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Many of the wigs and false eyelashes labeled “Made in China” that are sold by American retailers may violate U.S. sanctions on North Korea, which is where they are actually manufactured, according to experts.

China imported approximately 30 tons of North Korean-made wigs and false eyelashes in April worth over $22.7 million, according to data from China’s General Customs Administration examined by VOA’s Korean Service.

About half, amounting to more than $11.2 million, were imported by Chinese companies in Henan province. Xiaogang, a city in central Henan province, is the world’s largest wig manufacturing, distribution and export hub.

Although North Korea sealed its border with China in January 2020 at the beginning of the pandemic, trade between the neighbors has resumed gradually since North Korea declared victory over COVID-19 in August 2022. China is North Korea’s biggest trading partner.

The amount of Pyongyang’s wig and false lash exports to China in April shows that “trade is returning after the pandemic” as North Korea’s total exports to China in 2021 “only amounted to $56.3 million,” said Troy Stangarone, senior director at Korea Economic Institute (KEI) to VOA Korean by email.

As North Korea’s exports to China return to pre-pandemic levels, experts said U.S. companies must be vigilant that supply chains do not include Chinese manufacturers that use North Korean labor. U.S. penalties for sanctions violations convictions include “incarceration, fines, and forfeiture of any/all goods imported and proceeds of these crimes,” according to federal law.

“Chinese firms have been known to subcontract with North Korean firms and label the goods as made in China,” Stangarone said. “Any efforts by Chinese firms to directly or indirectly export wigs and fake lashes or any other North Korean goods to the United States would be a violation of U.S. sanctions.”

Despite the sanctions, however, there is still a good chance that those items could end up in the U.S., he added.

$128.6 million in human hair products

China was the top global exporter of human hair products including wigs and fake lashes in 2021, totaling approximately $1.84 billion while the U.S. was the largest importer of those products worth approximately $1.01 billion in the same year.

In April, China was the largest exporter of wigs and other human hair products to the U.S. amounting to $128.6 million.

“If firms utilize China as part of their supply chain, they need to be aware” they could be “unknowingly sending North Korean goods to the United States,” said Stangarone.

The U.S. Treasury issued an advisory in 2017 cautioning American businesses to “closely examine their entire supply chain(s) for North Korean laborers and goods and services or technology” especially “those businesses with operation in high-risk countries.”

The advisory said that North Korea uses forced labor to raise revenue to fund its weapons of mass destruction (WMD) and ballistic missile programs.

The “use of North Korean citizens or nationals as laborers in supply chains could trigger U.S. sanctions, and the issuance of work authorizations for these North Korean nationals is prohibited under UN Security Council resolution 2397” issued in 2017, said the advisory.

Joshua Stanton, a Washington-based attorney who helped draft the Sanctions Enforcement and Policy Enforcement Act in 2016, said, “Importing products made with forced or penal labor into the United States has long been a violation of the U.S. Tariff Act.”

He continued, “If goods are made in whole or in part with North Korean labor, they’re subject to rebuttable presumption that they’re made with forced labor.”

Regulations ban imports from North Korea

The regulations ban imports of goods, services or technology from North Korea. 

In 2019, California-based e.l.f. Cosmetics agreed to pay nearly $1 million for importing over $4 million worth of false eyelash kits from Chinese suppliers that sourced materials from North Korea in violation of the North Korean Sanctions Regulations. 

The U.S. Treasury said the cosmetics company “appears not to have exercised sufficient supply chain due diligence while sourcing products from a region” in which North Korea is “known to export goods.”

“If U.S. Customs and Border Protection’s Office of Trade identifies those [North Korean-made] wigs, it will seize them and sell them at auction,” said Stanton.

Stanton said U.S. Customs and Border Protection (CBP) may rely on tips to identify North Korea-made products such as items coming from an exporter or factory with a known history of employing labor in North Korea, among other ways of detection.

In 2022, CBP seized goods produced by the Chinese companies Jingde Trading, Rixin Foods and Zhejiang Sunrise Garment Group at U.S. ports.

The seizures were based on CBP’s “investigation indicating that these companies use North Korean labor in their supply chains in violation of the Countering America’s Adversaries Through Sanctions Act (CAATSA),” the CBP said in December 2022. 

