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The Sanction Industry: North Korea, Cuba and the USA

May 17, 2017
Plain English Version

Bridges over the Yalu River connecting the North Korean city of Sinuiju and the Chinese city of Dandong. Much of the North’s trade with the world flows across its bridges or through its port. CreditDamir Sagolj/Reuters

What do Kim Jong-un of North Korea, Raul Castro of Cuba and President Donald Trump all have in common? All share the view that free markets and free trade threaten their regimes.

For years other governments have placed sanctions on North Korea and Cuba. These two countries plan and control their own economies. Karl Marx was an early political philosopher. He described governments like North Korea and Cuba as “owning the means of production.”

The economies of North Korea and Cuba actually do not work. These counties are not part the global economy. Their people often go hungry. The sanctions by other countries hurt them even more.

But there are changes occurring in both poor countries. There are large secret industries. The job of those secret industries

Map of Chine and North Korea.

is to get around the sanctions. North Korea works hard at this. China is its willing partner. Goods go by ship, truck and rail back and forth between countries. The chief routes are over bridges. They cross the Yalu River between the North Korean city of Sinuiju and the Chinese city of Dandong.

A silk mill in Pyongyang, the North Korean capital. Fake labels help support the garment industry. Credit Ed Jones/Agence France-Presse — Getty Images

Here is one story. A woman puts $100,000 in American dollars in her backpack. She then takes a six-hour train ride into North Korea. She arrives at a factory. Hundreds of women are using high-end European sewing machines. Although the clothes are sewn in North Korea, the label on the clothes says “Made in China.” She gives the money to the manager of the plant and takes her fee. She then returns to North Korea with the clothes. The transaction is illegal. China cannot make clothes in North Korea. And double down by putting a “Made in China” label on them.

It is the tip of a huge iceberg. China is not the only one that works with North Korea to traffic in illegal goods. Companies all over the globe assemble and ship parts of appliances and other goods in and out of North Korea. People and companies make billions of dollars getting around the imposed sanctions.

North Korea’s workers and performers work in China. The North Korean government collects money from the workers. It goes to pay for their nuclear program. Some countries might call this “taxes.” But because the workers in North Korea have no choice, other nations liken it to “slave labor.”

North Koreans performing at a restaurant in Beijing. For decades, the North has been accused of sending workers abroad and confiscating most of their wages. Credit Ng Han Guan/Associated Press.

Their governments practice strict control. But North Korea and Cuba are part of the world. Small markets are springing up all over these countries. Their citizens are clamoring for the things that other consumers have. These markets are a challenge to the governments of both countries. But the money flows through the economy. It helps their bottom lines.

Where does President Trump come in? He is imposing his own form of sanctions. He threatens American companies that plan on moving to other countries. He is imposing his political will on the American free market. He is against free trade agreements.

Free trade usually results in prices to going down. It increases the wealth of this nation. But to stay in control of the government, Trump is willing to reduce American prosperity.

Trump has his reasons. American workers have lost their jobs to free markets and trade. But while he restricts trade, the rest of the world is embracing free trade. His ideas are out of sync with other countries. His efforts will put a brake on American growth.

Trump, Jong-un and Castro have different approaches. They share the goal of staying in power.

Source: The New York Times May 12, 2017

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