2009年12月31日木曜日

Hong Kongs export control list effective on Feb 4, 2010

As mentioned earlier in this blog on Nov. 16, Hong Kong's control list for strategic commodities, as set out in Schedule 1 to the Import and Export (Strategic Commodities) Regulations ("the Regulations"), will be changed to reflect those of the international non-proliferation regimes (e.g. the Wassenaar Arrangement, the Australia Group, the Missile Technology Control Regime, the Nuclear Suppliers Group, etc.). In November announcement by TID (Trade and Industry Department), the effective date was unknown and to be announced.
TID announced on Dec. 28 that the effective date of the Order is Feb 4, 2010.

To facilitate the trade to have a better understanding on the upcoming changes to the control list, seminar will be arranged in two sessions, conducted in Chinese 1, to be held on 15 and 18 January 2010 respectively. (English session can be arranged separately upon request.)

(Source: http://www.stc.tid.gov.hk/english/circular_pub/2009_stc19.html )

2009年12月25日金曜日

Japan export control list update effective on April 01, 2010

As shared in this blog on Dec. 09, the Japanese export control list is updated to reflect the list change of Wassenaar Dec. 2008. The goods and technologies list is already available in METI web site.

The schedule of the implementation is now available.
The promulgation date: December 28, 2009
The effective date: April 01, 2010

Some newly added items are as follows. These are just examples in dual-use items in Wassenaar. (ECCN is for reference purpose to better understand for foreigner. Japanese export control list have totally different numbering scheme.)

  1. 3A001.h 輸出貿易管理令別表1、7項
    Electronic components (Solid-state power semiconductor switches,diodes, or ‘modules’ having certain technical parameter.)
  2. 5A002.a.7 輸出貿易管理令別表1、9項
    ”Information security” systems,equipment and components (Non-cryptographic information and communications technology (ICT) security systems and devices evaluated to an assurance level exceeding class EAL-6 (evaluation assurance level) of the Common Criteria (CC) or equivalent)
  3. 6A001.c  輸出貿易管理令別表1、10項
    Acoustic systems, equipment and components (Diver deterrent acoustic systems specially designed or modified to disrupt divers and having a sound pressure level equal to or exceeding 190dB (reference 1 :Pa at 1 m) at frequencies of200Hz and below.)
  4. 5E001.d 外国為替令別表、9項
    “Technology” according to the General Technology Note for the “development” or“production” of Microwave Monolithic Integrated Circuit (MMIC) power amplifiers specially designed for telecommunications and having certain technical parameters.

Normally in practice, METI conduct public seminar and distribute guidance book before the implementation day so that the industries can understand and prepare the list change. Probably, it will be in February or March next year.

(Source: http://www.meti.go.jp/press/20091222002/20091222002.html )

2009年12月23日水曜日

Singapore, EU Start Talks on FTA

Singapore and the European Union (EU) have agreed to start negotiations on a free trade agreement (FTA), according to the Nikkei news paper on December 23.

An FTA with the EU will be a key addition to Singapore's network of free trade agreements, as the EU is Singapore's largest trading partner. Singapore already have bilateral FTA with US and Japan, and one of the states in AFTA. EU and Asean started FTA negotiation in 2007, but currently the negotiation is in stuck. Among Asean countries, Singapore is the first country to negotiate bilateral FTA with EU. Because Singapore have little agricultural industry, which is always sensitive area in FTA negotiation, the bilateral negotiation would be relatively easy for both parties.

During the first eleven months of 2009, Singapore's total trade with the EU stood at S$78.6 billion, accounting for 11.6 percent of Singapore's total trade. The EU is also the island nation's largest investor.

2009年12月21日月曜日

President Obama Announces More Key Administration Posts

Below is the copy from press release in White House web site on December 17, 2009.

On December 17, 2009, President Barack Obama announced his intent to nominate Mr. Kevin Wolf to key administration post as Assistant Secretary of Commerce (Export Administration), Department of Commerce.

President Obama said, “It gives me great confidence that such dedicated and skilled individual have decided to join my administration as we work to address the many challenges American families are facing. I look forward to working with them in the coming months and years.”

Mr. Kevin Wolf is a partner in the Washington, D.C. office of Bryan Cave LLP. Since joining the firm in 1993, his practice has covered most aspects of the law and policy of international trade, but has focused on the Export Administration Regulations (EAR), the International Traffic in Arms Regulations (ITAR), sanctions administered by the Office of Foreign Assets Control (OFAC), the antiboycott regulations, the Foreign Corrupt Practices Act (FCPA), and multilateral trade controls.

Congratulation, Kevin-san for excellent new position!

(Source: http://www.whitehouse.gov/the-press-office/president-obama-announces-more-key-administration-posts-121709-0 )

2009年12月10日木曜日

Wassenaar updated 2009 list available

Wassenaar Arrangement ("WA"), international regime of dual-use items, announce new updated export control list normally in December every year. Now in this year, it is available on WA web site.
http://www.wassenaar.org/controllists/index.html

WA list by itself don't have legal binding effect to traders. Each member country need to put it into the domestic law. While many countries are now midst of preparing implementation of last year's WA list 2008, it is good to know "next year's" export control list.
Below are some significant change in IT commodities.

Category 4 - Computers:
4A003.b: "Digital computers" having an 'Adjusted Peak Performance' ('APP') exceeding 1.5 Weighted TeraFLOPS (WT). Current parameter is 0.75WT. With the advance of processor technology, the control parameter is relaxed.

4D001.b.1: "Digital computers" having an 'Adjusted Peak Performance' ('APP') exceeding 0.25 Weighted TeraFLOPS (WT). Current parameter (WA 2008) is 0.1WT. With the advance of processor technology, the control parameter is relaxed.

