Export Control in Japan and CISTEC

Transcription

1 Export Control in Japan and CISTEC Theory and Practice of Export Regulations -2 nd Edition- International Trade Law and Export Regulations November 2016 Caen H.RIKO CISTEC 1

2 1. Historical Background 1949: The Foreign Exchange and Foreign Trade Control Act was promulgated 1952: Japan joined COCOM 1987: Toshiba Machine Co. incident happened 1989: CISTEC was established 2002: WMD catch-all control was introduced 2007: Brokering control and transshipment control were introduced 2008: Military catch-all control was introduced 2014: The policy of the Three Principles on Transfers of Defense Equipment and Technology was set out 2

3 Law The Foreign Exchange and Foreign Trade Act (the Act) Cabinet Orders 2. Legal Structure The Export Trade Control Order (ETCO) The Foreign Exchange Order (FEO) Subordinate Legislations Numerous Ministerial Ordinances, Notices, Notifications, and Guidances Note: This complex, multi-layer structure characterizes the Japanese legal system, making it quite difficult for exporters to understand the legal system. 3

4 3. The Foreign Exchange and Foreign Trade Act The Act is the only law in Japan that states the basic framework and the principles of the control on exports of both arms and dual-use items. It was originally promulgated back in 1949, when Japan was to start its economic recovery after the war under the policy of foreign trade promotion. The Act is a principal economic law concerning trade and foreign exchanges covering broad areas of cross-border transactions, and export controls just account for a small portion of the Act. 4

5 4. The Control Principle The Act, for the purpose of maintaining peace and security in Japan and in the international community, requires a license when a person intends to export or transfer listed goods or technologies to a foreign country. Articles 48 and 25 require a license when exporting or transferring controlled goods or technologies to foreign countries. 5

6 5. Regulatory Framework The Law The Foreign Exchange and Foreign Trade Act Cabinet Orders Control Lists Article 48 (Exports of goods) The Export Trade Control Order The Attachment List No.1 (Controlled goods) Article 25 (Transfer of technologies) The Foreign Exchange Order The Attachment List (Controlled technologies) Cat.1to15 (List Control) Category 16 (Catch-All Control) Cat.1to15 (List Control) Category 16 (Catch-All Control) Items subject to the control Arms and Dual-use items Non-controlled items Arms and Dual-use items Non-controlled items Destinations subject to the control All destinations All destinations except for specific 27 countries (the White Countries) All destinations All destinations except for specific 27 countries (the White Countries) 6

7 6. Administrative Authority The Ministry of Economy, Trade and Industry (METI) Trade and Economic Cooperation Bureau Trade Control Department Security Export Control Policy Division Security Export Control Administration Division Security Export Licensing Division 7

8 7. The Types of the Control The List Control Export of listed goods Transfer of listed technologies The Catch-All Control WMD Catch-All Military Catch-All Brokering Control (C-All element is adopted) Transshipment Control (ditto) 8

9 8. The List Control: Goods The export of listed goods to foreign countries/regions requires a license issued by the Minister of Economy, Trade and Industry. Controlled goods are listed in the Attachment List No.1 to the Export Trade Control Order 9

10 9. The List Control: Technologies The transfer of listed technologies requires a license if: It is from Japan to a foreign country It is from a resident to a non-resident Controlled technologies are listed in the Attachment List to the Foreign Exchange Order 10

11 10. Transfer of Technology Cross-border transfer Any person, resident or non-resident, shall obtain a license when transferring listed technology from Japan to a foreign country. Transfer within Japan Any resident shall obtain a license when transferring listed technology in Japan to a non-resident. Transfer within a foreign country Any resident shall obtain a license when transferring listed technology in any foreign country, except when the technology was sourced in a foreign country and the transaction is completed only in a foreign country. 11

