# EUR-Lex - 52013JC0003 - EN

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# 52013JC0003

**Joint Proposal for a COUNCIL REGULATION amending Regulation (EC) No 329/2007 concerning restrictive measures against the Democratic People’s Republic of Korea /* JOIN/2013/03 final - 2013/0078 (NLE) */**

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EXPLANATORY MEMORANDUM

(1)
Council Regulation (EC) No 329/2007 of 27 March
2007 gives effect to measures provided for in Council Decision 2010/800/CFSP of
22 December 2010 concerning restrictive measures against the Democratic
People's Republic of Korea ("North Korea").

(2)
On 18 February 2013, the Council adopted
Decision 2013/88/CFSP amending Decision 2010/800/CFSP concerning restrictive
measures against North Korea which provides for additional restrictive measures.

(3)
These additional measures include an additional
criterion for autonomous designation by the Union, prohibitions on supply of
additional goods relevant to North Korea's weapons of mass destruction related
programmes, prohibitions in relation to gold, precious metals and diamonds,
newly printed or minted North Korean banknotes, and public bonds,

(4)
The measures also include prohibitions on the
opening of new branches, subsidiaries, or representative offices of North
Korean banks in the territories of Member States, and the establishment of new
joint ventures.

(5)
Moreover, in accordance with paragraph 13 of United
Nations Security Council (UNSC) Resolution 2087 (2013), no claims in connection
with the performance of any contract or transaction affected by measures
decided on pursuant to relevant UNSC Resolutions or measures of the Union in
accordance with relevant decisions of the UNSC or covered by the present
Regulation, are to be granted to designated persons or entities or any other
person or entity in North Korea.

(6)
In view of Article 215 TFEU, further action by
the Union is needed to give effect to these measures.

(7)
The High Representative for Foreign Affairs and
Security Policy and the Commission should therefore propose to amend Regulation
(EC) No 329/2007 accordingly.

2013/0078 (NLE)

Joint Proposal for a

COUNCIL REGULATION

amending Regulation (EC) No 329/2007
concerning restrictive measures against the Democratic People’s Republic of
Korea

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on European Union, and in
particular Article 215 (1), thereof,

Having regard to the
joint proposal from the High Representative of the Union for Foreign Affairs
and Security Policy and the European Commission,

Whereas:

(1)
Council Regulation (EC) No 329/2007[1] gives effect to measures
provided for in Decision 2010/800/CFSP.

(2)
On 18 February 2013, the Council adopted
Decision 2013/88/CFSP amending Decision 2010/800/CFSP concerning restrictive
measures against the Democratic People's Republic of Korea[2] which provides for additional
restrictive measures against the Democratic People's Republic of Korea
(hereinafter referred to as ‘North Korea’). Decision 2013/88/CFSP gives effect
to additional measures required by United Nations Security Council (UNSC)
Resolution 2087 (2013) and further autonomous measures of the Union.

(3)
The additional measures include an additional
criterion for autonomous designation by the Union of persons and entities
subject to restrictive measures, namely persons involved
in, including through the provision of financial services, the supply to or
from North Korea of arms and related material of all types, or of items,
materials, equipment, goods and technology which could contribute to North
Korea's nuclear-related, ballistic missile-related or other weapons of mass
destruction related programmes.

(4)
Furthermore, the measures prohibit the sale,
supply, transfer to North Korea of certain other goods relevant to North
Korea's weapons of mass destruction-related programmes, in particular its
ballistic-missile sector, especially certain types of aluminium.

(5)
Decision 2013/88/CFSP also prohibits the sale,
purchase, transportation or brokering of gold, precious metals and diamonds to,
from or for the Government of North Korea and the delivery of newly printed or
minted or unissued North Korean banknotes and coinage to or for the benefit of
the Central Bank of North Korea, as well as the sale or purchase of North Korea
public or public-guaranteed bonds. Furthermore, Decision 2013/88/CFSP clarifies
that where the Council has provided for a prohibition on financial services,
this includes the provision of insurance and re-insurance services. This
necessitates a technical amendment to the Regulation.

