How N.Korean seafood ends up in countries that ban it

* N.Korea seafood exported to U.S., Japan via China

* They ban all N.Korea products regardless of origin

* China doesn't recognise such "unilateral sanctions

* China allows N.Korea fish exports if for "livelihoods"

By Sue-Lin Wong

YANJI, China, Dec 21 (Reuters) - The brightly coloured packages advertising "Walleye Pollock" at the West Market in Yanji, a Chinese city near the border with North Korea, say the fish came from China.

But 15 vendors interviewed at the market say the fish came in from North Korea to be processed, packaged and mostly sold in China. They say they buy the fish from Chinese wholesalers who deal with their North Korean counterparts at the border.

The packaged fish is also exported to countries that ban North Korean products, including South Korea, Japan and the United States, say the vendors, who are also involved in the export of their products.

"All the dried fish is from North Korea but we package it here so we say the fish is from here," said one vendor who spoke on condition of anonymity.

Smaller packets sell for around 40 yuan ($5.80) while the bigger ones which are often given as gifts sell for at least 100 yuan.

"We export everywhere, mostly to South Korea and Japan. I've even exported to the U.S.," said another vendor. "We sell some of our fish here, but we mostly export overseas."

The official newspaper of the government of Jilin province, where Yanji is located, said in a September article that North Korean and Russian seafood is processed in a town near Yanji, before being exported to South Korea, Japan, the United States and Europe.

Reuters could not independently confirm that North Korean seafood from Yanji or nearby towns is being exported to South Korea, Japan and the United States.

CUTTING EXPORT REVENUE

The United States, Japan and South Korea, ban products made inside North Korea, as well as those using North Korean ingredients produced in third countries, such as China.

The United Nations Security Council imposed new sanctions on North Korea this month aimed at cutting its annual export revenue by a quarter in response to Pyongyang's fifth and largest nuclear test yet in September.

China's imports of North Korean seafood are allowed under U.N. sanctions, if they support the livelihood of ordinary North Korean fishermen.

In practice, it is almost impossible to ascertain whether the seafood that comes across the border is from independent fishermen or state-linked companies, analysts said.

China's foreign ministry spokesman Lu Kang declined to respond to a Reuters question about the repackaging of North Korean fish for export.