Tillerson says talks with North Korea may be close, notes 'restraint'

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Meanwhile, Russia and China had proposed that the United States and South Korea should freeze their military drills in exchange for the North putting a moratorium on further missile and nuclear tests.

The peace gesture came just hours after the Treasury announced new sanctions on mainly Chinese and Russian entities and individuals with suspected ties to North Korea's nuclear program.

The latest round of increased tensions surrounding North Korea followed Pyongyang's two test launches last month of intercontinental ballistic missiles (ICBMs), which precipitated the U.N. Security Council's decision to impose new and tighter sanctions.

The UN Security Council unanimously passed a resolution on August 5 banning exports of coal and iron, among other punishments, after Pyongyang tested two intercontinental ballistic missiles in July.

Secretary of State Rex Tillerson speaks at the State Department in Washington Tuesday Aug. 22 2017 to discuss Afghanistan

A North Korean statement promised "merciless retaliation and unsparing punishment" in response to the drills.

Secretary of State Rex Tillerson speaks at the State Department in Washington, Tuesday, Aug. 22, 2017, to discuss Afghanistan. The penalties are meant to complement the new United Nations sanctions.

That led to particularly belligerent rounds of threats from North Korea state media and President Trump, who at one point vowed "fire and fury" against North Korea and then warned that US military weapons were "locked and loaded".

It was earlier announced that the USA was imposing sanctions on Chinese and Russian companies and individuals, including those dealing in Pyongyang's energy trade and helping North Korean entities gain access to the United States and global finance.

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The US envoy, Robert Wood, said the "path to dialogue still remains an option" but added that Washington was "undeterred in defending against the threat North Korea poses".

The measures block any assets the entities may have in US jurisdictions and bar Americans from transactions with them.

"It is unacceptable for individuals and companies in China, Russia and elsewhere to enable North Korea to generate income used to develop weapons of mass destruction and destabilize the region".

US President Donald Trump warned North Korea this month it would face "fire and fury" if it threatened the United States.

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Among those sanctioned are six Chinese companies, including three coal companies, and two Singapore-based companies that sell oil to North Korea and three Russians that work with them.

Shortly before the allies embarked on war games this week, North Korean government channel Uriminzokkiri released a propaganda video showing members of the Trump administration, including Tillerson, engulfed in flames.

The Treasury also alleged that three Chinese companies - Dandong Zhicheng Metallic Materials, JinHou International Holding and Dandong Tianfu Trade - had collectively imported almost a half billion dollars' worth of North Korean coal between 2013 and 2016.

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