Category 5, Part 2 - Information Security:
A new Note 4 (exemption note) is added in encryption control. This will significantly increase uncontrolled items in encryption items. This exemption note looks similar concept to "Ancillary encryption" which US EAR currently adopt in ENC exemption. Below is the copy of Note 4.

==== Quote from WA 2009 list Category 5 Part 2 ====
Category 5–Part 2 does not apply to items incorporating or using "cryptography" and meeting all of the following:

a. The primary function or set of functions is not any of the following:
1. "Information security";
2. A computer, including operating systems, parts and components therefor;
3. Sending, receiving or storing information (except in support of entertainment, mass commercial broadcasts, digital rights management or medical records management); or
4. Networking (includes operation, administration, management and provisioning);

b. The cryptographic functionality is limited to supporting their primary function or set of functions; and

c. When necessary, details of the items are accessible and will be provided, upon request, to the appropriate authority in the exporter’s country in order to ascertain compliance with conditions described in paragraphs a. and b. above.
==== end of Quote ===

Interpretation of the exemption note always cause discussion. But this exemption note will certainly decontrol many of encryption items.

2009年12月9日水曜日

Japan export control list update Wassenaar 2008

On December 9, 2009, Japanese Ministry of Economy, Trade and Industry ("METI") posted the planned update list of export control list to seek public comment. This list update reflect the Wassenaar Arrangement as of December 2008.

The list change is broad range of goods/technologies, including most of Wassenaar Categories 1 - 9. All member states of Wassenaar Arrangement will reflect this list change. For example, Hong Kong already announced the list update in November. US will announce EAR update as of December 11 in Federal Register.

For computer industry guy, the following changes may be interested in. This is just a part of many changes. (Please be noted below is my translation to equivalent ECCN and language. Japanese category number is totally different from Wassenaar style numbering, and no English translation of the control list is provided.)


  • 4D001.b.1/4E001.b.1 “Software” and “Technology” specially designed or modified for the “development” or “production” of “Digital computers” having an ”Adjusted Peak Performance” (“APP”) exceeding 0.04 Weighted TeraFLOPS (WT), à relaxation of control to 0.1APP

  • 5A002. the relaxation of control over certain wireless personal area network equipment devices with published or commercial cryptographic standard (including certain wireless routers and wireless printers, etc.) Following exemptions notes are added.

    (h) Equipment specially designed for the servicing of portable or mobile radiotelephones and similar client wireless devices that meet all the provisions of the Cryptography Note (Note 3 in Category 5, Part 2), where the servicing equipment meets all of the following:
    1. The cryptographic functionality of the servicing equipment cannot easily be changed by the user of the equipment;
    2. The servicing equipment is designed for installation without further substantial support by the supplier; and
    3. The servicing equipment cannot change the cryptographic functionality of the device being serviced;

    (i) Wireless "personal area network" equipment that implement only published or commercial cryptographic standards and where the cryptographic capability is limited to a nominal operating range not exceeding 30 metres according to the manufacturer’s specifications.
The effective date of this list update is not yet announced, but normally in practice, it is a few months after the announcement for public comment.

(Source: http://search.e-gov.go.jp/servlet/Public?CLASSNAME=Pcm1010&BID=595109088&OBJ )

2009年12月2日水曜日

Trader arrested in export violation to North Korea


According to the various newspaper sources on Dec 01, 2009, traders in Hyogo prefecture who run small trading company were arrested in violation of Foreign Exchange and Foreign Trade Law ("FEFTL") to illegally export household items to North Korea.
They exported household items such as clothes via Dalian in China, but the final destination is suspected as Korea Paekho 7 Trading (朝鮮白虎7貿易会社) or Shinfung Trading (新興トレーディング), which are listed as WMD proliferation concerned party of METI.

In Japan, substantially all export (not only WMD stuff) to North Korea is prohibited for trade sanction. All export to North Korea is required to obtain approval of METI based on FEFTL Article 48, paragraph 3. This implies, however, no approval is granted in application due to government policy.
Household items are not restricted in export in Wassenaar Arrangement or any other international regimes. The export license for Wassenaar control or WMD related goods are based on FEFTL Article 48, paragraph 1. Therefore, the export of household items to North Korea is restricted in different provision of FEFTL.

The penalty of the violation of Article 48 paragraph 3 is imprisonment with work for not more than five years or a fine of not more than five million yen, or both. (When five times the price of the goods of the violation exceeds five million yen, a fine shall be not more than five times the price.) The penalty of FEFTL was actually enhanced since Nov. 01 this year. The previous penalty of violation of Article 38 paragraph 3 was three years imprisonment or a fine of not more than one million yen, or both. These arrested traders will be imposed severer penalty than before.

2009年12月1日火曜日

Cambodia join AJCEP on Dec 01, 2009

On October 30 (Fri), 2009, Cambodia made the notification on the completion of its legal procedures necessary for the entry into force of the Agreement on Comprehensive Economic Partnership among Japan and ASEAN ("AJCEP").

With this notification, the Agreement will enter into force on December 1 (Tue), 2009 in relation to Cambodia.

This Agreement has already entered into force among Japan, Singapore, Laos, Viet Nam, Myanmar, Brunei, Malaysia and Thailand. The remaining countries are only Indonesia and Philippines.

2009年11月25日水曜日

Japan introduce new bulk export license for intercompany transaction

On November 20, 2009, Japanese Ministry of Economy, Trade and Industry (“METI”) announced to introduce new type of bulk export license of inter-company transaction for Japanese companies to export items to its overseas subsidiaries. Bulk export license allows an exporter make multiple exports of certain controlled items regulated by international regimes such as Nuclear Suppliers Group, Australia Group, Missile Technology Control Regime and Wassenaar Arrangement, to certain destinations without obtaining individual license by METI. This new type of bulk license system is effective on same day as of the announcement.