(6)
Decision 2013/88/CFSP prohibits the opening of
new branches, subsidiaries, or representative offices of North Korean banks in
the territories of Member States, the establishment of new joint ventures, or
the taking of an ownership interest by the North Korean banks, including the
Central Bank of North Korea, with banks within the jurisdiction of Member
States.

(7)
Moreover, in line with paragraph 13 of UNSC Resolution
2087 (2013), it is necessary to establish that no claims in connection with the
performance of any contract or transaction affected by these measures shall be
granted to designated persons or entities or any other person or entity in North
Korea.

(8)
Regulation (EU) No 329/2007 should therefore be
amended accordingly,

HAS ADOPTED THIS REGULATION:

Article
1

Regulation No
329/2007 is amended as follows:

(1)
Article 2 is replaced by the following:

"Article
2

1.           It shall be prohibited:

(a)
to sell, supply, transfer or export, directly or
indirectly, the goods and technology, including software, listed in Annexes I,
Ia and Ib, whether or not originating in the Union, to any natural or legal
person, entity or body in, or for use in North Korea;

(b)
to participate, knowingly and intentionally, in
activities the object or effect of which is to circumvent the prohibition
referred to in point (a).

2.           Annex I shall include all
items, materials, equipment, goods and technology, including software, which
are dual-use items or technology as defined in Regulation (EC) No 428/2009.*

Annex Ia shall include other items,
materials, equipment, goods and technology which could contribute to North
Korea's nuclear-related, other weapons of mass destruction-related or ballistic
missile-related programmes.

Annex Ib shall include certain key components
for the ballistic-missile sector, such as certain types of aluminum used in
ballistic-missile related systems.

3.           It shall be prohibited to
purchase, import or transport the goods and technology listed in Annexes I, Ia
and Ib from North Korea, whether the item concerned originates or not in North
Korea.

____________

- OJ L 134, 29.5.2009, p. 1."

(2)
In Article 3(1), point (b) is replaced by the
following:

"(b)    to provide, directly or
indirectly, financing or financial assistance related to goods and technology
listed in the EU Common List of Military Equipment or in Annexes I, Ia and Ib,
including in particular grant, loans and export credit insurance, as well as
insurance and reinsurance, for any sale, supply, transfer or export of such
items, or for any provision of related technical assistance to any natural or
legal person, entity or body in, or for use in, North Korea;”

(3)
The following Articles 4a and 4b and are inserted:

"Article 4a

1.         It shall be prohibited:

(a)
to sell, supply, transfer or export, directly or
indirectly, gold, precious metals and diamonds, as listed in Annex VII, whether
or not originating in the Union, to or for the Government of North Korea, its
public bodies, corporations and agencies, the Central Bank of North Korea and any
person, entity or body acting on their behalf or at their direction, or any
entity or body owned or controlled by them;

(b)
to purchase, import or transport, directly or
indirectly, gold, precious metals and diamonds, as listed in Annex VII, whether
or not originating in North Korea, from the Government of North Korea, its
public bodies, corporations and agencies, the Central Bank of North Korea and
any person, entity or body acting on their behalf or at their direction, or any
entity or body owned or controlled by them; and

(c)
to provide, directly or indirectly, technical
assistance or brokering services, financing or financial assistance, related to
the goods referred to in points (a) and (b), to the Government of North Korea,
its public bodies, corporations and agencies, the Central Bank of North Korea
and any person, entity or body acting on their behalf or at their direction, or
any entity or body owned or controlled by them.

2.           Annex VII shall include
gold, precious metals and diamonds subject to the prohibitions referred to in
paragraph 1.