12 11. The Listed Items Japanese Category number 1 2 Control types Classification of the Items Military items Arms Nuclear items NSG List Control 3 Chemical weapons AG Dual-use WMD-related 3-2 Biological weapons AG items 4 Missiles MTCR 5 Advanced materials WA Cat. 1 6 Material processing WA Cat. 2 Conventional 7 Electronics WA Cat. 3 arms-related 8 Computers WA Cat. 4 WA Cat. 5 9 Communication/ Information security International Regimes WA/ML 10 Sensors and lasers WA Cat Navigation/avionics WA Cat Marine WA Cat Aerospace/propulsion WA Cat Other ML items Except for WA/ML 15 Sensitive items WA very sensitive 16 Catch-All Control Items other than those under Categories

13 12. The Catch-All Control WMD Catch-All and Military Catch-All Category 16 items (Those subject to the Catch- All control) Informed condition and Objective condition The End User List (entities of WMD concern) The 27 White Countries (license is exempted) The Commodity Watch List The catch-all elements are also adopted in the Brokering Control and Transshipment Control 13

14 13. The WMD Catch-All Control Conditions that invoke the control Informed condition A license is required: If an exporter is instructed by METI to apply for a license. Objective Condition ( Know condition is objectified) End-use condition End-user condition If an exporter is aware, through written information he obtained, that the item will be used for the development, manufacture, use, or storage of WMD (WMD activities). If an exporter is aware, through written information he obtained, that the item will be used for specific NCB-related activities listed by the authority. If an exporter is aware, through written information he obtained, that the end-user has been engaged, or used to be engaged, in the WMD activities. If the end-user is on the End User List published by METI, unless it is apparent that the item will not be used for the WMD activities. Note: Exports to the 27 White Countries are not subject to the Catch-All control both WMD and Military. 14

15 14. The Military Catch-All Control Destination Condition A license is required: Countries under UNSC Arms Embargo Other countries Informed condition Objective (end-use) condition Informed condition If an exporter is instructed by METI to apply for a license. If an exporter is aware, through written information he obtained, that the item will be used for the development, manufacture, or use of conventional weapons. If an exporter is instructed by METI to apply for a license. 15

16 15. The End User List The End User List is a list published by METI that contains entities which are suspected of being involved in WMD activities. Exporters are required to check the end-use very carefully when exporting any items to an entity on the list. As of October 2015, a total of 527 entities in eleven countries/regions are listed. Note: The current list is published at the following site: 16

17 16. The Commodity Watch List A list of 40 goods with high risks of diversion to WMD applications. (In addition, 12 more items are designated specifically for the exports to Syria) Example: 1.Tributyl Phosphate (TBP) (N) 2.Carbon fibre Glass fibre Aramid fibre( N, M) 3.Titanium alloy (N, M) 4.Maraging steel (N, M) Exporters are required to check and verify the enduse and end-user very carefully when exporting any items on the list. When exporting any items on the list to any entity on the End User List, a license is required should the attached WMD symbols agree to each other. 17

18 17. The Brokering Control Brokering of arms and related technology under Category 1 of the Control List requires a license. Brokering of other items requires a license if: The person conducting the transaction has been informed by METI, or The person knows, through written information he obtained, that the item will be used for WMD activities. This control does not apply, however, if the item moves to or from any of the 27 White Countries. 18

19 18. The Transshipment Control Transshipment is defined as an act to transship foreign goods at seaports or airports in Japan. Transshipment of arms requires a license. Transshipment of other goods requires a license if: The person conducting the transaction has been informed by METI, or He knows, through written information he obtained, that the item will be used for WMD activities. Transshipment control does not apply if the destination is any of the 27 White Countries. 19

20 19. The Licensing System Category No. Name of the licenses Individual License 1 Individual Export License 2 General Bulk Export License 3 Special General Bulk Export License Bulk License 4 Special Bulk Export License 5 Special Bulk Export License for Repair or Replacement 6 Special Bulk Export License for Overseas Subsidiaries 20

