The US Senate has voted unanimously in favour of tougher sanctions against North Korea, after the country’s recent nuclear and rocket tests.
It targets anyone who directly or indirectly helps Pyongyang’s weapons proliferation or human rights abuses.
On Thursday, South Korean workers started withdrawing from the industrial park jointly run by the two Koreas.
It comes after South Korea suspended its operations at the Kaesong industrial park on Wednesday.
Seoul said the North was using its investment “to fund its nuclear and missile development”.
Kaesong is the last remaining point of co-operation between the two Koreas and a vital source of cash for the North.
The draft legislation targets any person or entity trading or financing anything related to weapons of mass destruction, conventional arms proliferation, North Korea’s rocket programme, money laundering, narcotics trafficking, human rights abuses, activities that threaten US cyber security, and the import of luxury goods.
All were already restricted, but the measures aim to tighten the sanctions further.
The bill also authorises $50m (£34m) for radio broadcasts into North Korea and humanitarian aid programs.
The House of Representatives earlier passed a similar bill. The two will now have to be reconciled with a final measure needing President Barack Obama’s sign-off.
Republican Senator Cory Gardner, one of the authors of the sanctions bill, criticised President Obama’s policy of “strategic patience”.
“The situation in the Korea peninsula is at its most unstable point since the armistice,” he said, referring to the deal to end hostilities in the Korean War in 1953.
Republican senators and presidential candidates Ted Cruz and Marco Rubio interrupted campaigning to go back to Washington DC for the vote. But Democratic candidate Bernie Sanders did not return, although he did express his support for the bill in a statement.
Congress has been keen for sanctions to be tightened since North Korea tested a nuclear device in January. Last weekend, the North launched a long-range rocket, which it said was designed to put a satellite into orbit, but critics say it was to test ballistic missile technology.
But with vastly more North Korean trade being done with China than with the US, politicians admitted that measures were intended in large part at demonstrating resolve to Beijing – Pyongyang’s biggest ally and trading partner, and a permanent UN Security Council member reluctant to significantly step up sanctions.
Japan also toughened its sanctions on the North this week, including by restricting remittances from members of its Korean community to North Korea, and a ban on North Korean ships entering Japanese ports.