The new bulk export license is called as “Special Subsidiary Bulk License”, covers both goods and technology and its validity is three years. This bulk license is limited for exporting to specific Japanese subsidiary overseas, which is owned and controlled by Japanese company, and the parent company in Japan supervise, advise its export compliance, and conduct audit in its overseas subsidiary. Internal Compliance program (“ICP”) implementation of its parent company is compulsory. In this bulk license scheme, there are two types of license. Type A license is for a subsidiary as an end-user of items, while Type B license is for a subsidiary as an importer or a re-exporter which is typically considered as child company of Japanese trading house. Therefore, type B is required to have an end-user of Type A license holder.

In the past, there are three kinds of bulk export license in Japan, which are General Bulk Export License, Special Bulk Export License, and Special Bulk Export License for Repair or Replacement. The goods and technologies covered depend on the sensitivity of items and destination country and the matrix of items/destination country provide the validity of each bulk license. General Bulk Export License is for non-sensitive items in Category 2 to 14 to non-sensitive countries. Special Bulk Export License can be used for more sensitive and specific items in Category 2 to 14 to specific end-user in more broad destinations. For example, to export radiation hardened computer (or ECCN: 4A001.a.2) from Japan to Singapore, Special Bulk License is valid, while General Bulk License is not valid. Special Bulk Export License for Repair or Replacement is used only for arms and related items return (Category 1) to the original exporter in white countries.
The new license, Special Subsidiary Company Bulk License covers same goods and technologies as Special Bulk Export License and the end-user is limited for designated Japanese company’s subsidiary. Both special bulk licenses are not valid for export or transit to Iran, Iraq, North Korea, or Libya. The difference with current Special Bulk License is that the current special bulk license requires certain result of past shipments to get license application status, the export items must be decided in license application beforehand, and it is required to submit a written pledge by the end-user to METI. Instead, Special Subsidiary Company Bulk License has no such limitations, but an audit is required by parent company, and shipment results need to be reported to METI once a year. Also a big difference is that Special Subsidiary Company Bulk License does NOT include “design and manufacturing” technology in its coverage, although Special Bulk Export License allows it to be included. Therefore, as for technology export, Special Subsidiary Company Bulk License only covers the technology for “use”.

At the time of introducing this new bulk export license, the validity period of existing bulk export license is extended. As for Special Bulk Export License and Special Bulk Export License for Repair or Replacement, the validity period was two years, then both are extended to three years. With this period extension, all bulk export license are same validity period of three years.

With this new type of bulk license introduction, subsidiaries of Japanese companies in Asia may be required to set up more solid export compliance operation and accept internal audit by the initiative of its parent companies in Japan. While overall export control regulation tend to be enhanced and tightened to prevent illicit trade, good traders with excellent compliance record can get more privilege in trade. Traders are encouraged to make use of such privilege, and at the same time, can minimize the risk of violation.  

(Source: http://www.meti.go.jp/policy/anpo/kanri/091120%20sekou/091120%20kogaisya.html )

2009年11月20日金曜日

Korea abolish reporting requirement of Strategic Goods

On October 23, 2009, the amendment of export control law in Korea took place and a reporting requirement of Strategic Goods (NSG, AG, MTCR and Wassenaar controlled goods) was abolished according to the newsletter from Korean law firm in November.

The reporting requirement of Strategic Goods in Korea was to report to relevant government authority on manufacturing or on importation of the goods (not on every transaction, but on initial release of the goods) within 30 days. This requirement was introduced in April 2007 and was very unique system. Although this reporting requirement looks contributing to solid export compliance, it is no doubt the operational burden to traders are significant. So, abolished in 2 years and half.

As another new requirement in Korea export control, an approval of transit and of trans-shipment of Strategic goods are implemented. Prior to the amendment, the Korean government could only issue an order to stop the movement of Strategic Goods. A consignee or a career is responsible for obtaining this approval. This new requirement will certainly contribute to diversion risk to North Korea where many countries have trade sanction programs.

2009年11月16日月曜日

Hong Kongs amend export control list

Hong Kong will amend their export (also import) control list shortly, and the amended list and its notice was disclosed in TID web site.
http://www.stc.tid.gov.hk/english/circular_pub/2009_stc16.html

This is to reflect the amendment of list of international regimes such as Wassenaar, NSG, AG, and MTCR. Hong Kong's list will reflect these agreements as of end of 2008.
As far as I know, US, Singapore and Japan don't reflect this list change yet. Therefore, this Hong Kong's list change is useful to know the future list of other countries.
In addition, Hong Kong require import license also for these controlled items, this list change will affect exporter to Hong Kong, too.

When?: The Order was gazetted today (i.e. 13 November 2009) and will be tabled at the Legislative Council on 18 November 09. Once the legal procedure is completed, the Order will come into effect on a day to be appointed by the Director-General of Trade and Industry by a notice published in the Gazette

What change?: Notable changes for computer/semiconductor industries are as follows. These are only some examples. For details, please see http://www.gld.gov.hk/cgi-bin/gld/egazette/gazettefiles.cgi?lang=e&year=2009&month=11&day=13&vol=13&no=46&gn=226&header=1&part=0&df=1&nt=s2&newfile=1&acurrentpage=12&agree=1&gaz_type=ls2

3A001.a.7 the removal of control over certain field programmable logic devices (including certain high-technology integrated circuits with memory function).

