imperative. The experience 
is that pressure without negotiations has never worked in the 
past with Pyongyang, and there is no reason to think it will 
work now. The question to ask about people who prefer the 
sanctions-only approach is: How long will it take for the 
sanctions to work to get North Korea to accept our negotiating 
position and to stop their ICBM testing, their nuclear testing, 
and their fissile material production? How long? With that in 
mind, it seems to me that legislation now under consideration 
should not immediately trigger sanctions but provide for at 
least a three-month implementation period to allow time for 
talks. Three months is not going to make a difference in terms 
of the impact of the sanctions, but it may open the opportunity 
for talks if we are willing to talk.
    Now, Washington is preoccupied with getting Beijing to put 
more pressure on Pyongyang. But it is worth recalling that on 
three occasions when China and the United States worked 
together in the U.N. Security Council to impose tougher 
sanctions--in 2006, 2009, and 2013--North Korea responded by 
conducting nuclear tests in an effort to drive them apart.
    That, interestingly enough, did not happen after Washington 
and Beijing agreed on the much tougher Security Council 
sanctions last November. Instead, Kim Jong Un defied widespread 
expectations that he would soon conduct a sixth nuclear test as 
a signal of restraint in the expectation that President Trump 
would open talks. If we delay talks, we may get that test.
    The recent test-launch of an ICBM underscores how the 
prospect of tougher sanctions without talks prompts Pyongyang 
to step up arming. A policy of maximum pressure and engagement 
can only succeed if nuclear diplomacy is soon resumed and the 
North's security concerns are addressed.
    We must not lose sight of the fact that it is North Korea 
that we need to persuade, not China. And that means taking 
account of North Korea's strategy. During the Cold War, Kim Il 
Sung played China off against the Soviet Union to maintain his 
freedom of maneuver. In 1988, anticipating the collapse of the 
Soviet Union, he reached out to improve relations with the 
United States, South Korea and Japan in order to avoid 
overdependence on China. That has been the Kims' objective ever 
since.
    From Pyongyang's vantage point, that aim was the basis of 
the 1994 Agreed Framework and the September 2005 Six-Party 
Joint Statement. For Washington, obviously, suspension of 
Pyongyang's nuclear and missile programs was the point of those 
agreements, which succeeded for a time in shuttering the 
North's production of fissile material and stopping the test 
launches of medium- and longer-range missiles. Both agreements 
collapsed, however, when Washington did little to implement its 
commitment to improve relations and, of course, Pyongyang 
reneged on denuclearization.
    That past is prologue. Now there are indications that a 
suspension of North Korean missile and nuclear testing and 
fissile material production may again prove negotiable. In 
return for suspension of its production of plutonium and 
enriched uranium, the Trading with the Enemy Act sanctions 
imposed before the nuclear issue arose could be relaxed for yet 
a third time, and energy assistance unilaterally halted by 
South Korea in 2008 could be resumed.
    An agreement will require addressing Pyongyang's security 
needs, including adjusting our joint exercises with South 
Korea, for instance, by suspending flights of nuclear-capable 
B-52 bombers into Korean airspace. Those flights were only 
resumed, I want to remind you, to reassure allies in the 
aftermath of the North's nuclear tests. If those tests are 
suspended, the B-52 flights can be too, without any sacrifice 
of deterrence. North Korea is well aware of the reach of U.S. 
ICBMs and SLBMs, which, by the way, were recently test-launched 
to remind them.
    The U.S. can also continue to bolster, rotate, and exercise 
forces in the region so conventional deterrence will remain 
robust. The chances of persuading North Korea to go beyond 
another temporary suspension to dismantle its nuclear and 
missile programs, however, are slim without firm commitments 
from Washington and Seoul to move toward political and economic 
normalization, engage in a peace process to end the Korean War, 
and negotiate security arrangements, among them a nuclear-
weapons-free zone that would provide a multilateral legal 
framework for denuclearization. In that context, President 
Trump's willingness to hold out the prospect of a summit with 
Kim Jong Un would also be a significant inducement.
    Let me say in closing, we know what North Korea is like, 
with its one-man rule, cult of personality, internal 
regimentation, and dogmatic devotion to juche ideology. It is a 
decidedly bad state. That is what we Americans know about North 
Korea.
    The wisest analyst I know once wrote, ``Finding the truth 
about the North's nuclear program is an example of how what we 
know sometimes leads us away from what we need to learn.'' The 
best way to learn is to enter into talks about talks and probe 
whether Pyongyang is willing to change course.
    Thank you.
    [The prepared statement of Mr. Sigal follows:]

