Foreign banks whose business supports the north korean regime. Whether directly or indirectly. By encompassing both the Economic Activity in north korea, these measures would represent the toughest financial sanctions yet directed at north korea. This means going after coal, petroleum, textiles and minerals as well as north korean laborers abroad. In addition, the bill would incentivize greater by leveraging our vote at the International Financial institutions were certain countries with lax enforcement go to seek assistance. This bill puts those countries on notice. This proposed legislation has been informed by the committees ongoing work on north korea, as well as the un panel of experts evaluation of existing sanctions effectiveness. Needless to say, north koreas sixth nuclear test on september 3, coupled with its repeated launching of intermediate and longrange Ballistic Missiles underlines that more must be done. As a result, the legislative draft will be looking at plays out a choice. Foreign banks can either do business that benefits north korea, or they can do business with the United States. They cannot do both. As many of us here are aware, this is a similar approach to the one taken in 2010 against iran which helped compel the ayatollah negotiate over the Nuclear Program. While there are differences of opinion over how successful those negotiations were, there is consensus, i believe, that in the absence of secondary sanctions affecting banks, tehran wouldve been less incentivized to even engage in talks. A focus on banks is especially important given how north korea has evaded sanctions in the past. As doctor john park testified before the subcommittee in july, the North Koreans have moved much of their trading activity offshore using third country brokers and Front Companies. The specter of financial sanctions may concentrate the minds of foreign banks so that the entities identified by doctor park and others have fewer options to carry out transactions and mask north korean involvement. Having said that, this bill would expand the scope of our sanctions to encompass even actors engaged in conventional trade with the north. Kevin north koreas unchecked hostility, broadening our efforts in this way appears essential. Nevertheless, chinas response to stronger sanctions has been cited as a concern as the country accounts for an estimated 90 of north koreas trade. Some have therefore argued that harsher sanctions may damage cooperative efforts with chinese leaders to curb north koreas weapon program. I would submit those critics should be far more sensitive to a quartercentury of failed multilateral efforts. There comes a time when caution over ways strategic patience and it becomes a euphemism for selfdelusion. As the subcommittee learned from its hearing in july, if china is not part of the solution to north korea, it is part of the problem. Chinese officials have fallen short on enforcing un sanctions to beijing. Beijing itself has signed on to it. As the Un Security Council talks following the nuclear tests, it is still unclear if china is committed to meaningfully tackling the north korean threat. Finally, we should acknowledge that kim jonguns eagerness enforcing the withdrawal of u. S. Troops in the region may not be entirely inconsistent with chinese interests. For all the reckless talk of china exerting influence around the globe at arrival to u. S. Power, we are curiously asked to believe that their hands are tied when it comes to a small, economically dependent state next door. Well, if chinese officials hands are tied, then we should proceed with secondary sanctions so there banks can assist International Efforts to cut off north koreas access to finance. If, on the other hand, china could do more than it has been secondary sanctions may finally inspire it to do so. I want to thank our witnesses were appearing today and i look forward to their testimony. The chair now recognize the Ranking Member of the subcommittee, when more for five minutes. Thank you so much. In the absence of Ranking Member of the full committee, i would like to share some thoughts that she had committed to paper regarding todays hearing. I want to thank our witnesses for joining us to discuss the legislative proposal aimed at expanding the United States sanctions against north korea and pressuring the International Committee to enforce those restrictions as well. The situation in north korea is the most urgent and dangerous threat to peace and security that we face. It is one that grows more dangerous as north korea aggressively pursues the capacity to extend its nuclear region, the United States. In fact, there are no good options for dealing with north korea. Most experts agree that a preemptive strike, at this point, on north korea would be reckless beyond belief. Of the least bad options, i like the idea to lean more heavily on north korea, and i like the idea of tougher sanctions, but we should not confuse either of those things with a coherent strategy, and we should be clear upfront about our goals and objections and what we expect sanctions can accomplish. Any ratcheting up of sanctions must be coupled of aggressive diplomatic engagement by the United States and within a framework that would entail the nuance negotiations with north korea, u. S. Allies