4D001.b.1/4E001.b.1 “Software” and “Technology” specially designed or modified for the “development” or “production” of “Digital computers” having an ”Adjusted Peak Performance” (“APP”) exceeding 0.04 Weighted TeraFLOPS (WT), to relaxation of control to 0.1APP

5A002. the relaxation of control over certain wireless personal area network equipment devices with published or commercial cryptographic standard (including certain wireless routers and wireless printers, etc.) Following exemptions notes are added.

(h) Equipment specially designed for the servicing of portable or mobile radiotelephones and similar client wireless devices that meet all the provisions of the Cryptography Note (Note 3 in Category 5, Part 2), where the servicing equipment meets all of the following:
1. The cryptographic functionality of the servicing equipment cannot easily be changed by the user of the equipment;
2. The servicing equipment is designed for installation without further substantial support by the supplier; and
3. The servicing equipment cannot change the cryptographic functionality of the device being serviced;

(i) Wireless "personal area network" equipment that implement only published or commercial cryptographic standards and where the cryptographic capability is limited to a nominal operating range not exceeding 30 metres according to the manufacturer’s specifications.

2009年11月9日月曜日

MOF Japan extend temporary duty rate of Tobacco and Alcohol

According to the Ministry of Finance ("MOF") web site on Nov. 06, 2009, MOF drafted the plan to extend temporary customs zero duty rate of Tobacco and Alcohol products in next fiscal year.

Cigarettes (2402.20) and many of Alcohols (2208) products such as whisky, brandy, vodka, and liquors have general tariff with ad-valorem or non-ad valorem duties, but currently the MNF tariff rate is Free. For example, for cigarettes (2402.20), the general tariff is 8.5% plus 290.7 yen / 1,000 pcs., and the WTO bound rate is also same rate. However, the temporary duty rate is zero percent and the duty free rate is applied as MFN based on Act on Temporary Measures concerning Customs.
This Act is basically "temporary", therefore re-newed every year. Current one is from April 01, 2009 to March 31, 2010. It may be sound strange, however, this temporary rate for tobacco has been extended every year till now from 1987 due to Japan-US Tobacco Agreement.
For temporary tariff for Alcohol is also extended annually same manner from 1998 due to WTO recommendation.

Normal procedure would be that MOF will submit amendment of the Act in February next year, and then the Diet will approve it by end of March. The new tariff (if approved, the rate as Free) will be applied from April 01, 2010.

In September this year, Japanese government political power changed from LDP (Liberal Democratic Party of Japan) to DPJ (Democratic Party of Japan) and currently actively discussed the increase of tobacco tax for compensating budget deficit, such points may make the "annual established custom"somewhat cloudy. But this temporary zero percent tariff for tobacco and Alcohol is decided not by domestic reason but by foreign external pressure, I bet free "temporary" tariff rate will be applied next year again as usual.

(Source: http://www.mof.go.jp/jouhou/kanzei/h22kaisei/zaimu/h22zaimu.htm )

2009年11月6日金曜日

Japan-Vietnam EPA supplemental information

The bilateral EPA with Japan and Vietnam ("JVEPA") was entry into force on October 01, 2009.
According to the web site of Ministry of Economy, Trade and Industry ("METI") of Japan on November 05, the practical operational procedure regarding JVEPA was notified by Vietnam government as follows. This information is largely for Certificate of Origin ("CO") in importing the goods into Vietnam.

1) In case the CO of JVEPA is not available on hand in declaring import into Vietnam, according to MOF Notification No. 45 (on May 07, 2007), the importer should pay the customs duty of MFN rate with notifying to Customs on document that the CO will be submitted later.
Then, within 30 days, by the importer submitting CO (Form VJ) to Customs, the duty amount difference between MFN and EPA preferential tariff shall be reimbursed.

2) Even if the further late submission of CO more than 30 days since import declaration, the importer still can be reimbursed the duty amount as long as the CO is valid (One year since issuing date). However, please be noted such late submission is subject to administration penalty of late submission based on MOF Notification No. 45 (on May 07, 2007).

3) The goods exported from Japan before October 01, 2009 can also be treated same manner as above 1) and 2) regardless of the arriving date of Vietnam.

(Source: http://www.meti.go.jp/policy/trade_policy/epa/html2/091105JVEPA_kanzeikanpu_oshirase.pdf )

2009年10月16日金曜日

Seminar for export control in Japan Tariff Assciation


Today on October 16, I successfully completed the export control presentation to various trade professional audience, arranged by Japan Tariff Association.

The number of audience was approx. 30 and the session was 1 hour presentation.


The subject is US and Asia's export control.

As the time is limited as 1 hour, the topics are relatively general and basic one, including WW regimes, US export control basics, Case study of violation and Singapore/Hong Kong's export control briefing.


I made the presentation in Japanese, and prepared the presentation material also in Japanese.
(Sorry for those who not understanding Japanese.)

My presentation today will be published as one of the articles of Monthly Trade Magazine ("Boeki Jitsumu Digest") issued by Japan Trade Association December edition.


Expect to have another seminar in the future!

2009年10月11日日曜日

Customs Published Results of Post-Entry Audit; Findings Show Highest Non-Compliance amount in History

In an effort to ensure compliance with Customs laws, particularly with regard to making correct import declarations and paying the correct taxes and duties, Japan Customs under the Ministry of Finance (“MOF”) conducts post-entry audit every year. The post-entry audit is conducted to review the import declarations of importing companies and determine if correct duties and taxes have been paid. On October 09, 2009, the Customs Authority published on their website the results of the post-entry audit conducted between the period from July 2009 to June 2009. During this period, the Customs team conducted post-audits on a total of 6,080 companies. The post-entry audit team’s findings are summarized as below:

Amount of penalty collected on incorrect import declarations is the highest based on historical records
The total non-declared and short-declared value of all investigated companies was approximately JPY198 billion (approximately US$2.2 billion). The amount of penalty collected for such customs violations was approximately JPY12.9 billion (US$144 million), an increase of 15.4% compared with previous year’s post audit results. This amount is the highest and worst in the history of customs valuation relating to import declarations.