Article 4b

It shall be prohibited to sell, supply, transfer or export,
directly or indirectly, newly printed or unissued North Korean denominated
banknotes and minted coinage, to, or for the benefit of, the Central Bank of
North Korea."

(4)
The following Article 5a is inserted:

"Article 5a

1.           It shall be prohibited for
credit and financial institutions falling within the scope of Article 16 to do
any of the following:

(a)
to open a new representative office in North
Korea or to establish a new branch or subsidiary in North Korea;

(b)
to establish a new joint venture with a credit
or financial institution domiciled in North Korea or with any credit or
financial institution referred to in Article 11a(2).

2.           It shall be prohibited:

(a)
to authorise the opening of a representative
office or the establishment of a branch or subsidiary in the Union of a credit
or financial institution domiciled in North Korea or of any credit or financial
institution referred to in Article 11a(2);

(b)
to conclude agreements for, or on behalf of, a
credit or financial institution domiciled in North Korea or for, or on behalf
of, any credit or financial institution referred to in Article 11a(2)
pertaining to the opening of a representative office or the establishment of a
branch or subsidiary in the Union;

(c)
to grant an authorisation for taking up and
pursuing the business of credit institution or for any other business requiring
prior authorisation, by a representative office, branch or subsidiary of a
credit or financial institution domiciled in North Korea or of any credit or
financial institution referred to in Article 11a(2), if the representative
office, branch or subsidiary was not operational before 19 February 2013.

(d)
to acquire or to extend a participation, or to
acquire any other ownership interest, in a credit or financial institution
falling within the scope of Article 16 by any credit or financial institution
referred to in Article 11a(2)."

(5)
In Article 6, paragraphs 1 and 2 are replaced by
the following:

"1.          All funds and
economic resources belonging to, owned, held or controlled by the persons,
entities and bodies listed in Annex IV shall be frozen. Annex IV shall include
the persons, entities and bodies designated by the Sanctions Committee or the
UN Security Council in accordance with paragraph 8(d) of UNSCR 1718 (2006).

2.           All funds and economic
resources belonging to, owned, held or controlled by the persons, entities and
bodies listed in Annex V shall be frozen. Annex V shall include persons,
entities and bodies not listed in Annex IV, who, in accordance Article 5 points
(b) and (c) and (d) of Council Decision 2010/800/CFSP**have been identified by
the Council as:

(a)
as responsible for North Korean nuclear-related,
other weapons of mass destruction-related or ballistic missile-related
programmes, as well as persons or bodies acting in their name or on their
instructions and entities owned or controlled by them; or

(b)
as providing financial services or the transfer
to, through or from the territory of the Union, or involving nationals of
Member States or entities organized under their laws, or persons or financial
institutions in the territory of the Union, of any financial or other assets or
resources that could contribute to North Korean nuclear-related, other weapons
of mass destruction-related or ballistic missile- related programmes, as well
as persons, or bodies acting in their name or on their instructions and entities
owned or controlled by them.

(c)
involved in, including through the provision of
financial services, the supply to or from North Korea of arms and related
material of all types, or of items, materials, equipment, goods and technology
which could contribute to North Korea's nuclear-related, ballistic
missile-related or other weapons of mass destruction related programmes, to North
Korea.

Annex V shall be reviewed at regular intervals
and at least every 12 months.

___________

** OJ L 341, 23.12.2010, p. 32."

(6)
The following Articles 9a and 9b are inserted:

"Article 9a

1.           It shall be prohibited:

(a)
to sell or purchase public or public-guaranteed
bonds issued after 19 February 2013, directly or indirectly, to or from any of
the following:

(1)
North Korea or its Government, and its public
bodies, corporations and agencies;

(2)
the Central Bank of North Korea;

(3)
a credit or financial institution domiciled in
North Korea or any credit or financial institution referred to Article 11a
paragraph 2 ;

(4)
a natural person or a legal person, entity or
body acting on behalf or at the direction of a legal person, entity or body
referred to in (i) or (ii);

(5)
a legal person, entity or body owned or
controlled by a person, entity or body referred to in (i), (ii) or (iii);

(b)
to provide brokering services with regard to
public or public-guaranteed bonds issued after 19 February 2013 to a person,
entity or body referred to in point (a);

(c)
to assist a person, entity or body referred to
in point (a) in order to issue public or public-guaranteed bonds, by providing
brokering services, advertising or any other service with regard to such bonds.