and china. This would require unprecedented policy making capacity in coordination across the United States government as well as skills, policy coronation with our allies. It concerns me therefore that just does this crisis is accelerating, a diplomatic capability, which opens channels for crisis medication and reduce the risk of miscalculation are diminished. Not only our u. S. Ambassador ships to japan and south korea still vacant, the president has yet to nominate a permanent assistant secretary of state for East Asia Pacific affair. The proposal before us today rightly recognizes the need to exert massive and immediate pressure on the north korean regime and importantly and list chinas anothers in this effort. Such a powerful approach toward sanctions, however, that has a capacity to reverberate across the Global Economy and produces potentially disastrous consequences must also allow for careful calibration and implementation. We look forward to the witnesses views on the proposal before us as well as views on how the u. S. Can most effectively use leverage on the danger that north korea presents. I yield my time. The chair now recognizes the gentleman from washington for an opening statement. Thank you, mr. Chairman and Ranking Member for the time and thank you all for convening this important hearing. Responding effectively to north koreas provocations will require a variety of tools. Credible deterrence, skillful diplomacy and a careful design of nonmilitary sanctions. Here we have jurisdiction over only one of those tools, sanctions. I believe its important we always keep the broader picture in mind as we work to perfect the discussion draft which has been put forward today. Even with perfect compliance, i believe its difficult to stop any country from pursuing a course of action which it views as vital to its survival through sanctions alone. These challenges are even greater when dealing with the regime like north korea. The regime which relies on force to stamp our, a regime which has demonstrated indifference, the incredible suffering of its own people, a regime which can easily make sure its Nuclear Program are the last to feel any pinch. Done right, however, sanctions can make further north korea advances slower and more costly. It gives more time for other policy to tools to work. I look forward to hearing from our distinguished witnesses about how this proposed draft fits into a larger strategy. My constituents in the south will include Service Members at the joint base lewis mccord are counting on us to respond to this crisis in a responsible manner. So too are our allies like south korea and japan and in asiapacific region which has enjoyed decades of peace and prosperity in large part because of the credibility of u. S. Security guarantees in a broader commitment to the region. We cannot avai afford to fail them. We have to get this right. I am hopeful that was steady American Leadership working in a bipartisan manner, we will get this right. I yield back. The gentleman yields back and because of the significance of the issues under consideration in this hearing and the importance of the north korean threat to our homeland and to the interest of our country, a number of members from the full committee have expressed interest in participation in todays subcommittee hearing. I asked for unanimous consent that members on the full committee, but not on the subcommittee may join in this hearing. Without objection, that is ordered. Today we welcome the testimony of a distinguished panel of witnesses, first david who is the founder and president of the institute for science and interNational Security. He has written numerous assessments on the secret Nuclear WeaponsProgram Throughout the world. He has published assessments in numerous technical and policy journals including the bulletin of the atomic scientists, Scientific American on the science and global security, washington quarterly, and arms control today. He has also coauthored four books including the world inventory of petroleum and highly enriched as well as peddling peril, how the secret nuclear trade arms americas enemy. Prior to founding the institute he worked as a senior staff scientist at the federation of american scientists and as a member of the Research Staff of Preston University for energy and environmental studies. Anthony spent more than 17 years in the u. S. Government as an expert in the use of targeted financial measures. Most recently he was a foreignpolicy fellow in the office of senator marco rubio and a Senior Advisor on issues relating to the Senate Foreign relations committee. He has also served in the Treasury Department as Deputy Director and then director of the office of Global Affairs and financial crime. Prior to joining treasury, he spent over 13 years in various capacities at the state department including as chief of the defensive measures in wmd finance team. He was also nonproliferation advisor to the u. S. Delegation to the 2005 round of the Six Party Talks in beijing and participated in north korea meetings following the identification of the primary moneylaundering concern. He also served as an Intelligence Analyst covering north Korea Nuclear missile programs. Mr. Klinger specializes in korean and japanese career. Hes a freak and