Increased Number of Non-Compliance Companies
The post-entry audit team investigated a total of 6,080 companies. Of these, 4,188 or 68.9% of companies investigated were found to have failed to make correct import declarations, the numbers of non-compliant companies increased 2.2% compared with last year. The average penalty amount per company was JPY3.1 millions (US$34,400).

The top 5 product categories and its short duty/tax declarations amount are as follows. These top 5 categories show 50.6% of short duty/tax amount.
- Electrical Machinery (Chapter 85) JPY2,264,900,000
- Machine and Mechanical appliances (Chapter 84) JPY1,327,590,000
- Ore (Chapter 26) JPY945,340,000
- Mineral fuels (Chapter 27) JPY894,500,000
- Organic chemicals (Chapter 29) JPY708,070,000

Sample cases of Short-Declaration Subject to Penalties
Case 1 – Short declaration of expense of R&D cost
A company in Japan imported engine of vehicle from Italy. The importer did not include the expense of R&D cost in import declaration, but the cost was relating to the imported engines and paid separately to manufacturer. The expense of R&D cost must have been included in the amount of import declaration. The non-declared duty/tax amount was JPY1.29 billions and the penalty amount was JPY69 millions.

Case 2 – Short declaration of cost for product development
A company in Japan imported packaging cases for imaging equipment from China. The importer did not include the cost of metal mold which was given free of charge by the importer to the manufacture in China. The cost of such metal mold must have been included in the amount of import declaration. The non-declared duty/tax amount was JPY702 millions and the penalty amount was JPY38 millions.

Case 3 – False application of GSP preferential tariff
A company in Japan imported copper cables from China, and applied GSP preferential tariff in customs declaration. The manufacturer in China imported raw material of the copper cables from Indonesia, and the product was actually not qualified the country of origin in China, according to GSP preferential tariff rule. The penalty amount was JPY14 millions.

Japan Customs strongly encourages importers to learn and understand the customs valuation system. The lack of knowledge about customs valuation and interpretation of customs law may result in additional costs to companies. Non-compliance with customs laws may result in imposition of huge penalties and may damage a company’s brand image and credibility.

2009年9月30日水曜日

Documents retention period to be extended in Japan (2)

As reported in this blog on June 23 this year, the document retention period in Japan is to be extended from current 5 years to 7 years, based on the amendment of Foreign Exchange and Foreign Trade Law ("FEFTL") effective on November 1, 2009.
Please find below the reason of period extension.
http://japantradecompliance.blogspot.com/2009/06/documents-retention-period-to-be.html

Today as of September 30, the more detailed announcement is released by METI, it is still in draft level, though. The summary is as follows.

1) Document retention 7 years: Basically METI encourage 7 years period of export related document, but it is only for WMD related documents because of the statute of limitations in its violation. This rule is limited to items of Export Trade Control Order and Foreign Exchange Order Appendix category 2 - 4, and WMD related business in catch-all control. (Japanese appendix category 2 - 4 means, NSG, AG, and MTCR items.)

2) 5 years retention is still acceptable for Non-WMD items. This is for above mentioned Appendix category 5 - 14 of both Orders. (This means most of Wassenaar dual-use items.)

3) ICP update is required. For companies who submit ICP to METI, it is necessary to update the document retention article and re-submit to METI. The companies who have general bulk license need to submit annual check list to METI every July. They need to reflect this document retention period in this annual report. Don't forget it next July.

4) From November 1 onward, the WMD related documents (or Appendix category 2 - 4) should be kept for 7 years.

I'm still wondering, for a company who only deal wassenaar dual-use items and don't have NSG, AG and MTCR items, they don't have to extend the document retention period. However, the difficulty is in WMD catch-all control case, which cover most of industrial items excluding food and wooden products. Such general items can be used for WMD purpose and cannot predict future end-use and end-user. This point would raise many questions to METI.

Also, Customs Act in Japan prescribe the document retention period as 5 years in its Article 94 for export goods. It is not scheduled to be changed so far regardless of FEFTL amendment.

(Source: http://search.e-gov.go.jp/servlet/Public?CLASSNAME=Pcm1010&BID=595109078&OBJ )

2009年9月29日火曜日

New bulk export license for intercompany trade

Ministry of Economy, Trade and Industry ("METI") of Japan announced new bulk export license system for inter company trade to seek public comment on September 29, 2009.

This is special bulk license for 100% Japanese owned company (as parent company) to export overseas subsidiary which corporate share is more than 50 percent. The new bulk license is available for inter company trade between Japanese parent company and overseas subsidiary, while the export compliance training and audit is mandatory for granting the bulk license and the ultimate end-use is the subsidiary of Japanese company.

The new bulk license is called "Special Subsidiary Bulk Export License" and covers both goods and technology.
According to the draft of the notice, the overseas subsidiary is classified to Type A and Type B.
Type A special subsidiary is an end-user of items, while Type B is an importer of items.
Type B is supposed to be a subsidiary of trade house and sell items to Type A subsidiary in the imported country.

The items covered by this bulk license is broader than General Bulk License which is currently available for the company who have and implement solid ICP.
The Special Subsidiary License covers much broader items and the ship-to country and applicable items are identified in matrix of current bulk export license. In general, it covers NSG, MTCR, AG and Wassenaar controlled items, except very sensitive items and some high risk ship-to countries.

However, the bulk license is not valid in exporting to (and transship via) Iran, Iraq, North Korea and Libya.
Also, if it comes to be known that the item is to be used for WMD purpose, the license is not applicable and the exporter must report to METI.