21 20. The Bulk Licenses No. Eligible items Eligible destinations Other conditions ICP Pre-audit by METI 2 Controlled but less sensitive 27 countries (White countries) Electronic application only Not Required Not Required 3 Same as above Except Iran, Iraq, DPRK,UN arms embargo Countries Reference to matrix table which defines certain conditions Required Required 4 Specific items repeatedly ordered Specific Customers with repeated orders Export record report to METI Required Required 5 Arms and arms related 27 countries (White countries) Only to original exporter Required Required 6 Specific items repeatedly ordered Except Iran, Iraq, DPRK,UN arms embargo Countries Subsidiaries with majority share Required Required 21

22 21. License Exemptions Low value goods Re-export of goods imported for repair A controlled item incorporated into an end product as a non-principal element Technology in public domain or related to basic scientific research Technology transfer in association with an export of listed goods Technology transfer in association with an export of listed software 22

23 22. Exporters Compliance Standard A person who conducts exports of controlled items is legally required: To place a person ultimately responsible for export controls in the organization, To establish a proper export control organization, To establish proper product classification procedures, transaction screening procedures, and shipment control procedures, To conduct auditing and training, To keep related documents properly for certain years, To report any violation cases to the authority. 23

24 23. The ICP Registration System An ICP is beneficial for both companies and the government. A company can register its ICP with METI if it meets certain standard set by the authority. Further, if the company so wishes, METI publishes its name on the Website. Currently, about 1,500 ICPs are registered, of which 603 company names are published. 24

25 24. Penalties Violations An export or brokerage of controlled goods or technology related to WMD without license. An export or brokerage of other controlled goods or technology without license. Penalties Imprisonment for not more than ten years or a fine not more than ten million yen, or not more than five times of trade amount,or both. Imprisonment for not more than sevenyearsorafinenotmorethan seven million yen, or not more than five times of trade amount,or both. An export or transmission of documents, drawings or recorded media that contain controlled technology without license. Imprisonment for not more than five years or a fine not more than five million yen, or not more than five times of trade amount,or both. 25

26 25. Japan s Arms Export Control Policy Since 1967 until recently, Japan, as a peace-loving nation, had maintained its policy of blanket ban of arms exports (but with some exceptions) based on the policy guideline called the Three Principles on Arms Exports. However, on 1 April 2014, the Japanese government changed its arms export control policy, replacing the 47- year old principles with the new guideline called the "Three Principles on Transfers of Defense Equipment and Technology. The government now allows arms exports under the new guideline, which is nonetheless as strict as ever. 26

27 26. The New Principles 1. A transfer is prohibited if it: (1) violates Japan s obligations under international treaties, etc. (2) violates UN Security Council Resolutions. (3) is to a country involved in armed conflicts. 2. A transfer is permitted if it: (1) helps promote Japan s peace-building and international cooperation. (2) serves Japan s national security. (a) International joint development/production (b) Enhancement of defense/security cooperation (c) Support of SDF s overseas operations (d) Safety assurance of Japanese nationals abroad 3. Proper control (1) Permission is granted only when the government of the recipient country can assure proper control over an unauthorized use and a third country retransfer. (2) The recipient country is required to get a prior consent of the Japanese government if it intends to do the above. 27

28 27. Challenges Internationalization of the classification numbering system Create a single set of export control law and regulations, replacing the current system (future) Raising awareness of STC in Academia and SME 28

29 28. CISTEC About CISTEC Founded in April 1989 non-profit, non-governmental organization dealing with security export control issues comprehensively. Associated members: 436(as of Nov ) Associated University members:35( ditto ) 29

30 CISTEC Organization consisted of members from Industry Chair 30

31 Export Control Research Committee Policy, Rules and Procedures Board and related Committees of 1. Export control policy 2. Rules and procedures 3. International research 4. International relations Goods and Materials Board and related Committees of 1. Dual-use items for WMD 2. Advanced materials 3. Industrial machinery 4. Electronics 5. Information technologies 6. Sensors, lasers, navigations & avionics 31

32 29. CISTEC Members Proportion by Sector Electric Appliances Machinery Wholesale Trade Information & Communication Precision Instruments Others (NOTE) NOTE : The Sectors are as Specified by the Securities Identification Code Committee (SICC), and the Sectors in Others include Transportation Equipment, Chemicals, Services, Glass & Ceramics etc. 32