CAATSA bans the importation to the U.S. of items made by North Korean workers “anywhere in the world,” said the statement.

Although U.N. Security Council sanctions on North Korea do not explicitly list wigs and false lashes as banned export items, China and North Korea could be violating those sanctions, according to Stanton. U.N. sanctions ban the Pyongyang regime from exporting items like coal, textiles and seafood to prevent sales revenue from funding its weapons programs.

“The U.N. sanctions are not required to list every product and item that North Korea exports,” Stanton said.

North Korea’s “export to China is nonetheless a violation of UN sanctions if China fails to ensure that Pyongyang doesn’t use the profits for prohibited activities, including WMD proliferations,” continued Stanton.

North Korea conducted a record number of weapons tests last year to enhance the development of its missile and nuclear programs, a practice that Pyongyang is continuing this year. Its latest attempted launch of a satellite using ballistic missile technology banned by the UN failed on May 31.

Christy Lee contributed to this report.
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Consumer prices in the United States cooled last month, rising just 0.1% from April to May and extending the past year’s steady easing of inflation. At the same time, some measures of underlying price pressures remained high.

Measured year over year, inflation slowed to just 4% in May — the lowest 12-month figure in over two years and well below April’s 4.9% annual rise. The pullback was driven by tumbling gas prices, a much smaller rise in grocery prices than in previous months and less expensive furniture, air fares and appliances.

Tuesday’s inflation figures arrive just as Federal Reserve officials begin a pivotal two-day meeting, after which they’re expected to leave interest rates alone after imposing 10 straight rate hikes dating back to March 2022. On Wednesday, the central bank will likely announce that it’s skipping a rate hike but may hint that it will resume raising rates as soon as July. Top Fed officials have said they’re leaning toward a so-called “skip” to allow time to assess how their rate hikes have affected inflation and the overall economy.

Still, last month’s drop-off in overall inflation isn’t likely to convince the Fed’s policymakers that they’re close to curbing the high inflation that has gripped the nation for two years. The Fed tends to focus more on “core” prices, which exclude volatile food and energy costs and generally provide a clearer view of inflation.

And core prices remained high last month, rising 0.4% from April to May, the sixth straight month of increases at that level or higher. Compared with a year ago, core inflation slipped to 5.3% from 5.5%. That is still far above the Fed’s target of 2%.

Last month’s core inflation was fueled mainly by high apartment rental costs and a second straight jump in used car prices, which soared 4.4% just from April to May. On the other hand, wholesale prices of used cars declined last month, which may foretell lower retail used-car prices in coming months.

Gas prices, adjusted for seasonal patterns, fell 5.6% from April to May; they’re down nearly 20% from a year ago. And grocery prices ticked up just 0.1%, a relief to consumers, though they’re still 5.8% higher than they were a year ago.

The stubbornness of underlying inflation reflects a fundamental challenge for the Fed: The economy has steadily defied long-standing forecasts for a recession, dating back more than a year. Instead, businesses have kept hiring at a healthy pace, average paychecks are climbing and workers are freely spending their larger wages.

Though a resilient economy is great for households and businesses, it may also be helping fuel chronically high inflation. Some economists argue that many companies are keeping prices artificially high, more than is needed to cover their own higher costs, to drive profit growth. The nation’s consumers might have to pull back, en masse, before most businesses will reduce prices. In the meantime, steadily robust hiring is allowing Americans, as a whole, to keep spending.

The Fed has raised its benchmark rate by a hefty 5 percentage points over the past 15 months — the fastest pace of rate increases in four decades. Those hikes have led to much higher costs for mortgages, auto loans, credit cards and business borrowing. The Fed’s goal is to slow borrowing and spending, cool the economy and tame inflation — without causing a deep recession. It’s a notoriously difficult task.

There are some signs that the Fed’s efforts are having the desired effect. Inflation is expected to take another big step down in the June figures that will be reported next month. Price growth could slide as low as 3.2% from a year earlier, according to some economists’ estimates. That would be significantly below inflation’s peak of 9.1% in June 2022, the highest level in four decades.

Yet any sharp declines in May and June will in part reflect the fact that prices soared in both those months last year. As those months drop out of the year-over-year inflation calculations, they are replaced with smaller monthly gains. The effect can sharply lower measures of annual inflation.