                  Prepared Statement of Leon V. Sigal

    Mr. Chairman, Ranking Member Markey, Members of the Subcommittee: 
Thank you for inviting me to appear before you today. I have been 
involved in the North Korean nuclear and missile issue for well over 
two decades and have participated in Track II meetings with senior 
North Korean officials, as well as with senior officials of the other 
six parties.
    As you know, North Korea is on the verge of developing boosted 
energy nuclear weapons with higher yield-to-weight ratios. It has begun 
test-launching ICBMs and new mobile intermediate-range missiles to 
deliver them. It is churning out plutonium and highly enriched uranium 
at a rate of six or more bombs' worth a year.
    Such an unbounded North Korean weapons program poses a clear and 
present danger to U.S. and allied security. That makes it a matter of 
great urgency to negotiate a suspension of its nuclear and missile 
testing and fissile material production even if the North is unwilling 
to recommit to complete denuclearization up front. Have no doubt about 
it: complete denuclearization remains the ultimate goal. But demanding 
that Pyongyang pledge that now will only delay a possible agreement, 
enabling it to add to its military wherewithal and bargaining leverage 
in the meantime.
    Soon after taking office President Trump wisely resumed diplomatic 
engagement with Pyongyang. Those talks are now in abeyance. Restarting 
them is imperative. Pressure without negotiations has never worked in 
the past with Pyongyang and there is no reason to think it will work 
now. With that in mind, legislation now under consideration should not 
immediately trigger sanctions, but provide for at least a three-month 
implementation period to allow time for talks to resume.
    Washington is preoccupied with getting Beijing to put more pressure 
on Pyongyang. Yet it is worth recalling that on three occasions when 
China and the United States worked together in the U.N. Security to 
impose tougher sanctions--in 2006, 2009, and 2013, North Korea 
responded by conducting nuclear tests in an effort to drive them apart.
    That did not happen after Washington and Beijing agreed on the much 
tougher Security Council sanctions last November. Instead, Kim Jong Un 
defied widespread expectations that he would soon conduct a sixth 
nuclear test-a signal of restraint in the expectation that President 
Trump would open talks.
    The recent test-launch of an ICBM underscores how the prospect of 
tougher sanctions without talks prompts Pyongyang to step up arming. A 
policy of ``maximum pressure and engagement'' can only succeed if 
nuclear diplomacy is soon resumed and the North's security concerns are 
addressed.
    We must not lose sight of the fact that it is North Korea that we 
need to persuade, not China. Insisting that China do more ignores North 
Korean strategy. During the Cold War, Kim Il Sung played China off 
against the Soviet Union to maintain his freedom of maneuver. In 1988, 
anticipating the collapse of the Soviet Union, he reached out to 
improve relations with the United States, South Korea and Japan in 
order to avoid overdependence on China. That has been the Kims' aim 
ever since.
    From Pyongyang's vantage point, that aim was the basis of the 1994 
Agreed Framework, which committed Washington to ``move toward full 
normalization of political and economic relations,'' or, in plain 
English, end enmity. That was also the essence of the September 2005 
Six-Party Joint Statement in which Washington and Pyongyang pledged to 
``respect each other's sovereignty, exist peacefully together, and take 
steps to normalize their relations subject to their respective 
bilateral policies'' as well as to ``negotiate a permanent peace regime 
on the Korean Peninsula.''
    For Washington, suspension of Pyongyang's nuclear and missile 
programs was the point of these agreements, which succeeded for a time 
in shuttering the North's production of fissile material and stopping 
the test-launches of medium and longer-range missiles. Both agreements 
collapsed, however, when Washington did little to implement its 
commitment to improve relations and Pyongyang reneged on 
denuclearization.
    In the case of the 1994 Agreed Framework, when Washington was slow 
to live up to its obligations, the North Koreans began acquiring the 
means to enrich uranium. In the ill-fated October 2002 meeting with 
Assistant Secretary James Kelly, the North Koreans addressed uranium 
enrichment, but in Condoleezza Rice's words, ``Because his instructions 
were so constraining, Jim couldn't fully explore what might have been 
an opening to put the program on the table.''
    Similarly, in the case of the September 2005 six-party joint 
statement, believing that North Korea's declaration of its nuclear 
program in 2007 was incomplete, the United States decided, in the words 
of Secretary of State Rice, to ``move up issues that were to be taken 
up in phase three, like verification, like access to the reactor, in 
phase two.'' The North eventually agreed orally to key steps. When they 
refused to put them in writing, South Korea, in response, reneged on 
providing promised energy aid in 2008 and the North Koreans conducted a 
failed satellite launch.
    That past is prologue. Now there are indications that a suspension 
of North Korean missile and nuclear testing and fissile material 
production may again prove negotiable. In return for suspension of its 
production of plutonium and enriched uranium, the Trading with the 
Enemy Act sanctions imposed before the nuclear issue arose could be 
relaxed for a third time and energy assistance unilaterally halted by 
South Korea in 2008 could be resumed. An agreement will require 
addressing Pyongyang's security needs, including adjusting our joint 
exercises with South Korea, for instance by suspending flights of 
nuclear-capable B-52 bombers into Korean airspace. Those flights were 
only resumed to reassure allies in the aftermath of the North's nuclear 
tests. If those tests are suspended, the B-52 flights can be, too, 
without any sacrifice of deterrence. North Korea is well aware of the 
reach of U.S. ICBMs and SLBMs, which were recently test-launched.
    The United States can also continue to bolster, rotate, and 
exercise forces in the region so conventional deterrence will remain 
robust. At the same time it would be prudent to tone down the saber-
rattling rhetoric lest we stumble into a deadly clash we do not want. 
As Defense Secretary Jim Mattis has recently underscored, a war in 
Korea would be ``more serious in terms of human suffering than anything 
we have seen since 1953.''
    The chances of persuading North Korea to go beyond another 
temporary suspension to dismantle its nuclear and missile programs are 
slim without firm commitments from Washington and Seoul to move toward 
political and economic normalization, engage in a peace process to end 
the Korean War, and negotiate regional security arrangements, among 
them a nuclear-weapon-free zone that would provide a multilateral legal 
framework for denuclearization. In that context, President Trump's 
willingness to hold out the prospect of a summit with Kim Jong Un would 
also be a significant inducement.
    Although the September 2005 joint statement of Six Party Talks 
explicitly called for the parties ``to negotiate a peace regime for 
Korea'' and ``to explore ways and means for promoting security 
cooperation in Northeast Asia,'' little planning has been undertaken in 
allied capitals to implement those commitments. Seoul could take the 
lead in mapping out ways to do so and coordinate them with Washington. 
I would ask the chair's permission to enter into the record my prepared 
statement along with a proposal for such a comprehensive security 
settlement that I recently co-authored with Morton Halperin, Thomas 
Pickering, Moon Chung-in, and Peter Hayes.

    [The information referred to is located at the end of the hearing]

    In closing, much about North Korea rightly repels us. Goose-
stepping troops and gulags, a regime motivated by paranoia and 
insecurity to menace its neighbors, leaders who mistreat their people 
and assassinate or execute officials for not toeing the party line, a 
state that committed horrific acts like its 1950 aggression and the 
2010 sinking of the Cheonan. It is one of our core beliefs that bad 
states cause most trouble in the world. North Korea, with its one-man 
rule, cult of personality, internal regimentation, and dogmatic 
devotion to juche ideology is a decidedly bad state. That's what 
Americans know about North Korea.
    The wisest analyst I know once wrote, ``Finding the truth about the 
North's nuclear program is an example of how what we `know' sometimes 
leads us away from what we need to learn.'' The best way to learn is to 
enter into talks about talks and probe whether Pyongyang is willing to 
change course.

