Policy & Law

FOREIGN TRADE LAW OF THE DEMOCRATIC PEOPLE’S REPUBLIC OF KOREA

Adopted by Decision No.104 of the Standing Committee of the Supreme People’s Assembly on December 10,1997, amended by Decree No.483 of the Presidium of the Supreme People’s Assembly on February 26, 1999, amended by Decree No.807 of the Presidium of the Supreme People’s Assembly on December 7, 2004, amended by Decree No.2195 of the Presidium of the Supreme People’s Assembly on March 27, 2007, amended by Decree No.160 of the Presidium of the Supreme People’s Assembly on July 21, 2009, amended by Decree No.2052 of the Presidium of the Supreme People’s Assembly on December 21, 2011,  amended by Decree No.2303 of the Presidium of the Supreme People’s Assembly on April 3, 2012 amended by Decree No.849 of the Presidium of the Supreme People’s Assembly on December 23, 2015  and amended by Decree No.2387 of the Presidium of the Supreme People’s Assembly on September 6, 2018

Chapter 1 Fundamentals

Article 1 (Objective)

This Law is enacted for the purpose of establishing strict system and order for foreign trade, thereby contributing to expanding the overseas market, ensuring the foreign trade balance and developing the national economy.


Article 2 (Basic principle of foreign trade)

The DPRK has consistently maintained the policy of promoting foreign trade. 

The State shall improve the export structure and foreign trade modes, encourage export and activate local foreign trade as required by the developing realities. 


Article 3 (Multilateral and diversified foreign trade)

Multilateral and diversified foreign trade is a fundamental way of expanding foreign trade.

The State shall ensure that foreign trade is conducted with foreign countries and companies in various modes and ways.


Article 4 (Principle of maintaining credit-worthiness)

To maintain credit-worthiness in foreign trade is a prerequisite for developing foreign trade relations with foreign countries.

The State shall ensure that quality of exports is guaranteed, dates of delivery are met and obligations of payment are performed properly.


Article 5 (Fulfilling of foreign trade plans and terms of contract)

Foreign trade of the DPRK shall be conducted in accordance with the plans of national economy and contracts.

The State shall ensure that plans for and contracts of foreign trade are strictly fulfilled.


Article 6 (Guidance on foreign trade)

The State shall strengthen guidance on foreign trade with a view to ensuring unified and balanced development thereof.


Article 7 (Most–favored-nation treatment, national treatment)

The State shall, in accordance with the foreign trade agreements concerned, afford most favored–nation-treatment or national treatment to the contracting parties on the principle of reciprocity.


Article 8 (Countermeasures to sanctions, restrictions or bans)

The State may take countermeasures to the sanctions, discriminatory restrictions or bans on the DPRK in the field of foreign trade.


Article 9 (Exchange and cooperation)

The State shall promote exchange and cooperation with foreign countries and international organizations in the field of foreign trade.


Article 10 (Foreign trade procedures in special economic zones)

Foreign trade in the special economic zones shall be subject to the relevant laws and regulations.


Chapter 2 Parties to Foreign trade

Article 11 (Institutions that have the right to conduct foreign trade transactions)

Foreign trade transactions shall be conducted by the institutions, enterprises and organizations that obtained business license from the central foreign trade guidance organ.


 Article 12 (Requirements for obtaining license for conducting foreign trade transactions)

The following requirements shall be satisfied to obtain license for conducting foreign trade:

1. Name and organizational structure;

2. Articles of association;

3. Category of business and indices;

4. Place of business;

5. Source of fund;

6. Necessary experts and staff; and

7. Production bases of goods or source of technology or service marketable in the external markets.


Article 13 (Issuance and endorsement of a business license)

Institutions, enterprises and organizations that wish to conduct foreign trade transactions shall submit an application to that effect to the central foreign trade guidance organ.

The central foreign trade guidance organ shall review the application and either approve or reject it. In the case of approval a business license shall be issued.

The business license shall be subject to the endorsement of the central foreign trade guidance organ every year.


Article 14 (Rights and obligations of the parties to foreign trade)

Institutions, enterprises and organizations that obtained license shall have the rights and obligations as a party to foreign trade transactions.

The rights and obligations of a party to foreign trade shall be governed by the relevant law and regulations.


Article 15 (Scope of foreign trade transactions)

Institutions, enterprises and organizations shall conduct foreign trade transactions within the limit of the approved business license.

Foreign trade transactions outside the approved business category and indices shall not be conducted.


Article 16 (Conclusion of contracts)

Institutions, enterprises and organizations shall conclude contracts properly before conducting foreign trade transactions.

Where an important foreign trade contract is to be concluded, the contract concerned shall be submitted to the central foreign trade guidance organ for examination.


Article 17 (Export or import on consignment)

Institutions, enterprises and organizations concerned may, upon consignment by other institutions, enterprises and organizations, conduct foreign trade transactions of approved business categories and indices. In this case a contract should be correctly concluded and performed. 