This new inter-company bulk license is still in draft level and under public comment until October 27, the details may be changed later.
This is initiative by METI to grant more flexibility to well managed company, while Japanese government tighten the export control in technology transfer from coming November.

Looking at the definition of license holder, this new bulk license is not applicable for foreign companies in Japan, even if the company is registered as K.K. It is described as Shareholder is resident (= Japanese). Unfortunately, this system is for "genuine" Japanese companies.

(Source: http://search.e-gov.go.jp/servlet/Public?CLASSNAME=Pcm1010&BID=595109070&OBJCD=&GROUP=)

2009年9月24日木曜日

BIS advisory Downloads of encrypted software

As of September 11, 2009, BIS published advisory of downloading of encrypted software reviewed and classified as mass market, to be downloaded free of charge to anyone from the company's website without restriction.
http://www.bis.doc.gov/policiesandregulations/advisoryopinions/encryption_internet_ao.pdf

The advisory mention it would not be in violation of EAR if it posts mass market encryption software on the Internet for free and anonymous download and then at a later time the software is downloaded by an anonymous person in embargo countries such as Iran, Cuba, Syria, Sudan or North Korea.

The BIS advisory don't mention any company's name for this case determination.
It may be some relation with the case is for Mozilla Firefox open source project below.

During a recent Firefox download event, Mozilla posted a map on its Web site showing where downloads were occurring. It became clear that a substantial number of downloads were coming from Iran. Mozilla then had knowledge that it was exporting to Iran, which could have put it in violation of the U.S export regulations, exposing the firm to criminal and financial penalties. At that point, Mozilla made a voluntary disclosure to federal authorities in the hopes of securing a no-violation letter.
http://www.internetnews.com/government/article.php/3839831/Mozilla+Firefox+Cleared+of+US+Export+Rules.htm

2009年9月10日木曜日

U.S. amend Cuba Trade Restrictions

The U.S. Treasury Department and the U.S. Department of Commerce have amended regulations that will facilitate commercial contact with Cuba, without signaling an end to the longstanding U.S. embargo of that country.

For U.S. exporters, there are two important changes. First, the Office of Foreign Assets Control (OFAC) has amended regulations to greatly expand the range of commercial telecommunications transactions with Cuba, such as cellular and satellite communications. In addition, OFAC has authorized a general license that will enable employees of producers or distributors of medical or agricultural products (including food) to travel to Cuba to engage in the marketing, sales negotiation, accompanied delivery, or servicing in Cuba of agricultural commodities, medicine, or medical devices eligible under the Department of Commerce's export or re-export licensing policy to Cuba.

All previous travel to Cuba was required to take place pursuant to a specific license issued by OFAC.

2009年9月3日木曜日

China Becomes World's Largest Exporter

For the first time, China overtook Germany as the world's biggest exporter during the first half of 2009, the World Trade Organization reported Tuesday.

From January through June 2009, China's total export volume amounted to $521.7 billion, slightly exceeding Germany's exports, which totaled $521.6 billion.
Germany has long been the biggest exporter of goods and services but has been closely followed by China in recent years. In 2007, Germany exported $1.32 trillion of goods over the full year while China's exports reached $1.22 trillion, according to the WTO. However, between 2000 and 2007 China's exports grew by an average annual rate of 25 percent, while Germany's exports grew by only 13 percent a year.

A WTO spokesperson said China and Germany remain very close in the competition, and it is too soon to say if China will overtake Germany as the world's largest goods exporter for all of 2009. The final results will depend on several unknown factors, including foreign exchange rates and the pace of economic recovery in the various markets that buy exports from China and Germany in coming months.


China Becomes Japan's Largest Trading Partner in First Half of 2009

China becomes Japan's biggest trading partner in both exports and imports in the first six months this year, as the global economic downturn affected Japan-U.S. trade more seriously, the Japan External Trade Organization (JETRO) said Wednesday.

http://news.xinhuanet.com/english/2009-08/19/content_11912240.htm

2009年8月26日水曜日

Japan-Vietnam EPA entry into force on Oct 01

According to the announcement by Ministry of Foreign Affairs of Japan ("MOFA"), the EPA between Japan and Vietnam will enter into force on Oct. 01, 2009.

The Exchange of Diplomatic Notes concerning the Entry into Force of the Agreement between Japan and the Socialist Republic of Viet Nam for an Economic Partnership will take place in Hanoi on August 26 (Wed) between the Embassy of Japan in Viet Nam and the Ministry of Foreign Affairs of Viet Nam.

With this Exchange of Notes, the Agreement will enter into force on October 1 (Thu).

This EPA is 11th for Japan, followed by the EPA with Singapore, Mexico, Malaysia, Chili, Thailand, Indonesia, Brunei, Asean, Philippines, and Switzerland.

With this EPA with Vietnam, it is estimated both countries will be able to eliminate the 92% of customs tariff of combined trade amount within 10 years.
Japan will reduce the tariff to zero for 95% of its import from Vietnam within 10 years.
Vietnam will reduce the tariff to zero for 88% of its import from Japan within 10 years. (93% will be eliminated in 16 years time.)

Trader should bear in mind Japan have had Japan-Asean EPA which is already entry into force, and can claim preferential tariff with Vietnam. Both Japan-Vietnam EPA and Japan-Asean EPA are independent EPA treaty and no legal superiority, traders can choose whichever EPA preferential tariff. Need to check which preferential tariff is beneficial based on HS code of the product.