Still, core prices are expected to stay high in May, driven up by another jump in used car prices and steady increases in rental costs. Used car prices soared 4.4% just from March to April. Economists expect another increase, though not quite as large, from April to May.
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South Korea has charged a former Samsung executive accused of stealing company secrets worth hundreds of millions of dollars to set up a copycat chip factory in China, prosecutors told AFP on Tuesday.

Semiconductors have become a flashpoint issue between the United States and China, which are locked in a fierce battle over access to chip-making technology and supplies.

South Korean prosecutors said the 65-year-old former Samsung employee allegedly stole the company’s factory blueprints and clean-room designs from 2018 and 2019.

The Suwon district prosecutor’s office said the suspect unsuccessfully tried to set up a copycat production facility in the Chinese city of Xian — where Samsung already has a chip factory.

The man, who has not been identified and is in detention pending trial, stole material that is classified by South Korea as a “national core technology” — a category of tech that could potentially harm national security and the economy if disclosed overseas.

Prosecutors said he had been in custody for some time and was formally charged on Monday.

They described him as a “top expert in semiconductor manufacturing”, who had worked in the industry for decades.

South Korean authorities said the information allegedly targeted in the theft would have been worth at least $236 million to Samsung.

“It is a serious crime that can have a tremendous negative impact on our economic security by shaking the foundation of the domestic semiconductor industry at a time when competition for chip production is intensifying every day,” prosecutors said in a statement on Monday.

“The semiconductor industry accounted for 16.5% of South Korea’s total exports in 2022… and is a national security asset.”

Six other people who worked with the executive have been charged over suspected involvement in the theft.

Samsung declined to comment when contacted by AFP on Tuesday.

Chip war

Samsung Electronics is one of the world’s largest producers of chips and smartphones, and its parent group’s turnover is equivalent to about one-fifth of South Korea’s GDP.

Like many of the world’s biggest chip makers, a large portion of its production is based in China.

Chips are the lifeblood of the modern global economy, and China — the world’s second-largest economy — relies on a steady supply of chips made by foreign firms for its huge electronics manufacturing industry.

The United States imposed a series of export controls last year to prevent China from acquiring the most advanced chips that could be used in cutting-edge weapons and frontier tech such as artificial intelligence.

The Netherlands and Japan followed this year with restrictions of their own, without naming China.

But the curbs have infuriated Beijing, which has accused Washington of “technological terrorism.”

China last month said U.S. chip giant Micron had failed a national security review, and told operators of “critical information infrastructure” to stop buying its products.

Analysts have described that move as retaliation for the U.S. semiconductor curbs.

“Amid intensifying semiconductor competition between the U.S. and China, South Korea is in a difficult situation as it has to side with its security ally U.S. while it obviously cannot ignore Beijing and its influence,” Kim Dae-jong, a professor of business administration at Sejong University, told AFP.

“Samsung Electronics should pay more attention to technology and information security. China is trying to catch up.”
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Australia’s national science agency Tuesday unveiled a new blueprint to ensure the nation’s food supply is secure and resilient. The Commonwealth Scientific and Industrial Research Organization has said the sector faces serious challenges, including climate change and disruptions to supply chains.

More than 70% of Australia’s agricultural production is exported overseas, according to government data, helping to feed an estimated 70 million people around the world and at home. It makes Australia a key global food producer.

But CSIRO, the Commonwealth Scientific and Industrial Research Organization, is warning that the nation’s food systems must change to remain sustainable in the future.

Australia’s national science agency has identified several key threats to food production; “recent climate extremes, the COVID-19 pandemic, and geopolitical uncertainties.” It has also identified other critical challenges, including increasing demand, as well as disruptions to supply chains and the workforce.

It has unveiled a new plan called Reshaping Australian Food Systems to make food production more sustainable, nutritious, productive and resilient.

Michael Robertson, the director of CSIRO Agriculture and Food, told the Australian Broadcasting Corp. that new approaches are needed in agriculture.

“There is also an awful lot of innovation required around new products, new food products, new ways of producing crops and animals on farms, the use of renewable energy in food processing [and] better understanding of our supply chains and transport networks,” he said.

Robertson also said that climate change would bring more extremes to farmers and disruptions to water supplies.

Better access to healthy diets and minimizing food waste are among five key areas identified in the CSIRO blueprint. The agency has estimated that a third of Australia’s food production goes to waste each year.

