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U.S. Secretary of State Rex Tillerson speaks at a press conference at the Australia-United States Ministerial Consultations (AUSMIN) at Government House in Sydney, Australia, June 5, 2017. REUTERS/Jason Reed

(reuters_tickers)

By Patricia Zengerle

WASHINGTON (Reuters) - The United States is weighing imposing sanctions on countries that do business with North Korea and looking for ways to revive strained relations with Russia, U.S. Secretary of State Rex Tillerson said on Tuesday.

At a committee hearing, he also defended President Donald Trump's plans for steep reductions in U.S. spending on diplomacy and foreign aid. Senators from both major parties charged that such cuts would ultimately hurt America.

At the start Tillerson told lawmakers that North Korea had released Otto Warmbier, a U.S. university student held captive for 17 months, and the United States was seeking the release of three other detained Americans. [L1N1JA0PP]

Washington has sought to increase economic and political pressure on Pyongyang because of its nuclear and ballistic missile programs. The North has conducted five nuclear tests and is believed to be making progress towards an intercontinental ballistic missile that could hit the United States.

Tillerson said Washington is discussing North Korea with all of its allies, and seeing some response from China, its biggest trading partner. He said North Korea would top the agenda at next week's high-level talks between U.S. and Chinese officials.

Tillerson said the United States would have to work with other countries to deny North Korea access to basics such as oil and will have to consider whether to impose sanctions on those doing business with North Korea.

"We are in a stage where we are moving into this next effort of, 'Are we going to have to, in effect, start taking secondary sanctions because countries we have provided information to have not, or are unwilling, or don’t have the ability to do that?'" Tillerson told the Senate Foreign Relations Committee.

Because the United States has no trade with the North, its strongest way to impose economic pressure is through "secondary sanctions" that threaten companies from third countries with losing access to the U.S. market if they deal with Pyongyang.

TIES WITH RUSSIA AT A LOW

Asked whether the United States wanted to see an Iran-style global embargo to deny exports of petroleum and other products to North Korea, Tillerson said that this would only work if Russia and China, the North's main suppliers, cooperated.

Tillerson repeated his view that U.S. relations with Russia were at an all time-low and still deteriorating. Ties have been strained by differences over Syria, Ukraine and allegations, denied by Moscow, of Russian efforts to influence the 2016 U.S. presidential election.

He said the administration was trying to find a way to re-establish a working relationship, notably on Syria.

It took years of diplomacy with Russia and China to achieve consensus among major powers to impose the sanctions on Iran and a similar result with the North seems unlikely given Beijing's reluctance to destabilise its neighbours.

Asked if China had lived up to its pledges to crack down on the North, Tillerson said its actions had been "uneven," but added: "They have taken steps, visible steps that we can confirm. We are in discussions with them about entities inside of China."

The purpose of Tillerson's appearance, his first of four congressional hearings this week, was to discuss the budget. In all, the Trump proposal cuts about 32 percent from U.S. diplomacy and aid budgets, or nearly $19 billion.

Committee members, including some of Trump's fellow Republicans, spoke sharply against the plan. Republicans control both houses of Congress, which sets the federal government budget.

Separately, 16 retired senior generals and other ex-military officers said they would submit joint testimony to the Senate on Wednesday about the importance of foreign aid to national security.

(Additional reporting by Amanda Becker, Yara Bayoumy, David Brunnstrom, Susan Heavey and Matt Spetalnick; Writing by Patricia Zengerle, Yara Bayoumy and Arshad Mohammed; Editing by Frances Kerry and Howard Goller)

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