Article 9b

1.           No claims in connection
with any contract or transaction the performance of which has been affected,
directly or indirectly, in whole or in part, by the measures imposed under this
Regulation, including claims for indemnity or any other claim of this type,
such as a claim for compensation or a claim under a guarantee, notably a claim
for extension or payment of a bond, guarantee or indemnity, particularly a
financial guarantee or financial indemnity, of whatever form, shall be
satisfied, if they are made by:

(a)
designated persons, entities or bodies listed in
Annex IV and V;

(b)
any other North Korean person, entity or body,
including the Government of North Korean, its public bodies, corporations and
agencies;

(c)
any person, entity or body acting through or on
behalf of one of the persons, entities or bodies referred to in points (a) and
(b).

2.           The performance of a
contract or transaction shall be regarded as having been affected by the
measures imposed under this Regulation where the existence or content of the
claim results directly or indirectly from those measures.

3.           In any
proceedings for the enforcement of a claim, the onus of proving that satisfying
the claim is not prohibited by paragraph 1 shall be on the person seeking the
enforcement of that claim.

4.           This
Article is without prejudice to the right of the persons, entities and bodies
referred to in paragraph 1 to judicial review of the legality of the
non-performance of contractual obligations in accordance with this
Regulation."

(7)
The text as set out in Annex I to this
Regulation is inserted as Annex Ib.

(8)
In Articles 3(1) and 3a, references to 'Annexes
I and Ia' are replaced by references to 'Annexes I, Ia and Ib '.

(9)
The text as set out in Annex II to this
Regulation is inserted as Annex VII."

Article
2

This Regulation shall enter into force on the date of its
publication in the Official Journal of the European Union.

This Regulation is binding in its entirety and directly applicable
in all Member States.

Done at Brussels,

For
the Council

The
President

ANNEX I

"ANNEX Ib

Goods referred to in the second subparagraph of Article 2

Certain key components for the ballistic-missile
sector, such as certain types of aluminum used in ballistic-missile related
systems

7601 || Unwrought aluminium

7602 || Aluminium waste and scrap

7603 || Aluminium powders and flakes

7605 || Aluminium wire

7606 || Aluminium plates, sheets and strip, of a thickness exceeding 0,2 mm

7609 || Aluminium tube or pipe fittings (for example, couplings, elbows, sleeves)

7614    || Stranded wire, cables, plaited bands and the like, of aluminium, not electrically insulated

7604 || Aluminium bars, rods and profiles

7608 || Aluminium tubes and pipes"

ANNEX II

"ANNEX VII

List
of gold, precious metals and diamonds referred to in Article 4a

HS
Code          Description

7102    || Diamonds, whether or not worked, but not mounted or set

7106    || Silver (including silver plated with gold or platinum), unwrought or in semi-manufactured forms, or in powder form

7108 || Gold (including gold plated with platinum), unwrought or in semi-manufactured forms, or in powder form

7109 || Base metals or silver, clad with gold, not further worked than semi-manufactured.

7110 || Platinum, unwrought or in semi-manufactured forms, or in powder form

7111 || Base metals, silver or gold, clad with platinum, not further worked than semi-manufactured.

7112 || Waste and scrap of precious metal or of metal clad with precious metal; other waste and scrap containing precious metal or precious-metal compounds, of a kind used principally for the recovery of precious metal"

[1]               OJ L 88, 29.3.2007, p1

[2]           OJ
L 46, 19.2.2013, p28