Australia’s agricultural activity is determined by the climate, the availability of water and the proximity to markets.

Livestock grazing takes place across the country, while horticulture — the production of fruit, vegetables and flowers — and cropping, that includes the planting of wheat and barley, are generally located in coastal regions.

In 2021–22 exports of Australian agricultural, fishery and forestry products were worth $51.2 billion, according to official records.
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Canada’s worst-ever spring wildfire season has forced its forestry industry to shutter sawmills, driving up lumber prices and setting production back for months just as housing construction has slowed due to higher costs and a tight labor market. 

Canada has the world’s third-largest forest area and is the second-largest softwood lumber producer, according to Canadian government estimates, making it a key supplier of a critical housing material. 

This year’s unprecedented fires have already consumed at least 4 million hectares, or 1% of Canada’s forest, according to the Forest Products Association of Canada (FPAC), an industry group. 

The fires are blazing through Alberta, British Columbia and Quebec, all provinces with active forestry industries. 

The fires have also forced thousands of people to evacuate their homes and blanketed cities with smoke as far away as Toronto, New York and Washington. 

Fires in British Columbia and Alberta have forced significant downtime at sawmills, and “ground zero” has now shifted to Quebec, FPAC CEO Derek Nighbor said. 

“It’s significant. Closing mills and having to restart them is a lot of work and that’s people who have to be laid off temporarily,” said Nighbor, who did not have an overall estimate of lost production. 

Chicago lumber futures for July delivery have climbed 7% since June 1. 

The unexpected disruption to the lumber industry risks further slowing new home construction, adding to Canada’s acute housing shortage. Investment in residential building construction, after adjusting for inflation, fell in March to its lowest level since June of 2020. 

Resolute Forest Products has temporarily shut four Quebec sawmills due to nearby fires and a related log shortage, Resolute Vice President Seth Kursman said. Workers were digging trenches near the facilities to suppress the fires. 

Kursman said it was premature to say if the company may need to declare force majeure – unexpected circumstances that prevent a business from meeting contract obligations – or could make up the lost production later in the year. The closed mills mainly produce softwood lumber for North American markets. 

Supply constraints 

Resolute has also paused harvesting activities in areas near fires. 

Long-term damage to forests will require up to eight weeks to assess once the fires abate, Nighbor said. 

“Is there anything that’s salvageable? Is it younger trees that have been taken out or is it 60-to-80-year-old trees, because that will impact future operations,” he said. 

Wildfires can temporarily boost lumber prices as supplies are constrained and buyers increase inventories, although prices tend to revert later in the year, RBC Capital Markets analyst Paul Quinn said in a note. 

Chantiers Chibougamau was forced to shut its Nordic Kraft pulp mill in Lebel-sur-Quevillon, Quebec after a fire spread within 500 meters (1,640 feet) of it, but it expects to resume production this week, company spokesperson Frederic Verreault said. 

Forest fires are partly a natural phenomenon, culling debris and creating new growth. But big blazes can also reduce timber supply for the long term, Quinn said. 

Nighbor said as Canada’s wildfires worsen, federal and provincial governments should allow for expanded tree harvesting, especially of older trees, to reduce fire risk. 

Prime Minister Justin Trudeau’s government has set a goal of protecting 30% of Canada’s lands by 2030. About 13% is currently protected, Nighbor said. 

“There’s this sense in some political circles that protecting trees is going to be some solution for (the) climate. We need to be looking (at forestry) through a fire lens,” he said. 

Forests can become more fire-resilient by thinning them of dying trees, prescribed burning and retaining tree species that are fire-resistant, said Michelle Ward, vice president at Canfor. The forestry company has not had to shut facilities due to fire. 

The government will continue to protect natural lands, but responsible forestry practices can also support fire resilience, said Keean Nembhard, a spokesperson for the Canadian natural resources department. 

Joe Foy, protected areas campaigner with the Wilderness Committee, an environmental group, said protecting communities from fire is better left to governments than forestry companies. 

“Unleashing forest companies to build hundreds of kilometers (of) more roads to do more clear-cutting results in a worse situation, not a better one,” Foy said.  
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Pakistani authorities are touting the arrival of the first shipment of discounted Russian crude oil as “transformative,” however, analysts say the extent of relief it will bring the country’s crisis-riddled economy is not clear.  