    Senator Gardner. Thank you, Mr. Sigal, for your testimony 
today, to both of you.
    Senator Markey, if you have any questions.
    I just would start with the brief question that you heard 
Secretary Thornton talk about some of the pillars that they 
laid out. Mr. Klingner, you said how is the policy of the 
administration any different than strategic patience. If the 
actions that they have laid out do not result in additional 
pressure, it is strategic patience. Is that correct?
    Mr. Klingner. I think the real test is what actions are 
implemented. We have heard from successive administrations 
tough talk. When President Obama said North Korea is the most 
heavily sanctioned, the most cut off nation on earth, he was 
flat-out wrong, as you pointed out in your opening comments.
    So it is really the actions that carry through on these 
pledges of pressure. I am waiting to see the length of the list 
of sanctions or entities that will be sanctioned, not only 
North Korean but, as you have pointed out, the Chinese 
violators of U.S. law.
    Senator Gardner. And would a more global approach to denial 
of access to financial networks be something that you think 
could actually work?
    Mr. Klingner. I think so, sir. I think we need to have 
really a full spectrum and a comprehensive, integrated 
strategy. Too often the debate in Washington is sanctions 
versus engagement. They are two sides of the same coin. You 
need both of them. They are working in conjunction with each 
other, along with other measures of information operations, 
human rights advocacy, deterrence, et cetera. But I think we do 
need to augment the sanctions that we have.
    As you have said, there is proposed legislation which will 
plug holes, which will augment measures. In many ways, though, 
they are trying to induce this administration, as previous 
administrations, to use the authorities they have long had to 
fully enforce U.N. resolutions and U.S. laws.
    Senator Gardner. Mr. Sigal, why will China not, responsible 
for 90 percent of North Korea's economy, why will China not 
simply go to Kim Jong Un and say step down your nuclear program 
and begin the conversations that you talk about?
    Mr. Sigal. I think, Mr. Chairman, they have. The problem is 
that the Chinese, I think, understand the situation somewhat 
similarly to what I have tried to suggest, which is that the 
North Koreans want to change their relationship with us as a 
hedge against China. They do not want to be dependent on China. 
They also understand that when they joined with the U.S. at the 
U.N. and voted for tougher sanctions resolutions, and in most 
cases implemented them, at least most of them, the North Korean 
response on three occasions was to test a nuclear weapon in 
order to drive the two of us apart.
    So I think part of this is there seems to be in the Chinese 
mind a different logic working because they seem to grasp what 
the North Koreans seem to want, and I think we have to, 
unfortunately, grasp what the North Koreans want, which is an 
improved relationship with us because they do not want to be 
dependent on China.
    Senator Gardner. Senator Markey.
    Senator Markey. Thank you, Mr. Chairman.
    Thank you both for excellent testimony.
    Mr. Sigal, it is often implied that the only way the United 
States can engage in dialogue with North Korea is by giving it 
economic or other concessions, or by conceding the ultimate 
goal of any talks, the complete denuclearization of the Korean 
Peninsula.
    But I believe there are many circumstances under which we 
could engage in talks with North Korea that would not require 
concessions, that would not impact our ability to ensure the 
safety and security of our allies, and would not remove any 
options for the United States to deal with the North Korean 
challenge. Mr. Sigal, your testimony indicates that you may 
feel the same.
    Can you share your opinion on some of the different ways 
the United States can engage with North Korea without having to 
provide economic concessions or without having our allies 
question our commitment to their safety or security?
    Mr. Sigal. Yes, sir. First of all, from the North Korean 
vantage point vis-a-vis the United States, not necessarily vis-
a-vis others, this has never been about economics. It has been 
about the relationship. The only interest they have in 
sanctions easing is not because they expect Fortune 500 
companies to rush into North Korea and invest. It is because it 
is a sign to them of enmity. The Trading with the Enemy Act--I 
mean, how clear could it be?
    Secondly, with respect to a thing that obviously a lot of 
people worry about, that the first thing they will want in a 
peace process is U.S. troops to go out, if that is what they 
want, we are not going to give it to them, are we? We will only 
take our troops out of South Korea if South Koreans ask us to 
do that, and the North Koreans know that. Indeed, the North 
Koreans for many years, until at least a couple of years ago, 
kept talking about essentially this: If the United States is 
our enemy, U.S. troops in South Korea are a threat to us and 
they have to go. But if the United States is no longer an 
enemy, those troops are no longer a threat to us, and they can 
stay.
    And indeed, the North Koreans on numerous occasions, the 
last of them a couple of years ago, talked about the U.S.--it 
is a bridge too far--and North Korea being allies. You can have 
two allies. You can be allied to South Korea, and you can be 
allied to us. They were looking for a formulation to change the 
relationship. That is what this is about.
    In a world in which the relationship is changed, it is 
possible to imagine--I am not saying it is likely, but it is 
possible to imagine that the North Koreans, down a long road, 
will become convinced we are no longer their enemy and they do 
not need nuclear weapons to protect themselves. I do not think 
there is a sign we can get there now because of our politics 
and because of their politics. But we have got to stop the 
programs now to give ourselves the chance to do that, and I 
know of no other way to get them to get rid of their nuclear 
weapons.
    Senator Markey. Thank you, Mr. Sigal.
    Mr. Klingner, we ``convinced'' Gaddafi to give up his 
nuclear weapons program. We ``convinced'' Saddam Hussein to 
give up his nuclear weapons program. And then subsequently we 
participated in the process that led to their deaths. So if you 
are Kim and you are looking at the United States and the goal 
ultimately to denuclearize, what does he need as a guarantee 
for his own personal safety in order to convince him that it is 
worth his while to engage in talks that could head towards 
denuclearization? And ultimately, what are the concessions or 
the commitments that the United States would have to make in 
order to get him to accept that premise?
    Mr. Klingner. North Koreans have used those same examples 
in explaining why they will never, ever negotiate away their 
nuclear weapons.
    Senator Markey. Exactly.
    Mr. Klingner. They have said denuclearization is off the 
table, there is nothing you can offer us, we are prepared to 
talk about a peace treaty or a fight. So unless we change their 
calculus, then they will not negotiate away those nuclear 
weapons. In the meantime, the pressure, the sanctions, the 
targeted financial measures are fulfilling a number of other 
objectives as we hope we can get to a negotiated position. In 
the meantime we are enforcing our law, we are no longer turning 
a blind eye to violations and, as I mentioned, we are putting 
in place measures to constrict both the in-flow and out-flow of 
prohibited nuclear missile components.
    Senator Markey. So when you look at this recent dramatic 
increase in trade between North Korea and China, what is your 
message to the Trump administration in terms of what they have 
to do, in terms of telescoping the timeframe to ensure that the 
North Korean economy is not benefitting from this Chinese trade 
given the rapid movement that they have made towards the 
integration of an ICBM with a nuclear warhead?
    Mr. Klingner. I would say we need to distinguish between 
diplomacy and law enforcement, and then give that message to 
China. So, U.S. law is not negotiable. Those entities that come 
into the U.S. financial system and misuse it, in violation of 
U.S. law, will be treated accordingly. And then with diplomacy 
we continue to try to convince Beijing to more fully implement 
required U.N. sanctions. We work with them to try to reduce 
their support for the regime.
    But those things that are against U.S. law, against U.N. 
resolutions, those are not negotiable.
    Senator Markey. Can we change the calculus in the North 
Korean regime's mentality that they do not want to have a 
repetition of what happened in Libya and Iraq affect them 
without our legislation passing and without the already-
existing sanctions being tightened in order to force a 
negotiation in a timeframe that actually avoids, perhaps, the 
irreversible moment in our relationship?
    Mr. Klingner. I think the first step is you need to change 
the calculus of the Chinese banks and businesses that are 
engaging with North Korea, and you can do that through U.S. 
law. So you can wean them away from engaging with North Korea, 
and we have seen that in the past when the U.S. took action and 
then had private meetings throughout Asia to induce 24 
entities, including entire countries and the Bank of China, to 
defy the Chinese government by cutting off its interaction with 
North Korea. If we go after those Chinese organizations, as 
Senator Gardner pointed out, you can have a few small number of 
very influential actions you can take that have repercussions 
across a much broader scale. You use the laws to take out the 
criminal organizations, and you also change the calculus for 
legitimate businesses who see it as no longer in their business 
interest to engage with North Korea. So you can tighten the 
regime by enforcing U.S. law.
    Senator Markey. So compared to the sanctions that are 
already on the books, and thus far their lack of efficacy, and 
the proposal that Senator Gardner and I have introduced, what 
is your view about our legislation in terms of serving as an 
additional weapon in the arsenal, the diplomatic arsenal which 
the Trump administration can use, and how would such 
legislation, our legislation, complement existing laws already 
on the books?
    Mr. Klingner. I think it very well complements existing 
legislation and existing executive orders and regulations. But 
again, the problem or the question will always be ``Will the 
executive branch of any administration actually use the powers 
that they have been given? It is like the mayor of a city 
saying I am tough on crime, but then not having his police 
department enforce those that they have evidence against.
    Senator Markey. And my view is that if they do not, then it 
is going to lead inexorably, inevitably, to a North Korean ICBM 
weapons program that is completed. So I do not think, as a 
nation, there is an option. I think the President has to become 
tougher on the Chinese. They are the safety valve. They are the 
release valve the North Koreans are using, and they are 
punishing the South Koreans rather than the North Koreans. I 
think ultimately, unless we get more real about what is 
happening, then we are just on a collision course with a North 
Korean nuclear weapons-armed, ICBM-capable posture for the rest 
of our lives.
    Do you agree with that, Mr. Sigal?
    Mr. Sigal. I agree with that, but I think what you said 
earlier is just as important, which is you have to open the way 
to negotiation.
    Senator Markey. Exactly.
    Mr. Sigal. That is the key.
    Senator Markey. Exactly.
    Mr. Sigal. And not on our terms but actually talks about 
talks to get them to stop. In a circumstance in which they have 
suspended their testing and their fissile material production, 
that period is much more secure. We want to prolong that 
suspension as much as possible and go beyond it to get them to 
dismantle the facilities they have for producing more missiles, 
and then ultimately get the weapons. The weapons are going to 
come last. They are going to come down a very long road because 
they need to be assured the relationship has changed. That is 
the structure of a deal that at least is remotely possible.
    Is it likely? I would not bet on that. Negotiations are not 
guaranteed. But sanctions seem to me a very long road to 
nowhere at this point, if done alone, if done alone.
    Senator Markey. Right.
    Mr. Sigal. You are saying both.
    Senator Markey. Our view is sanctions--my view is sanctions 
with direct negotiations.
    Mr. Sigal. Absolutely, and that is my view too.
    Senator Markey. So can you just both--and I apologize, Mr. 
Chairman. Can you each give me your one-minute summary, just 
your one minute that you want the Chairman and I to remember 
from your testimony as we move forward during this very 
perilous time in our relationship with North Korea?
    Mr. Klingner. I would say realize that all the hype that 
sanctions have been implemented and failed is incorrect. They 
have not been tried to the full extent. The legislation last 
year induced the Obama administration to do its three actions 
against North Korea, which was because of the legislation. We 
need to increase the pressure. Yes, we want to get to 
negotiations, but I would distinguish between diplomatic 
discussion between diplomats as opposed to resuming formal 
negotiations where you lose control of the momentum and it 
often requires U.S. concessions so the negotiations do not 
fail. Have diplomatic discussions amongst the State Department 
and their MOFA counterparts, but realize that has been tried 
many times before and they are the ones that have been refusing 
to talk.
    Senator Markey. Mr. Sigal?
    Mr. Sigal. I think sanctions are important, but they have 
to be married with negotiations. The only way in the time that 
we need to stop an ICBM and stop a boosted energy or 
thermonuclear device by North Korea is to get negotiations 
going and see whether they will stop testing and stop fissile 
material production. That takes both sanctions and negotiation.
    Senator Markey. I thank both of you, and I thank you, Mr. 
Chairman, for this excellent hearing.
    Senator Gardner. No, thank you.
    Thanks to all of you. Thanks again for being here. I 
apologize for the late start. Thank you all for being a part of 
this hearing.
    The record will remain open until the close of business on 
Friday, including for members to submit questions for the 
record. I kindly ask the witnesses to respond as quickly as 
possible, and your responses will be made a part of the record.
    Thanks to the committee.
    This hearing is now adjourned.
    [Whereupon, at 5:05 p.m., the hearing was adjourned.]