commentator on foreign media. The analysis and writing about north korea, south korea and japan are informed by his 20 years of service and the Defense Intelligence agency. From 1996 until 2001, he was cia Deputy Division chief for korea, responsible for the analysis of political, military, Economic Leadership issues for the president of the United States and other senior policymakers. In 1993 and 1994 he was the chief of the cia korea branch which analyze military departments during a Nuclear Crisis with north korea. Elizabeth rosenberg is a senior fellow and director of the Energy Economic and Security Program at the center for a new american security. In this capacity she publishes and speaks on the National Security and Foreign Policy implications of Energy Market shifts and the use of sanctions and economic statecraft. From may 2009 until septembe september 2013, mrs. Rosenberg served as a Senior Advisor to the assistant secretary and then to the undersecretary for terrorism and financial intelligence. In these roles, she helped to develop and implement financial and energy sanctions. She also helped formulate anti Money Laundering policy and oversee financial regulatory enforcement activities. Each of you will be recognized for five minutes to give an oral presentation of your testimony. Without objection your written statement will be made part of the record. Mr. Albright you are now recognized for five minutes. German bar, Ranking Member and other members of the committee, think you for the opportunity to testify today. North koreas september 3 nuclear test, by far its the largest in terms of explosive yield demonstrated to resolve and commitment to developing a Nuclear Arsenal able to strike its enemies. During the past two years, north korea has embarked on an intensive Nuclear Weapons testing and Production Campaign that is including the destruction and operation of mediocre facilities, three underground tests and tons of Ballistic Missile launches. Its apparent goal is to have tens of Nuclear Weapons of many varieties made into Ballistic Missiles with ranges stretching to intercontinental distances. Few doubt that north korea can now launch Ballistic Missiles that can strike our allies, japan and south korea. There is rightly more skepticism that north korea is yet able to deliver Nuclear Warhead to american city. It is making rapid progress toward that goal. I continue to believe that north korea can be peacefully denuclearize to, however substantive negotiations appear unlikely unless north korea changes its path. Given north koreas own willingness, and its provocative behavior, there is little choice but to exert more pressure including harsher sanctions and trade cutoffs. The Security Council resolution passed on monday as an important step in that direction. A nearterm priority is to far more effectively isolate north korea from the regional and financial system. A central problem is that many countries are not enforcing sanctions effectively or in some cases willfully disregarding them. Punitive measures are needed to encourage compliance and deter violations. Additional u. S. Legislation that supports that goal is useful. North korea appears to target entities and persons in engaging activities in violation of Un Security Council sanctions intensive countries with weak or nonexistent control systems for proliferation financing controls or higher than average corruption. Although a range of remedies are needed to fix performance in general of many of these countries, the creation of unitive measures may be an effective means to accelerate more compliant behavior in the shortterm among a wide range of countries where entities and individuals see north korea as a quick way to make money or obtain military or other goods more cheaply or unavailable elsewhere. Dealing with chinas trade with north korea is in a different category. Morsnorth korea has depended on illegal procurement for decades for its nuclear and other military programs. As the chairman pointed out, it has gone offshore quite successfully to be able to acquire those goods and they dont just acquire them in the country of such as china, they are able to get those goods from the United States, europe and japan by operating in china and exploding chinas week export control and sanctions legislation. Although china is improving its export control laws, have not done an adequate job of enforcing the laws. Ive provided several examples in my testimony. China remains north koreas central supply conduit for its Nuclear Weapons program. One of the priorities is to change that. The Trump Administrations efforts to sanction chinese, and for that matter russian owned companies and individuals that significantly support north koreas Weapons Program are a positive step. Unless china and russia show dramatic improvement in ending their trade with north korea, United States should go further and sanction Major Chinese and russian banks and companies for any illicit north korea dealings. Both countries have gotten away for far too long and have haste to view consequences for turning a blind eye to the sanctions busting Business Activities of their citizens and those of north korea and using their economies for nefarious purposes. North korea has a diplomatic path out of its isolations