Article 18 (Fund transaction, mode of settlement)

Institutions, enterprises and organizations concerned shall conduct fund transactions with the designated bank and apply price settlement method.


Article 19 (Price fixing)

Institutions, enterprises and organizations that conduct foreign trade transactions shall obtain the approval of the central foreign trade guidance organ for the price of the trade indices and shipping in or out thereof. 


Article 20 (Establishment of branches, representative offices or agencies)

Institutions, enterprises and organizations concerned may establish and operate their branches, representative offices or agencies within and outside the DPRK. In this case approval thereof shall be obtained from the Cabinet via the central foreign trade guidance organ.


Article 21 (Alteration of the name, business category and indices)

Institutions, enterprises and organizations that wish to alter the business category or indices shall file an application with the central foreign trade guidance organ for the registration of the particulars of alteration and the confirmation thereof on their license. However, formalities for the registration of the change in the name or the affiliation shall be prescribed separately.


Article 22 (Prohibition of infringement on intellectual property rights)

Institutions, enterprises and organizations concerned shall not, in the course of foreign trade transactions, infringe on the copyrights or industrial property rights of other institutions, enterprises, organizations or citizens.


Article 23 (Payment of advances, offer of goods, technology and services)

Institutions, enterprises and organizations concerned shall not pay advances or offer goods, technology or services to the other party without receiving a bank security document and other legal warranty deeds.


Article 24(Using of e-foreign trade procedure system)

Institutions, enterprises and organizations concerned shall use the electronic foreign trade procedure system so that formalities for the export or import are performed expeditiously. 

Article 25 (Liabilities of institutions, enterprises and organizations)

Institutions, enterprises and organizations concerned shall be independent in conducting foreign trade transactions.

The credits and debts that incurred in the course of foreign trade transactions shall be the credits and debts of the parties to the given transaction and shall not be the liability of other institutions, enterprises, organizations or the State.


Article 26 (Transfer of credits and debts)

In the case of the division of an institution, enterprise or organization its credits and debts shall be divided accordingly, and in the case of merger they shall be transferred to the merged institution, enterprise or organization.

The credits and debts of a dissolved institution, enterprise or organization shall be liquidated by a designated liquidator.


Article 27 (Re-issuance or surrender of a business license)

An institution, enterprise or organization that lost its business license shall have it re-issued. 

An institution, enterprise or organization that is merged or dissolved shall surrender its business license to the central foreign trade guidance organ.


Chapter 3  Foreign Trade Plan

Article 28 (Contents of foreign trade plan)

Foreign trade plan constitutes an important part of the national economic plan.

A foreign trade plan shall include the plans for export and import, the plans for the production of export goods and cooperative goods and a plan for the shipment of foreign trade cargo.


Article 29 (Formulation and issuance of foreign trade plans)

Foreign trade plans shall be worked out by the State planning organ.

The State planning organ shall notify the foreign trade plans for the following year to the relevant institutions, enterprises and organizations every year within the prescribed time limit.


Article 30 (Planning methods of the State planning organ)

Institutions, enterprises and organizations concerned shall specify estimated figures and planned figures in a draft foreign trade plan for the following year and submit it to the State planning organ.

The State planning organ shall, on the basis of the draft foreign trade plan submitted by the institutions, enterprises and organizations, work out the plans for export and import, the plans for the production of export goods and cooperative goods and a plan for the shipment of foreign trade cargo. 


Article 31 (Planning methods of the institutions concerned)

Institutions, enterprises and organizations shall subdivide on a monthly basis the foreign trade plan formulated by the State planning organ and obtain the approval thereof from the central foreign trade guidance organ.


Article 32(Report of the result of export and import)

Institutions, enterprises and organizations concerned shall report the result of the execution of the plan for export and import to the State planning organ, the foreign trade guidance organ concerned and the statistics organ.


Article 33 (Making the plan for cargo shipment)

Institutions, enterprises and organizations concerned shall work out draft plans for the shipment of cargo by agencies, descriptions, transports and shipment sections on a yearly, quarterly and monthly basis and submit them to the State planning organ. 


Article 34 (Notification of cargo shipment plan, conclusion of contract)

The State planning organ shall work out a yearly cargo shipment plan for foreign trade subdivided into quarterly plans and forward it to the transportation organs and the organs concerned.

The institutions, enterprises and organizations shall, on the basis of a cargo shipment plan for foreign trade, conclude a monthly contract of cargo shipment with the transportation organ. 


Article 35 (Alteration of foreign trade plan)

Foreign trade plans shall not be altered without approval.

Where a foreign trade plan is to be changed under unavoidable circumstances, institutions, enterprises and organizations concerned shall submit relevant documents to the State planning organ. 


Chapter 4  Guidance on Foreign Trade


Article 36 (Foreign trade guidance organ)

To strengthen the guidance on foreign trade is an important guarantee for the proper implementation of the foreign trade policy of the State.