                              ----------                              


              Additional Material Submitted for the Record


  Responses of Acting Assistant Secretary Susan Thornton to Questions 
                 Submitted by Senator Edward J. Markey

    Question. In your testimony, you mentioned that the administration 
undertook a policy review and gathered ``lessons'' that guided the 
development of the administration's current strategy. You also noted 
that ``a negotiated solution'' remains ``the best chance at resolving 
this problem,'' and yet the administration maintains its unwillingness 
to engage in dialogue with North Koreans.
    What engagement options were considered during the administration's 
North Korea policy review?
    If the administration continues to see a ``negotiated solution as 
the best chance at resolving this problem'' then how is the 
administration working to achieve this end if it is unwilling to 
negotiate at this time?
    What is the most effective way to use sanctions to get North Korea 
back to the table?

    Answer. The United States seeks to find a peaceful resolution to 
the nuclear problem on the Korean Peninsula, and we are willing to 
engage in negotiations under the right conditions. During our policy 
review, the administration entertained an array of engagement options 
with the DPRK but ultimately assessed that conditions were not 
appropriate for direct strategic engagement at this time. This decision 
was reinforced by North Korea's continued provocations and flagrant 
violations of international law, signaling its unwillingness to engage 
in credible dialogue.
    Despite our willingness to engage with North Korea, we have seen no 
sign that the North Koreans are ready, or willing, to engage in any 
serious talks on denuclearization, nor do we see any chance that 
negotiations would succeed until underlying conditions change. 
Therefore, until North Korea indicates a credible willingness to 
discuss denuclearization, we will focus on increasing international 
pressure on the regime.
    Our maximum pressure campaign aims to restrict the regime's access 
to funds, and thereby to curtail its proliferation activities. To date, 
we've seen promising results for our maximum pressure strategy; many 
countries are expelling North Korean laborers and downsizing or ceasing 
diplomatic relations with the Kim regime. Furthermore, we have been 
aggressively engaging with China to use its unique economic leverage 
against North Korea to force the regime into returning to dialogue. It 
is the goal of this administration that through continued international 
pressure, Kim Jong Un will change his strategic calculus, discontinue 
developments of his nuclear and ballistic programs, and return to 
credible talks with the United States.

    Question. Reuters recently reported that North Korea's economic 
growth in 2017 was at a 17 year high despite sanctions and that China 
was responsible for 92.5% of all North Korean trade that same year. The 
New York Times recently reported that North Koreans in Russia work 
``basically in the situation of slaves,'' there have been news reports 
of North Korean laborers killed in Qatar while building soccer 
stadiums, and there are reports that despite the progress being made in 
Myanmar, its military still maintains close relations with North Korea. 
In your testimony, you talked a lot about working with countries that 
have ``special leverage'' over North Korea.
    What strategies will be most effective in exerting pressure on 
these partners and enablers of the North Korean regime?
    In addition to China, which countries have ``special leverage'' 
over North Korea and how you are working with them to pressure North 
Korea?
    Has the United States made clear that any engagement in 
sanctionable activity could lead to us imposing sanctions on these 
countries?

    Answer. The Trump administration is taking a global approach for 
this global issue; only by working with partners around the world will 
we be able to convince the DPRK that they stand alone as they pursue 
nuclear and ballistic weapons. Our strategy relies on messaging to our 
partners the urgent priority the administration places on the North 
Korean threat and establishing each country's cooperation on this 
matter as a significant benchmark reflecting the strength of our 
overall bilateral relationship. In addition, we will impose significant 
costs upon those who continue to do business with the North Korean 
regime. This tactic has evinced success in encouraging our 
international partners to curtail diplomatic and trade ties with the 
DPRK.
    Multiple countries with distinct leverage over North Korea, China 
first among them, have committed to fully implement UNSCR obligations. 
They are coordinating with us on pressing North Korea to return to 
serious talks. However, as we continue our peaceful pressure campaign, 
we are also focusing our efforts on a decreasing number of countries 
that continue to maintain relations with the DPRK. In addition to our 
ongoing diplomatic work on specific cases of illicit DPRK activities, 
engagements range from maximizing all bilateral opportunities to stress 
our request, to sending interagency teams from Washington to foreign 
capitals to discuss specific concerns, to assisting countries in fully 
adhering to U.N. Security Council resolutions. Special Representative 
for North Korean Policy Ambassador Joseph Yun's recent trip to Burma is 
a notable example of one such trip.
    We have made it clear to countries around the globe that the United 
States is committed to using targeted financial sanctions to impede 
North Korea's nuclear and ballistic missile programs and to counter the 
grave threat those programs pose to international peace and security. 
We have also stressed this administration will go wherever the evidence 
leads to impose legally available sanctions on entities or individuals 
that support North Korea's proscribed programs.

    Question. A recent study by Recorded Future, a cyber-security and 
intelligence firm based in Somerville, Massachusetts, found that ``the 
limited number of North Korean leaders and ruling elite with access to 
the internet are actively engaged in Western and popular social media, 
regularly read international news, use many of the same services such 
as video streaming and online gaming, and above all, are not 
disconnected from the world at large.''
    What do these reports say about the likely success of our efforts 
to isolate North Korea in order to make the Kim regime and its allies 
reconsider their nuclear and missile programs?
    Do we have any indications that North Korean elite internet 
activity, including ecommerce, violates any existing U.S. or U.N. 
sanctions?