(Source: http://www.mofa.go.jp/announce/announce/2009/8/1195112_1140.html )

2009年8月19日水曜日

ITAR and EAR (2)

In June 6, 2008, I listed the topic of "ITAR and EAR" in this blog.
http://japantradecompliance.blogspot.com/2008/06/itar-and-ear.html

Both of them are US export control regulation, but they are different. Focusing the difference between ITAR and EAR, here's some tips for understanding ITAR.

  1. U.S. State Department's Directorate of Defense Trade Controls (DDTC) administers International Traffic in Arms Regulations (ITAR). On the other hand, U.S. Department of Commerce's Bureau of Industry and Security (BIS) administers Export Administration Regulation (EAR).
  2. ITAR govern export of Defense articles and services. EAR control most of other dual-use items.
  3. Defense Articles are listed on ITAR's United States Munitions List (USML). USML is divided into 21 categories numbered I to XXI. Dual-use items subject to EAR is listed in EAR's Commerce Control List (CCL). CCL divided into 10 categories numbered 0 to 9. CCL further divided into 5-digit ECCN, e.g. 9A991.
  4. ITAR trumps EAR. Item subject to ITAR is not subject to EAR. (Even if ECCN specifically describes item, or even if BIS has classified item in a specific ECCN in writing ruling)
  5. What is ITAR controlled? Broadly speaking, was the item (regardless of how it is used now) originally specifically designed, developed, configured, adapted, or modified? For a military application, military end-item or a commercial satellite, spacecraft, or launch end-item or application?

Precise jurisdictional determinations are the most fundamental and most important part of any export compliance program. If item is subject to the jurisdiction to the ITAR, then there are almost always significant licensing requirements!

Take care.

2009年8月18日火曜日

Export violation case by US semiconductor company

On August 14, 2009, BIS has announced the following penalties for alleged violations of the Export Control Violations.

A U.S. semiconductor company in of Greensboro, N.C. has agreed to pay a $190,000 civil penalty in connection with exports of "spread-spectrum" modems to China. This product is classified in 5A001 according to BIS.

The allegations involved 14 unlicensed exports of these items to China with knowledge that the shipments would violate the EAR. BIS also alleged that on 13 occasions the company made false or misleading statements in connection with the submission of shipper’s export declarations (SEDs).

While the company voluntarily disclosed the violations, a manager at the company whose responsibilities at the time of the violations included export control compliance has agreed to pay a $15,000 civil penalty for making false and misleading statements in the course of the investigation.
Specifically, the manager was charged with telling a BIS investigator that an outside export control consultant had confirmed that the company’s products were not export-controlled to any region where the company was marketing or selling its products, even though she had been repeatedly advised that certain of the company’s products may have been classified under the Commerce Control List and may therefore have required an export license.

The lesson from this case is the importance of the keeping the written record. The written record would protect yourself, otherwise the situation may lead to "he said so, or she said so" confusion.

(Source: http://www.bis.doc.gov/news/2009/bis_press08142009.htm )

2009年8月14日金曜日

Horkos sanctioned export prohibition for 5 months

According to the News Release of METI on August 14, METI announced the administrative sanction of prohibition of export to Horkos.
As reported in this blog, Horkos Corp., high precision machine tool manufacturer in Japan, violated export control regulation by exporting license required high specification machine tool without export license of METI to South Korea and China.
http://japantradecompliance.blogspot.com/2009/03/horkos-employees-arrested-by-feftl.html

In addition to criminal prosecution(*), METI imposed administrative sanction to Horkos of prohibition of export as ALL of their products to ALL countries for 5 months (from August 21, 2009 to January 21, 2010). This sanction is based on the Foreign Exchange and Foreign Trade Law ("FEFTL") Article 53.

This penalty of export prohibition is severe penalty for a machine tool company who depend on their revenue in export.

(*) In March 2009, METI prosecuted Horkos and was convicted as guilty in July 2009.
The penalty amount is JPY47,000,000 and the CEO and former employees are sentenced as imprisonment of 1 year to 2 years half (3 years suspended sentence).

(Source: http://www.meti.go.jp/press/20090814003/20090814003.pdf )

Asean-India sign FTA in goods

India and ASEAN signed a free trade agreement ("FTA") on Thursday Aug 13 after more than six years of negotiations, but the deal did not embrace software and information technology.

Thai and Indian officials said the agreement would eliminate tariffs on products including electronics, chemicals, machinery and textiles that account for more than 80 percent of total trade in goods between the two sides.

The agreement will be effective from Jan. 1, 2010, and tariffs on the products covered would be reduced to zero between 2013 and 2016, according to a joint statement.

ASEAN is India’s fourth-largest trading partner after the European Union, the United States and China. Two-way trade between India and ASEAN was $47 billion in 2008, the statement said.

Asean have FTA with China, Korea, Japan and Australia/New Zealand. With the FTA with India, Asean will play more important role as economic hub than ever in Asia Pacific region.

2009年8月11日火曜日

New FEFTL in force on Nov. 1, 2009

The update of Foreign Exchange and Foreign Trade Law ("FEFTL") will be in force on Nov. 01, 2009. This update include the enforcement of "cross border" check of technology transfer, and impose more heavy penalty in case of WMD related violation.
One of the new article (Chapter 6-3, exporter's self compliance standard) is effective on April 01, 2010.

The main point of update is as follows:

- Basically all export of record media which includes controlled technology needs to have export license when exporting. Currently, the export license technology is required when the technology was received by non Japanese resident.

- Penalty: 10 years imprisonment in case of WMD related violation. Currently, the maximum imprisonment is 5 year.