Pakistan’s minister for petroleum, Musadik Malik, told the Reuters news agency that Islamabad paid Moscow for the cargo in yuan, the Chinese currency. The Pakistani government has so far not disclosed the price.

Announcing the arrival of the Russian vessel “Pure Point,” with a little more than 45,000 metric tons of crude oil, Pakistani Prime Minister Shehbaz Sharif said in a tweet Sunday night that the country was moving “one step at a time toward prosperity, economic growth and energy security and affordability.”

Authorities at the southern Karachi Port terminal began offloading the cargo Monday morning. Shariq Amin Farooqi, public relations officer for the Karachi Port Trust, told VOA the entire process would take 26 to 30 hours.  

Economic distress  

The discounted crude shipment comes at a time when import-dependent Pakistan faces a severe liquidity crunch. The country spends the biggest portion of its import funds, around $18 billion annually, on energy and fuel. 

According to recent central bank data, foreign exchange reserves were below $10 billion as of June 2, with the State Bank of Pakistan holding less than $4 billion – barely enough to cover a month of select imports.   

Pakistan has been teetering on the brink of default since last year. Its economy has grown at a rate of 0.29% in the fiscal year ending this month, according to government projections, while annual inflation reached a record high of almost 38% last month.  

Russian deal  

As part of what the government in Islamabad has called a “trial” shipment, Pakistan will receive a total of 100,000 metric tons of crude oil from Russia. The second shipment is expected in a few weeks.  

Islamabad began negotiating for discounted crude oil from Moscow last year in a bid to take advantage of the $60 per barrel price cap placed on Russian oil by the United States and its allies to deprive Moscow of funds in the wake of the war on Ukraine.

The deal was finalized in April after Pakistan’s minister for petroleum, Musadik Malik, led a delegation to Moscow late last year and a Russian delegation visited Islamabad in March to cement the details.   

The Pakistani government has so far not disclosed the payment method or the price at which it is acquiring crude from Moscow.

Dubai-based oil trading expert Ahmad Waqar told VOA that for the deal to truly ease Pakistan’s economic pain, it should include purchase on credit as Pakistan is strapped for cash.  

“In my opinion, right now, more than discount we need to get cargo on credit,” Waqar said.

Pakistan traditionally buys the bulk of its energy from Gulf countries with Saudi Arabia and the United Arab Emirates its top suppliers. While the Saudis have often supplied fuel on credit, Pakistan’s budget for the next fiscal year starting in July does not include any such facility from its Middle Eastern ally.  

Waqar said he believes the cost of getting cargo all the way from Russia via Oman, instead of from Gulf countries located nearby could also chip away at the possible benefit to Pakistan.    

“Russian cargoes are not as cheap as they used to be, let’s say, 10 months ago when India started buying from Russia…There was a different pricing level at the time. Since then, more international traders started buying and prices went up. It’s not possible to now say that ‘I can get Russian cargo very cheaply,’” Waqar said.  

In the past, petroleum minister Malik also tried to downplay the relief Russian oil could provide to Pakistanis at the pump, however, after the arrival of the cargo, local media quoted him saying Pakistanis will see a reduction in prices in a few weeks.  

How much usable fuel will be produced from the Russian crude is also not clear yet. Pakistan Refinery Limited, tasked with processing it, will submit a report to the government detailing the quality and quantity of the products.   

US approval  

Despite initial pushback from Washington, Pakistan’s neighbors China and India’s energy imports from Russia rose after the war in Ukraine began last year, with the latter seeing its purchases increase almost ten-fold since April 2022.  

Responding to Pakistan’s decision to purchase crude oil from Russia, the State Department in April said that it understood the demand for Russian energy and would not interfere in any country’s decision to buy from Moscow.  

“Countries will make their own sovereign decisions. We have never tried to keep Russian energy off the market,” said spokesperson Vedant Patel.    

The Pakistani ambassador to the U.S., Masood Khan, also dismissed concerns that the deal could damage already strained ties between Islamabad and Washington, saying U.S. officials had been consulted.   

“We have placed the first order for Russian oil, and this has been done in consultation with the United States government. There’s no misunderstanding between Washington and Islamabad on this count,” Khan told a gathering at the Washington-based Wilson Center in April.
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