    Answer. We support greater access to the internet in North Korea, 
not just for the commercial and economic reasons, but also for North 
Korean people to have access to voices of freedom and democracy, and 
greater visibility into the world outside of this isolated nation. 
While internet use has exploded globally, North Korea heavily restricts 
access, allowing only the most loyal government officials the ability 
to access the internet. The regime allows a larger pool of North 
Koreans access to a DPRK government-managed intranet. We oppose the 
repressive censorship environment in the DPRK and encourage the free 
flow of information to the North Korean people. The availability of 
accurate information about world events challenges the government's 
monopoly on information and builds curiosity among North Koreans for 
facts independent of state propaganda.
    At the same time, I can assure you that we take seriously and 
examine very closely all relevant information regarding possible DPRK 
illicit activities that might violate sanctions. We take into account 
both open source and intelligence reporting in considering necessary 
courses of action. This administration will go wherever the evidence 
leads to enforce sanctions on entities or individuals that support 
North Korea's proscribed programs.

    Question. Of the 1.7 million Korean Americans in the United States, 
some 100,000 are estimated to have families in the North. Almost none 
have been formally permitted to visit their family members or 
participate in inter-Korean family reunions. While North Korea and 
South Korea have a formal mechanism for face-to-face reunions with 
family members divided since the Korean War, no such formal mechanism 
exists for Korean Americans, many of whom use informal networks to 
reunite with family members in the DPRK.
    After the travel restriction goes into effect, how will the 
administration ensure the safety of Korean Americans who wish to 
reunite with their family members living in North Korea?

    Answer. The safety and security of U.S. citizens overseas is one of 
our highest priorities. Due to mounting concerns over the serious risk 
of arrest and long-term detention in North Korea, the Secretary has 
authorized a Geographic Travel Restriction on the use of a U.S. 
passport to travel in, through, or to North Korea. This restriction 
applies to all U.S. citizens and non-citizen nationals, including 
Korean Americans who wish to reunite with their family members.
    Korean Americans wishing to travel to North Korea to reunite with 
family members may be eligible for consideration for a special 
validation in a U.S. passport permitting travel to North Korea. Their 
eligibility to apply for an exception, however, does not guarantee a 
favorable answer to their request.

    Question. Recent reports by two private organizations, C4ADS and NK 
News, have revealed evidence of alleged North Korean sanctions evasions 
through networks of shell and front companies in China, Singapore, and 
elsewhere. We regularly hear from administration officials about the 
resources the United States is devoting to strengthening our military 
posture in Northeast Asia to deter North Korea. We hear very little 
about the resources that the United States is devoting to enforcing 
sanctions. Sanctions enforcement should be a coordinated whole of 
government approach involving the Department of State, Department of 
the Treasury, the intelligence community, and law enforcement agencies.
    Please describe in as much detail as possible the resources across 
the executive branch that the administration has committed to enforcing 
sanctions on North Korea.

    Answer. North Korea is a top national security priority, and the 
administration is working actively on a range of diplomatic, security, 
and economic measures to address this threat. We will utilize available 
sanctions authorities to ratchet up the pressure on the regime and cut 
off revenue that supports its illicit programs.
    We work in close coordination with other U.S. agencies that have a 
role in U.S., U.N., and other sanctions enforcement, including the 
Department of the Treasury, the Intelligence Community, and U.S. law 
enforcement. Within the Department of State, a number of bureaus and 
offices devote budgetary and workforce resources to enforcing 
sanctions, including the Bureau of East Asian and Pacific Affairs, the 
Office of the Special Representative for North Korea Policy, the Bureau 
of Economic and Business Affairs, the Bureau of Energy Resources, the 
Office of the Coordinator for Sanctions Policy, the Office of the 
Coordinator for Cyber Issues, the Bureau of International 
Organizations, the Bureau of International Security and Non-
Proliferation, the Bureau of Democracy, Human Rights, and Labor, the 
U.S. Mission to the United Nations, the Bureau of Intelligence and 
Research, and the Office of the Legal Adviser. Within the Department of 
the Treasury, a number of agencies and offices also devote budgetary 
and work resources to countering North Korea's proscribed nuclear and 
missile programs, including the Office of Foreign Assets Control, the 
Financial Crimes Enforcement Network, the Office of Terrorist Financing 
and Financial Crimes, the Office of Intelligence and Analysis, and the 
Office of the General Counsel. Our departments have a record of close, 
continuing, and successful coordination on the implementation of U.S. 
and U.N. sanctions against North Korea.
    We take seriously our obligations under the North Korea Sanctions 
and Policy Enhancement Act of 2016 (NKSPEA) and other statutory and 
Executive authorities. The Treasury and State Departments, through 
close consultation, take actions consistent with the NKSPEA. Since the 
February 2016 enactment of NKSPEA, Treasury has made nine designations 
targeting a total of 113 individuals and entities for North Korea-
related activities and identified dozens of aircraft and vessels as 
blocked. Those designations included North Korean ruler Kim Jong Un, 
marking the first time Treasury designated a head of state for human 
rights abuses.
    On September 26, 2016, the Department of Justice unsealed a 
criminal complaint against a Chinese company, Dandong Hongxiang 
Industrial Development Co., and four Chinese nationals for: conspiracy 
to violate the International Emergency Economic Powers Act (IEEPA) and 
defraud the United States; conspiracy to launder monetary instruments; 
and violation of IEEPA. The Department of Treasury designated these 
same entities under E.O. 13382 which targets weapons of mass 
destruction proliferators and their supporters.
    On June 15, 2017, the Department of Justice filed a complaint to 
forfeit over $1.9 million from China-based Mingzheng International 
Trading Limited for laundering U.S. dollars on behalf of sanctioned 
North Korean entities.
    On June 29, 2017, Treasury's Office of Foreign Assets control 
designated and froze the assets of three Chinese entities. Treasury's 
Financial Crimes Enforcement Network announced a finding that the Bank 
of Dandong acted as a conduit for illicit North Korean financial 
activity, is a foreign bank of primary money laundering concern, and 
has proposed to sever the bank from the U.S. financial system.
    The State Department has also designated eight entities and 
individuals associated with North Korea's prohibited weapons programs.
    In executing President Trump's North Korea policy, Secretary 
Tillerson has publicly stated that the time for strategic patience is 
over and all options are on the table with respect to countering the 
North Korea threat. Sanctions will play a prominent role in this 
administration's North Korea policy, as will continued, urgent 
engagement with the international community to better ensure 
enforcement of sanctions already in place. All members of the 
international community are duty-bound to ensure that United Nations 
Security Council Resolutions (UNSCRs) are fully implemented to limit 
North Korea's access to weapons technologies and to block revenue 
sources for its associated unlawful and dangerous programs. Our 
respective departments, along with U.S. Ambassador to the United 
Nations Nikki Haley, are devoting substantial resources to accelerate a 
vigorous international campaign to apply significant pressure on North 
Korea through diplomatic, security, and economic measures.

    Question. Since 2006, a series of U.N. Security Council resolutions 
have prohibited trade with North Korea in luxury goods. These sanctions 
are particularly important because they target regime elites not than 
ordinary North Koreans. Recently NK News has published evidence 
suggesting that a Singapore company called OCN Ltd is involved 
importing a vast range of luxury goods into North Korea.
    Prior to the publication of the NK News report, was the 
administration aware of the allegations of OCN's involvement in 
sanctions violations?
    If no: What additional tools does the administration need to be 
able to investigate potential sanctions violations?

    Answer. The administration will go wherever the evidence leads to 
impose legally available sanctions on entities or individuals that 
support North Korea's proscribed programs. We cannot comment on any 
ongoing investigations of sanction violations.

