North Korea yesterday pulled out of a liaison office with the South, in a major setback for Seoul, just hours after the United States imposed the first new sanctions on the North since the second US-North Korea summit broke down last month.
North Korea said it was quitting the joint liaison office set up in September in the border city of Kaesong after a historic summit between leader Kim Jong Un and South Korea's President Moon Jae-in early last year.
"The North's side pulled out after conveying to us that they are doing so on the instructions from a higher level, during a liaison officials' contact this morning," South Korea's Vice Unification Minister Chun Hae-sung told a briefing.
South Korea regrets the decision and urged a swift normalisation of the arrangement, Chun said, adding the South would continue to staff the office, set up as a regular channel of communication to ease hostility between the rivals, which technically remain at war.
The move came after the United States on Thursday blacklisted two Chinese shipping companies it says helped North Korea evade sanctions over its nuclear program and cited 67 vessels it said engaged in illicit trade helping the North.
It was the first such step since a second meeting between President Donald Trump and North Korean leader Kim Jong Un in Hanoi broke down over conflicting demands by the North for relief from sanctions and from the United States for Pyongyang to give up its nuclear weapons.
The US Treasury Department identified two Chinese firms for new sanctions - Dalian Haibo International Freight Co Ltd and Liaoning Danxing International Forwarding Co Ltd - which had helped the North evade US and international sanctions, it said.
It also cited 67 vessels for engaging in illicit transfers of refined petroleum with North Korean tankers or facilitating the export of the North's coal.
Reuters was unable to locate contact details for either of the Chinese companies to seek comment.