Guidance on foreign trade shall be provided by the central foreign trade guidance organ under the unified direction of the Cabinet.

The central foreign trade guidance organ shall develop a strategy for the implementation of the foreign trade policy of the State and provide guidance and control to ensure implementation thereof. 


Article 37 (Organization of non-standing foreign trade guidance committee)

A non-standing foreign trade guidance committee shall be set up in the central foreign trade guidance organ in order to provide proper guidance and control to the work of foreign trade.

The non-standing foreign trade guidance committee and the committee for the review of foreign trade accidents shall, on a regular basis, discuss the ways to implement the foreign trade policy of the State and to improve foreign trade and take relevant measures.


Article 38 (Creation of external environment for the development of foreign trade)

The central foreign trade guidance organ shall conclude foreign trade agreements with foreign countries and regions, and join international and regional economic organizations to create external environment favourable for the development of foreign trade.



Article 39(Survey of international market)

The central foreign trade guidance organ shall regularly conduct survey of international market to obtain necessary information on the demand for goods by countries, regions and indices.


Article 40(Certification of place of origin of exports)

The central foreign trade guidance organ shall certify the place of origin of the exports.


Article 41(Measures for the expansion of foreign trade transactions)

The central financial guidance organ, the central customs guidance organ and the central foreign trade guidance organ may take such measures as reasonably adjusting the payment of State dues and customs duties or granting subsidies for the purpose of expanding foreign trade transactions. In this case approval of the Cabinet shall be obtained.


Article 42(Restrictions on import and export)

Import and export shall be restricted in the following cases:

1. Domestic demand needs to be met and natural resources and environment protected;

2. Development of the national economy may be disrupted;

3. The balance of international payments and foreign trade needs to be ensured; 

4. The relevant treaty or agreement so demands; and

5. Sanctions or discriminatory measures are imposed on the DPRK.


Article 43 (Ban on import and export)

Import and export shall be banned in cases where:

1. National security and public order may be disturbed;

2. Casualties may be inflicted;

3. Environmental protection and growth of animals and plants may be endangered;

4. Economic profitability is not ensured; 

5. The relevant treaty or agreement so demands; and

6. Sanctions or discriminatory measures are imposed on the DPRK.

 

Article 44(Making a list of State strategic indices, restricted goods and controlled goods)

A list of State strategic indices, items to be restricted or controlled goods shall be made by the State planning organ.

The State planning organ shall make the said list and obtain the approval of the Cabinet before notifying it to the relevant institutions.

 The central foreign trade guidance organ, the central statistics organ and the organ concerned shall regularly provide the State planning organ n with information necessary for making the said list.


Article 45(Inspection and quarantine of exports and imports)

The institutions concerned shall conduct the inspection and quarantine of import and export goods timely and correctly on the basis of the document of price approval, the document of approval of import and export, the application for inspection of exports or imports, the application for hygienic quarantine and the application for the tally of goods.


Article 46(Provision of facilities for foreign trade transactions)

The central foreign trade guidance organ shall streamline the procedures for the foreign trade transactions so that good facilities may be provided for the foreign trade transactions.


Article 47(Activation of locally-controlled foreign trade)

The central foreign trade guidance organ and the relevant organs shall, for the activation of local foreign trade, solve such problems arising in the foreign trade as creating export bases and finding markets.


Article 48(Encouraging introduction of various modes)

Institutions, enterprises and organizations concerned shall encourage transit foreign trade, processing foreign trade and the operation of bonded warehouses and other modes of foreign trade transactions. They shall also encourage credit loans for foreign trade, introduction of the system of customs duties refund and the certification system of quality of goods and environmental protection.


Chapter 5 Sanctions and Settlement of Disputes


Article 49(Supervision and control)

Foreign trade shall be placed under the supervision and control of the central foreign trade guidance organ and the relevant supervisory organ.

 The central foreign trade guidance organ and the relevant supervisory  organ shall exercise regular supervision and control of the foreign trade transactions, production of export goods and export cooperative goods, supply of imported goods and cargo shipment for foreign trade.


Article 50(Suspension of inward or outward movement of goods)

Where important foreign trade contracts are concluded without undergoing the review of the central foreign trade guidance organ or approval for the price and inward or outward movement of goods is not obtained, the goods concerned shall not be allowed to be carried in or out.


Article 51(Revocation of business license)

Where restricted or controlled goods are imported or exported, no  foreign trade results are achieved for 3 years from the date of obtaining the business license or foreign trade is conducted without having the business license endorsed, the business license revoked.


Article 52(Administrative or penal liability)

Officials of institutions, enterprises, organizations and trading companies and citizens who are responsible for the grave consequences caused through their violation of this Law shall, depending on the gravity of the offence, be liable to administrative or penal liability. 


Article 53(Settlement of disputes)

Disputes concerning foreign trade transactions shall be settled through consultation. 

In case of failure in consultation the disputes shall be referred to an arbitration organ or a court for settlement.