                               __________

 Letter Submitted for the Record by Leon V. Sigal, Director, Northeast 
Asia Cooperative Security Project, Social Science Research Council, New 
                                York, NY

  ENDING THE NORTH KOREAN NUCLEAR THREAT BY A COMPREHENSIVE SECURITY 
                      SETTLEMENT IN NORTHEAST ASIA

  morton halperin, peter hayes, chung-in moon, thomas pickering, leon 
                                 sigal
                                        June 28, 2017
                              introduction
    Many Americans and South Koreans are convinced that it is 
impossible to denuclearize the Korean Peninsula, code for disarming 
North Korea's nuclear weapons program, and for ensuring that the South 
does not follow suit. We argue that the opposite is the case.
    However, as the old saying goes, if you don't know where you're 
going, any road will take you there. This logic applies as much to the 
North as it does to the United States, its allies, and international 
partners.
    As President Donald Trump prepares to meet with President Moon Jae-
in on June 29th, it is critical that they have a meeting of minds on 
the endgame. Unless this occurs, it will be impossible to align the 
front line state with American policy. Likewise, unless the two allies 
define a joint goal that makes sense to Kim Jong Un, he will have no 
reason to cooperate as against continue to confront the international 
community. The administration has made statements that denuclearization 
is their goal. We agree, but with the careful caveats embedded in this 
article.
    Now that North Korea unambiguously has demonstrated the ability to 
explode nuclear warheads--a condition that was not anticipated in the 
September 2005 principles--a new approach is required to match the 
scale and complexity of the North Korean nuclear threat. Sometimes such 
wicked problems require that the problem be enlarged, in order to 
change the mix of stakeholders, sequence of outcomes, and ultimate 
result. North Korea's nuclear weapons program is a case in point.
    The key is to shift from managing North Korea's bad behavior 
incrementally and reactively to a proactive, constructive policy by 
emphasizing a comprehensive approach that utilizes a set of 
interrelated elements agreed up front, and then implemented flexibly in 
whatever sequence best matches the asymmetrical capacities and 
interests of the six key parties to the Korean nuclear conflict. In 
particular, it requires addressing North Korea's security concerns, not 
just the allies'.
    In the six years since the comprehensive security concept to the 
North Korean problem was articulated in Tokyo by Morton Halperin,\1\ 
Kim Jong Un has grown accustomed to ruling while concurrently 
reconstructing North Korean identity and security strategy around its 
nuclear weapons. Consequently, it will be much harder and slower to 
freeze, dismantle, and eliminate North Korea's nuclear weapons today 
than it was in 2011, let alone in 2005.
    This essay argues that a U.S.-ROK coordinated approach can be built 
on the foundation of a plausible, concrete concept of a comprehensive 
regional security strategy that is actually capable of reversing and 
disarming the North Korean nuclear weapons program. Pressure may be 
useful, but thinking ahead to calculate and synchronize the pressure 
and critically to design a negotiable outcome is also essential. Unless 
the two allies propose to bring about a final state of affairs that is 
desirable to North Korea as well as the international community, 
nuclear brinksmanship in Korea is likely to continue for the 
foreseeable future; and North Korea will continue to acquire more 
nuclear weapons and to add delivery systems to its arsenal. This essay 
explains how the United States might actually achieve its most 
important policy goal in Korea, stopping and reversing North Korea's 
nuclear breakout.
                               background
    The original 2011 comprehensive security settlement proposal and 
subsequent articulations argued that the United States take the 
initiative in resolving the North Korea nuclear problem and that a 
clear pathway to doing so successfully could be envisioned.\2\ The 
strategy has six, inter-locking essential elements:

    1. Set up a Six Party Northeast Asia Security Council.

    2. End sanctions over time.

    3. Declare non-hostility.

    4. End the Korean Armistice; sign a peace treaty in some form.

    5. Provide economic, energy aid to DPRK, especially that which 
benefits the whole region (that is, complete many types of energy, 
telecom, logistics, transport, mobility, trading, financial networks 
via the North Korean land-bridge from Eurasia to ROK and Japan).

    6. Establish a regional nuclear weapons free-zone (NWFZ) in which 
to re-establish DPRK's non-nuclear commitment in a legally binding 
manner \3\ and to provide a framework for its dismantlement; and to 
manage nuclear threat in the region in a manner that treats all 
parties, including North Korea, on an equal basis.

    This approach was based on the following premises:

     The United States is a reliable and responsible provider 
of global and regional security.

     The United States is a sole supplier of the leadership 
needed to solve the North Korea issue.\4\

     North Korea's fundamental strategy--to change U.S. hostile 
policy to one that allows it to lessen dependence on China, improve its 
security, and survive as an independent state--remains the same under 
Kim Jong Un as his predecessors.

     The Six Party Talks is the only negotiation framework 
wherein all six parties could come together today given their 
respective frictions.

