(Last updated: 3 Sep 2009)

Current business situation

Australia implements sanctions against North Korea

Companies or individuals having dealings with the Democratic People’s Republic of Korea (North Korea) should be aware that Australia has taken action to fully implement the UN sanctions [Security Council Resolutions (SRC) 1718] against North Korea following their nuclear test on 9 October 2006.

The Australian regulations provide for the following offences:

A ban on exports to DPRK of:

• Arms-related material and material that could contribute to North Korea's nuclear, missile or WMD programs.
• Luxury goods (finalised list available)
• Arms-related material and material related to North Korea's nuclear, missile or WMD programs.

Other offences include:

• A ban on the transfer to the DPRK of technical advice, training, services or assistance relating to the above matters.
• A freeze on financial transactions in relation to individuals and entities identified by the UNSC as being involved in the DPRK's nuclear, missile or WMD programs.
• A ban on the entry into member states of individuals identified by the UNSC as being involved in the DPRK's nuclear, missile or WMD programs.

While current sanctions are limited, Australian businesses should be aware of the possibility that DPRK will conduct further nuclear tests resulting in additional, broader sanctions by the international community, including Australia.

If you now or in the future have any dealings with North Korean entities or entities with links to North Korea, we advise that you seek advice before doing so. 

For more information about the North Korea sanctions, please go to the DFAT media release: www.foreignminister.gov.au/releases/2006/fa125_06.html. 

For more information about United Nations sanctions currently in force, please see: www.dfat.gov.au/un/unsc_sanctions/index.html.

For help in addressing questions in relation to doing business with North Korea, contact Austrade Direct on 13 28 78.

Country facts

Capital city:	P’yongyang
Surface area:	121,000 sq km
Population:	23.3 million
Official language(s):	Korean
Head of State:	President of the Presidium of the Supreme People's Assembly HE Mr Kim Yong-Nam
Head of Government:	Prime Minister HE Mr Kim Yong-il
Australian exports to Democratic People's Republic of Korea:	No export trade was recorded
Australian imports from Democratic People's Republic of Korea:	A$7 million
Democratic People's Republic of Korea's principal export destinations:	China, Venezuela, Bolivarian Rep, Brazil
Democratic People's Republic of Korea's principal import sources:	China, Algeria, Russian Federation

(Source: Department of Foreign Affairs and Trade - Country economic fact sheet)

Economic climate

As one of the last remaining centrally planned socialist economies, the DPRK economy is also one of the most isolated. In the decades following the division of the Korean Peninsula in 1945 and the Korean war, the North Korean economy was able to recover and develop at a good pace, owing to its workforce, natural resources and support from other Soviet States. From the 1970s, however, as Soviet aid began to tail off following regional disputes, the economy experienced a number of difficulties including a failed modernisation drive and an inefficient command economy, coupled with a downturn in global demand and an increasingly military-focused budget.

While other socialist States experimented with some degree of market liberalisation, the DPRK reacted to economic pressures by turning inwards, and has fallen far behind regional economies, facing severe shortages of energy, raw materials, food, technology and efficient production facilities. Almost bankrupt and facing shortages of capital, DPRK has been increasingly relying on aid from the foreign community, and re-opening ties with the outside world. The investment environment is uncertain at this stage, but is more positive within the Rajin-Sonbong Free Trade Zone in the country’s north.

For the latest key economic indicators and statistics, please see the Department of Foreign Affairs and Trade country economic fact sheet.

Political climate

The DPRK is a tightly controlled and isolated society, with control of enterprise and trade managed firmly by the central government in Pyongyang. DPRK, although a small country, is reportedly to have one of the world’s largest standing armed forces.

Trade relations and statistics

Australia and the DPRK resumed diplomatic relations in May 2000, however, there is no resident diplomatic mission in either country at this point. The Australian Ambassador in Seoul represents Australia, while the DPRK is represented by its Ambassador in Jakarta.

Whilst the Democratic People’s Republic of Korea (DPRK) authorities are interested in developing trade with Australia, the acute shortage of foreign exchange means that Australian exports to DPRK on a cash basis will be difficult in the near term. 

Australian companies should be aware of the poor payments record of many DPRK agencies in past commercial ventures.

Please see the Department of Foreign Affairs and Trade country economic fact sheet for kety trade statistics.