North Korea agreed to stop its nuclear reactor and give International Atomic Energy Agency inspectors access to the country in a six-party agreement on February 13.
The Yomiuri daily said exports to North Korea could be completely stopped. Currently the restriction only concerns luxury goods and products that could be used to produce weapons of mass destruction.
But Japan could close access to its ports for all ships who stop in North Korea on their way to Japan, and extend the black list of organizations and individuals mentioned in a UN Security Council resolution who are banned from receiving funds.
North Korea's $25 million deposited in Banco Delta Asia was unfrozen in March in an attempt to win Pyongyang's promise to close its nuclear reactor. But the fund transfer has been stalled, and in response the Communist regime has delayed shutting down its Yongbyon reactor expected in April.
The North has pledged that it will fulfill its February commitments with five countries involved in a protracted nuclear dispute, as soon as it receives the funds.
The impoverished state has been cut off from global financial markets for several years and has used cash or complicated barter schemes to pay for supplies and services from other countries.
The North Korean BDA accounts were frozen in October 2005 at the request of the United States, which accused the regime of counterfeiting and money laundering. Washington also blacklisted the Macao bank earlier this year, making other banks wary of handling Korean funds and dealing with the BDA.
BDA Chairman Stanley Au has said Washington had no grounds to demand the arrest of Pyongyang's 52 accounts, South Korea's Yonhap agency said Monday. The agency said he had sent a petition to the U.S. Treasury Department, saying its unsubstantiated sanctions posed a threat to the bank's business.
Pyongyang had boycotted disarmament talks with China, the U.S., South Korea, Russia and Japan for more than a year over the funds, and conducted its first nuclear bomb tests in October 2006.
After North Korea's nuclear tests in October 2006, Japan fully stopped importing merchandise from the republic and closed all its ports to North Korean ships.
Earlier, Japan warned Pyongyang it could introduce additional sanctions if there was no progress in resolving the problem of Japanese nationals abducted by North Korean secret services in 1970-1980s.
North Korea admitted that it had abducted 13 Japanese in 1970-1980s. Five were repatriated, and the remaining eight, North Korea said, have died. Pyongyang believes the issue is closed, but Tokyo insists there were more such cases and demands all those kidnapped be returned home.