    To some, the first premise may no longer be a given because of 
President Trump's sometimes shocking statements and some U.S. actions, 
especially those surrounding the March-April 2017 U.S.-ROK military 
exercises which included ``decapitation'' dry runs and the botched 
deployment of an ``armada.'' The optics of latter was particularly 
unsettling to U.S. allies and other parties.
    Yet President Trump's willingness to drop U.S. insistence on an 
immediate DPRK commitment to denuclearization, his tantalizing 
references to meeting with Kim under the ``right circumstances,'' the 
near issuance of visas for a track 2 meeting in New York, and the quiet 
early approval of his administration of provision of food aid to North 
Korea, suggest he may be open to striking a deal with the DPRK. No one 
knows what this deal might be, although most American analysts suggest 
that a suspension of North Korean nuclear and missile testing and 
perhaps fissile material production is the most that can be achieved 
for now.
    Given the priority appropriately accorded to overcoming North 
Korea's nuclear threat by President Trump, we believe that striking an 
in-principle deal is at least on the cards. By ``deal'' here, we mean 
an agreement to start ``talks about talks'' on a deal, not the precise 
content of an acceptable deal which may take years and several stages 
to hammer out. But after President Trump mentioned meeting Kim Jong Un 
``under the right circumstances,'' one presumes that some officials in 
the administration, if not President Trump himself, have some clarity 
as to what might constitute such a deal, even if they are not sure yet 
how to get there.
    The death of American Otto Warmbier on June 19, 2017 after his 
eighteen-month-long detention in North Korea reminds us that timing is 
everything in politics, and that now is hardly a propitious time to be 
rushing to strike a deal with the North. Yet the strategic import of 
the North Korean threat is so great that the United States' ability to 
turn around this deteriorating situation has become a key test of its 
global leadership. It can no more walk away from dealing with North 
Korea than it can retreat to its own borders.
    Two parties have already positioned themselves to exploit the 
possible Trump opening to Pyongyang. China has made its own military 
deployments including bomber alerts, an aircraft carrier exercise, and 
border troop deployments. These deployments signal to Kim Jong Un and 
remind the United States and its allies that China could conceivably 
re-enter a new Korean War to preserve North Korea. Xi's private talks 
with Trump have clearly impressed upon the U.S. president that American 
policy is the main driver as to whether there will be more or fewer 
nuclear weapons in North Korea. China stands to gain from a Trump deal 
that would stabilize the Korean Peninsula to its benefit, avoid the 
unpleasant aspects for both of them of U.S. secondary sanctions 
affecting Chinese firms' dealings with North Korea, and allow the two 
great powers to move onto even more consequential issues that they must 
solve together.
    North Korea has become a pivot point for U.S.-China relations. 
These two great powers must choose between increasingly competitive 
versus cooperative world orders. Unless the United States is careful, 
by default China will become the locally strongest military power, the 
United States increasingly will be offshore and disengaged, and North 
Korea will continue to act as a spoiler state projecting nuclear 
threats. For North Korea that includes the ability to attack the United 
States itself with nuclear weapons. The alternative is a more fluid 
cooperative-competitive and multipolar world with a strong element of 
U.S.-Chinese concert that uses North Korea's dependency on China to 
block and then reverse its nuclear breakout.\5\ If they are jointly to 
resolve the North Korean threat, the North Korean issue demands that 
the United States and China make choices about the nature of their 
relationship that have implications well beyond the Korean Peninsula.
    For its part, in spite of its shrill and outrageous propaganda 
campaigns, North Korea has been profoundly silent in the way that 
matters most: it has neither tested a nuclear weapon nor a long-range 
missile since Trump's election. It seems likely that Kim Jong Un is 
waiting to see if Trump is capable of adjusting U.S. policy to the 
point where it is in North Korea's interest to re-enter talks, and to 
take the concrete steps needed to do so. In short, Kim Jong Un will not 
put his head in a noose unless it is made clear how he can slip through 
it.
    Which brings us to South Korea. The incoming president, Moon Jae-
In, confronts urgent domestic political and economic issues that he 
must attend to as his first order of business in the aftermath of 
former President Park Geun Hye's impeachment and the scandals demanding 
radical chaebol reform. To do so, he also needs to be perceived as 
playing a critical role in overcoming North Korea's nuclear threat 
precisely so he can focus on these domestic issues without being 
ambushed by inter-Korean issues or a U.S.-North Korea confrontation. 
Finally, President Moon must repair relations with China, and quickly, 
or lose one of the South's most potent policy tools with regard to the 
North, its indirect influence on China's North Korea policy.
    With regard to the Trump administration, President Moon faces a 
two-pronged dilemma. The first prong is that South Korea, not the 
United States, is at immediate risk from North Korean nuclear and 
conventional attack, but only the United States can reduce the nuclear 
and conventional threat posed to North Korea. In large part, this is so 
because North Korea will only deal with the United States on the 
nuclear issue. Thus, in spite of fears of abandonment or entanglement 
by the United States in its dealing with the North, and being perceived 
as inferior in some respect to the North in inter-Korean competition, 
when it comes to the nuclear issue, South Korea has no choice but to 
line up with, but behind the United States.
    The second prong is that to mollify President Trump and to secure a 
distinct role of its own in easing tensions with North Korea, President 
Moon may have to modify the KORUS trade deal in ways that are hugely 
politically unpopular with his key political constituencies. However, 
South Korea appears to be willing to review and reform its trade with 
the United States and may avoid making this a hot issue between the 
allies.
    President Moon must therefore decide which of these two priorities 
is most important--leading on North Korea issues and nuclear threat 
reduction; or realizing domestic social, economic, and political 
reforms. There is little doubt which he will choose.
    Likewise, President Trump will have to choose carefully how hard to 
push President Moon on trade issues in order to head off North Korea's 
threat to move the front line from the DMZ to the continental United 
States. He must also accept that if President Moon is to deliver on 
trade issues in ways that matter to the United States, he must first 
commence the truly arduous tasks of economic revival, reforming the 
chaebols, overcoming political corruption, and reducing inequality in 
Korean society.\6\ And he must embrace South Korea's constructive and 
leading role in resolving the North Korea issue, a point that Moon Jae-
in is sure to make during the Summit. Although South Korea cannot be 
the conductor of the DPRK denuclearization orchestra, it surely must be 
lead violin and recognized as such for its contribution.
    How both parties deal with the deployment and operation of the 
THAAD anti-ballistic missile system is a lightning rod for all these 
issues. At this stage, the prudent approach is for the United States 
and South Korea to forestall any precipitous decisions that may affect 
negatively an overall strategic approach to reducing North Korea's 
nuclear threat.
         three phase korean peninsula denuclearization process
    After the Summit, the two allies need to develop jointly an 
operational concept for a phased dialogue and set of nested, reciprocal 
actions and commitments that would incorporate the six elements of a 
comprehensive settlement listed at the outset of this note. To this 
end, we suggest that three distinct phases, albeit partly overlapping 
in implementation, will be required. These are:

    Phase 1: Initial agreement is reached that:

    1. North Korea will freeze quickly all nuclear and missile tests 
and fissile material production, including enrichment, either 
simultaneously or in a defined sequence and timeline, allowing the IAEA 
and possibly U.S. inspectors to monitor and verify these steps;

    2. In return for suspension of testing, the United States and South 
Korea will scale back joint exercises, especially deployment of 
strategic bombers, and lift the U.S. Trading with the Enemy Act for a 
third time. In return for freeze on all fissile material production, 
the allies will commence rapid, sensible energy assistance to the DPRK 
for small-scale cooperation on power generation, provide some 
humanitarian food and agricultural technical aid, and medical 
assistance, and commit to begin a peace process during phase 2.

    The Six Party Talks will resume on the on basis that (1) there are 
no preconditions; (2) all issues can be considered; and (3) each phase 
can be implemented as talks proceed with nothing agreed in each phase 
until everything in the phase is agreed.
    Phase 1 can be done in a series of reciprocal steps over a 
relatively short time frame (roughly three to six months).

    Phase 2: Six Party Talks resume, and North Korea undertakes initial 
dismantlement of all nuclear materials production facilities, including 
enrichment declaration and disablement, verified by IAEA and possibly 
U.S. inspectors.
    In return, the United States, China, and the two Koreas commence a 
``peace process'' to bring about a Northeast Asia ``peace regime.'' The 
Korea focus of this regime would be a non-hostility declaration and 
military confidence-building measures culminating in the replacement of 
the Korean Armistice with a peace treaty acceptable to all parties.\7\ 
At the same time, the six parties would establish a regional security 
structure including a regional Security Council, and would take initial 
steps to create a Northeast Asian security and economic community and 
cooperative security measures on a range of shared security concerns.
    The United States and South Korea would adjust in an incremental 
and calibrated manner their unilateral sanctions to allow for a phased 
resumption of trade and investment with North Korea, among them, 
revival of the Kaesong industrial zone by South Korea.
    The United States and the other four parties may commence 
confidence-building steps to cooperate with the DPRK on nuclear and 
energy security. Such steps might include implementation after 
preparation of the DPRK's 1540 nuclear security obligations, 
examination of nuclear safety requirements for fuel cycle operations in 
the DPRK, and/or initial joint work with DPRK on grid rehabilitation in 
the context of regional grid integration and tie lines with the ROK, 
Russia, and China.
    One issue to be resolved early in talks would be whether missile 
production facilities will also be designated for dismantlement and 
controlled by the agreement in defined ways.
    South Korea will also initiate discussions with the other five on a 
Northeast Asia Peace Regime.
    Defining what Phase 2 would cover can be done in a few months, but 
implementation of measures required of the DPRK side will take several 
years to complete in verified manner. Initial nuclear safety and 
security measures, and early energy cooperation steps, may be 
undertaken in six to eighteen months.
    Likewise, a peace and regional security process can begin in Phase 
2, but completion of key elements of each of these interrelated 
elements will take years. North Korea will want to see the result 
tested over multiple administrations representing both parties in the 
United States and South Korea to see if a peace regime is durable 
before they give up their weapons and weapons-usable fissile materials.
    This leads into Phase 3.

