An Analysis on the Effect of the International Sanctions on the Trading Patterns of North Korea: Focusing on the Gravity Theory

Abstract

Since the two North-South Korean Summits on April 27 and September 18, 2018, the relationship between the two countries is thawing at a neck-breaking pace. And the media is busy churning out optimistic forecasts about the reunification of the two Koreas. However, as the governments of South Korea and the United States have officially stated, the lifting of sanctions on North Korea can be considered only after an agreement between the related countries on denuclearization is reached. Also, considering the fact that denuclearization itself is a lengthy, stepwise process that takes years, it is likely that the lifting of sanctions would happen in line with progress on denuclearization. Therefore, what is important at this point is to link the momentum of conversation with tangible achievements directly relevant to denuclearization of the North and progress in the inter-Korean relationship. Another key factor is the ability to keep monitoring the development of the situation in order to identify the expectable risks with North Korea and manage them in an efficient manner. In this perspective, it would be meaningful to analyze how the sanctions that have been initiated by the UN Security Council since 2006, MTCR, NSG, WA, and other international export control systems have affected the trading patterns between North Korea and other countries to show whether the efforts of the international community have actually paid off. At the same time, this would allow us to examine the changes in the patterns of the trade of strategic materials, which is a sensitive matter in the international theater and expect the future direction of development in this matter, which gives more weight to the topic of this study. For this, the author analyzed the trade patterns between North Korea and its key trade partners, which account for more than 95 percent of the total trade volume, using the gravity model that is one of the most representative theories of international trade. Also in this study, the author analyzed the effect of sanctions on trade due to the sanctions imposed by the UN Security Council and the international export control system.