33 30. Linkage Channel among Industry, Government and Academia Government CISTEC Linkage Channel Industry Academia 33

34 Linkage Channel Organigram Government Academia Explanation, Practical Request Recommendation CISTEC Policy Proposal, Understanding, Amendment of Policy, Respect of Industry Standard Model ICP Industry Standard Product Classification Guidance Agreed Committees Agreed Output Exchange of Information and Opinions Industry 34

35 Linkage Function of CISTEC For the Government, CISTEC provide professional technical/commercial advices sound industry out on new policy plan of METI explain views/thoughts of industry/academia For Industry/Academia, CISTEC integrate opinions from Industry/Academia into common one recommend it to METI on behalf of whole industry/academia provide occasion of dialogue with METI officers 35

36 31. Four Major Activities of CISTEC 1.Research, Integrate Comments and Recommendation to the Government Collect and Analyze Fundamental Data on Goods and Technologies Research and Study for Domestic and International Export Control Regulations Integrate comments from Industry and Recommend them to the Government 2. Support Industry /Academia to establish Export Control System Provide individual Consultation Assist to establish Internal Compliance Program (ICP) Assist commodity/technology classification and provide tools for classification Provide various Training Seminars for Industry Hold Exams for Security Trade Certification 3. Provide information on security trade control Publish Journals and other publications Provide DB services of updated Information on concerned End-Users etc. 4. International cooperation on security trade control Hold annual Asia Export Control Seminars Networking with Foreign Governments, Industrial Associations and Research Institutions etc. 36

37 Publications - Guidance, Manuals, Handbooks - Parameter-sheets for Commodity Classification - Commodity Guidance - CISTEC Journal 37

38 32. CISTEC Seminars Conventional Seminars (FY 2015, 34times) - Basic Courses (Procedures, License, Classification) - Course for Top Management/ Executives - Theme-Oriented Courses (US Re-Export Controls, EU Export Controls, etc.) - Specific sector Course (Machine tool, Carbon fiber etc.) Web Seminars - DVD with video-recorded conventional seminars - e-learning Dispatching Instructors (FY 2015) - On-site and order-made seminars (88 times) 38

39 33. Other Services Classification Assistance assisting exporters to make proper commodity classification for license application Audit Assistance/STC System Establishment Assist. STC Certification Programs CISTEC provides certification of Expert, Advanced and Associate(Associate:26,603 Advanced:781 Expert:847) Database Service (Fee-Based) Consolidated Parties List of Reference Information Parameter Sheet for Commodity Classification Japanese Export Control Laws and Regulations 39

40 Classification Assistance Service CISTEC Started the 2 types of Commodity /Technology Classification Assistance Service since April 2012 General Service: Verify the classification done by customer and issue the Verification Certificate Full Support Service: Instruct customer basics how to make classification and issue the Verification Certificate 40 Copyright CISTEC(C) 2016 All Rights Reserved

41 STC Certification Program Type of Qualifications No. of Holder (Nov.2016) Strat time. No. of Execution STC-Expert 408 Since 2005 STC-Legal expert 311 STC-Semi-Legal expert 128 Once a year STC-Advanced 781 Since 2015 Twice a year STC-Associate 26,603 Since times a year NOTES : - The ONLY Certification of Knowledge and Skills on STC - Good Motivation for examinee - Incentives for STC Certification holders - Advantageous to promotion, change of job etc. - Regarded as an Effective Capacity-building tool 41 Copyright CISTEC(C) 2016 All Rights Reserved

42 University Membership Program - Started from 2009 (35Members as of Nov. 2016) - Free supply of various basic Guidance - Free Basic Seminars up to 5 persons - Free Dispatch of Instructor for In-House Training (once a year) - Free Consultant service upto15 times a year - Community site for university on CISTEC HP and More 42 Copyright CISTEC(C) 2016 All Rights Reserved

43 Thank you! 43