    Phase 3: Declaration and implementation of a legally binding 
Northeast Asia Nuclear Weapons Free Zone (NEANWFZ) by the other five 
parties for eventual acceptance and entry by the DPRK in lockstep with 
agreed timelines and specific actions to eliminate nuclear weapons by 
the DPRK; and commitment to come into full non-nuclear compliance over 
an agreed timeline, in return for lifting of multilateral and 
unilateral sanctions, large-scale energy-economic assistance package as 
part of a regional development strategy, successful experience with no 
U.S. hostile intent and conclusion of a peace treaty, and a calibrated 
nuclear negative security assurance to the North from the Nuclear 
Weapons States.
    Such a treaty is a standard U.N. multilateral convention that both 
Koreas have had no problem signing in the past and would not confront 
the constitutional issue that otherwise makes the two Koreas loathe to 
sign treaties with each other that might affect their respective claims 
to exercise sovereignty over the entire Korean peninsula. Moreover, the 
other four parties may be skeptical as to the durability of a Korea-
only denuclearization agreement and prefer the multilateral rather than 
unilateral guarantees provided by the Nuclear Weapons States to an NPT-
compatible nuclear weapons-free zone treaty.
    Phase 3 may take ten years to complete, maybe longer, during which 
incremental nuclear weapons disarmament may be undertaken by the North 
and verified by the other parties to the NWFZ as part of a regional 
inspectorate, accompanied by effective implementation of peaceful 
relations by the five parties. Phase 3 would enable a presidential 
summit to take place ``under the right conditions'' within two to three 
years from now.
                               conclusion
    North Korea's acquisition of nuclear weapons demands a 
comprehensive approach that is commensurate with the problem. Even if 
phases 1 and 2, the freezing and dismantlement of its nuclear fuel 
cycle and delivery systems were achievable, it is not clear why Kim 
Jong Un would enter into such commitments except for short-term 
tactical reasons. Although achieving such an outcome would be highly 
beneficial relative to where we are headed now with North Korean 
nuclear armament, limiting U.S. and South Korean strategy to realizing 
only a freeze and dismantlement would fail to bring about the actual 
elimination of North Korea's weapons. And we are skeptical that such a 
deal would endure long precisely because the North would not have a 
long-run interest in the ultimate outcome and would be left with a 
small, relatively vulnerable nuclear weapons stockpile and ever 
increasing isolation.
    To succeed, it is evident that a new element to the U.S. approach 
is needed that was not anticipated in 2005 because of its subsequent 
rapid nuclear arming. Simply insisting that the North disarm and rejoin 
the Nuclear Nonproliferation Treaty (NPT) is unrealistic as North Korea 
would have little confidence that putative benefits--in particular the 
ending of nuclear threat against the North by the United States--would 
be delivered. Moreover, it will take time to actually disarm--and North 
Korea cannot actually rejoin the NPT until it is fully disarmed. 
Meanwhile, a framework is needed to manage nuclear threat in the 
region, and most urgently, North Korea's nuclear threats. The elements 
that we have included in phase 3 are designed to address the need for 
such a management framework in a way that is legally binding, flexible 
enough to include all the parties to the Korean conflict and its 
resolution, and admits North Korea's anomalous status until it is fully 
disarmed.
    That said, we emphasize that in some sequence, all six elements of 
a comprehensive security settlement must be included in phase 3, not 
just a nuclear weapons-free zone. These provide interlocking support to 
the realization of a comprehensive security settlement that can change 
the strategic calculus of a state, even one as ``hard'' as North Korea. 
Anything less than such a comprehensive approach is liable to fail, 
with all the predictable consequences for American security, American 
global leadership, U.S.-Chinese relations, U.S. alliances in the 
region, and for the Korean peninsula.

------------------
Notes

    \1\ Morton H. Halperin, ``A Proposal for a Nuclear Weapons-Free 
Zone in Northeast Asia'', NAPSNet Special Reports, January 03, 2012.
    Updated here: Morton H. Halperin, ``A comprehensive agreement for 
security in Northeast Asia'', NAPSNet Policy Forum, March 16, 2015.
    \2\ Supplementary analysis includes: Peter Hayes, ``Overcoming 
U.S.-DRPK Hostility: The Missing Link Between a Northeast Asian 
Comprehensive Security Settlement and Ending the Korean War,'' North 
Korean Review,11:2, Fall 2015, pp. 79-102.
    Binoy Kampmark, Peter Hayes, and Richard Tanter, ``Summary Report: 
A New Approach to Security in Northeast Asia-Breaking the Gridlock 
Workshop'', NAPSNet Special Reports, November 20, 2012.
    Peter Hayes and Richard Tanter, ``Key Elements of Northeast Asia 
Nuclear-Weapons Free Zone (NEA-NWFZ)'', NAPSNet Policy Forum, November 
13, 2012.
    Leon V. Sigal, ``Sanctions easing as a sign of non-hostility'', 
NAPSNet Policy Forum, February 23, 2015.
    Thomas Pickering, ``Iran and a Comprehensive Settlement'', NAPSNet 
Policy Forum, February 10, 2015.
    \3\ Such a NWFZ would recognize that the DPRK would come into 
compliance with full dismantlement only over time and after full 
restoration of its NPT non-nuclear status. A NWFZ also deepens ROK and 
Japanese non-nuclear commitments (of value to China); and may 
facilitate management of nuclear threat by the three Nuclear Weapons 
States against each other in this region. In return, calibrated to its 
dismantlement and full compliance, the DPRK would get legally binding 
guarantees of no nuclear attack by Nuclear Weapons States; and the ROK 
and Japan immediately get the same legally binding guarantees from 
China, Russia and U.S. U.S. nuclear extended deterrence to allies 
continues because if the NWFZ treaty is violated, the United States and 
allies can revert to reliance on nuclear threat.
    \4\ After consultation with Chinese colleagues, the authors 
recognized that China was not capable of assuming a regional leadership 
role to create such an institutional security framework, but would 
willingly partner in a regional concert to establish a regional 
comprehensive security framework with the United States including the 
elements outlined in this essay. South Korea would follow the U.S. 
lead. Japan would follow the U.S. and ROK lead. Russia would be a bit 
player but can provide important reassurance and buttressing of the 
concept in Pyongyang.
    \5\ These are two of seven regional orders conceptualized by the 
U.S. National Intelligence Council; see D. Twining, ``Global Trends 
2030: Pathways for Asia's Strategic Future,'' December 10, 2012 and 
``Global Trends 2030: Scenarios for Asia's Strategic Future,'' December 
11, 2012.
    \6\ In this ``transaction,'' South Korea will gain from U.S. 
leadership on the nuclear issue provided it delivers sufficient 
progress to enable President Moon to implement his domestic policies as 
his first priority; and the United States will gain from South Korean 
support in its strategy to avoid North Korea being able to inflict 
nuclear attacks on the United States itself as well as on Japan. Thus, 
each party holds sway over the other's ability to realize its highest 
policy priority.
    \7\ Since the constitutions of both North and South Korea do not 
recognize the other as a sovereign entity, the ``peace treaty'' would 
involve a DPRK-U.S. normalization treaty and inter-Korean agreement. A 
four-party peace treaty is possible, but in that case, there must be a 
new interpretation of constitution in each Korea.

    Morton Halperin is senior advisor, Open Society Foundations; Peter 
Hayes is Director, Nautilus Institute and Honorary Professor, Center 
for International Security Studies, Sydney University; Chung-in Moon is 
distinguished professor, Yonsei University; Thomas Pickering is retired 
U.S. ambassador; Leon Sigal is Director, Northeast Asia Cooperative 
Security Project, Social Science Research Council.



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