(Source: http://www.cistec.or.jp/export/express/090811/090811index.html )

2009年8月9日日曜日

DHL pay penalty to BIS and OFAC in export violation

According to BIS press release on Aug. 6th, DHL pay penalty of $9 millions to BIS and OFAC in violation of export control regulation. The charge is the past shipment to Iran, Sudan and Syria, and failure of relevant record keeping. Below is the quotation from BIS web site.
More in-depth analysis is available in web site of Bryan Cave bulletin.
http://www.bryancave.com/bulletins/

(Quote from BIS Press Release)
The Commerce Department's Bureau of Industry and Security (BIS) and the Treasury Department’s Office of Foreign Assets Control (OFAC) have entered into a joint settlement agreement with DPWN Holdings (USA), Inc. (formerly known as DHL Holdings (USA), Inc.) and DHL Express (USA), Inc. (collectively “DHL”), regarding allegations that DHL unlawfully aided and abetted the illegal exportation of goods to Syria, Iran and Sudan and failed to comply with record keeping requirements of the Export Administration Regulations (EAR) and OFAC regulations. DHL will pay a civil penalty of $9,444,744 and conduct external audits covering exports to Iran, Syria and Sudan from March 2007 through December 2011.

“Preventing exports to sanctioned countries and preserving export records are fundamental components of effective compliance,” said Kevin A. Delli-Colli, Acting Assistant Secretary of Commerce for Export Enforcement. “Large-scale compliance breakdowns lead to significant sanctions aimed at ensuring that freight forwarders put into place and maintain necessary measures to meet their compliance responsibilities.”

BIS charged that on eight occasions between June 2004 and September 2004, DHL caused, aided and abetted acts prohibited by EAR when it transported items subject to the EAR from the United States to Syria, and that with regard to 90 exports between May 2004 and November 2004, DHL failed to retain air waybills and other export control documents required to be retained under Part 762 of the EAR.

OFAC charged that DHL violated various OFAC regulations between 2002 and 2006 relating to thousands of shipments to Iran and Sudan. Like DHL’s EAR violations, its OFAC violations primarily involve DHL’s failure to comply with applicable recordkeeping requirements.

In addition to the monetary penalty, DHL will hire an expert on U.S. export controls laws and sanctions regulations for an external audit of DHL transactions to Iran, Sudan and Syria between March 2007 and December 2009. Annual calendar year audits will be conducted in 2010 and 2011. The external auditor will assess DHL’s compliance with the EAR and OFAC regulations, including recordkeeping requirements.

Acting Assistant Secretary Delli-Colli praised the BIS Office of Export Enforcement’s Miami, Washington and San Jose field offices, along with OFAC for their outstanding work on the case. This case represents the largest joint settlement involving BIS and OFAC, and is the result of closer collaboration between the two agencies.

2009年7月31日金曜日

Approved Exporter procedure now available

With the implementation of Japan-Swiss EPA in coming September, METI announced the procedure to get "approved exporter" status for issuing self-declared C/O (Certificate of Origin).
This self-declared C/O system by approved exporter have never implemented in Japan, the relevant law is amended and new procedure is announced in METI web site. This is first trial both for Japanese government and traders in Japan.

Followings are the main topics of the approved exporter procedure manual.

- Overview of the self-declared C/O system administrated by METI
- Standard of authorization standard: An approved exporter must have experience of applying/receiving C/O periodically under current regulation. In addition, they must have internal governance structure to issue C/O appropriately.
- "Apply/receiving C/O periodically" means more than 8 times in half a year. This is minimum requirement.
- Details of applying procedure, applying form and required supporting documents
- METI will review, evaluate and have interview on site to the approved exporter applicant.
- The registration fee is JPY90,000 (US$950) for initial application. The validity is 3 years, and the renewal fee is JPY5,000 (US$53).

(Source: METI EPA/FTA web site, see bottom of the page, http://www.meti.go.jp/policy/trade_policy/epa/html2/2-torikumi3-switzerland.html)

2009年7月29日水曜日

Japan - Swiss EPA in force on Sept 1, 2009

According to MOFA of Japan, the Exchange of Diplomatic Notes concerning the Entry into Force of the Agreement on Free Trade and Economic Partnership ("EPA") between Japan and the Swiss Confederation will take place in Bern on July 29 (Wed).

With this Exchange of Notes, the Agreement will enter into force on September 1 (Tue).

Customs tariff for both countries, 99% of goods in trade amount will be eliminated within 10 years.

One point to noteworthy for Japan is the adoption of "approved exporter" system for declaration of country of origin. This system is first time introduction in Japan, but in Europe, the self-declaration by approved exporter is common system in claiming preferential tariff in FTA.

(Source: http://www.mofa.go.jp/announce/announce/2009/7/1194357_1138.html )

2009年7月25日土曜日

Peru - Singapore FTA take effect on Aug

Free Trade Agreement between Singapore and Peru will take effect on August 1, 2009.

For Singapore, the trade with Peru in 2008 was valued at S$75.2 million ($52.11 million).

For Peru, a resource-rich Latin America nation, it's first free trade agreement with an Asian nation. Peruvian Trade and Tourism Minister Martin Perez said that the country is committed to moving forward on other bilateral trade pacts due to stalled global trade negotiations.

Peru has completed trade pacts with Chile and United States and it is seeking deals with China, South Korea, Thailand and Japan.

(Source: http://www.bilaterals.org/article.php3?id_article=15590&lang=en )

2009年7月24日金曜日

JPN End User List added entities of Iran and N. Korea

Japanese Ministry of Economy, Trade and Industry ("METI") announced on July 24, 2009 that they added some entities of Iran and North Korea in "The End User List" (or Foreign User List), which is WMD proliferation activity concerned entities list.

As a general practice, this list has been updated only once a year. In 2009, this proliferation concern list was updated on May 1st. It is not usual to have another update within months.

According to the announcement of METI Press Release, two entities in North Korea and one entity in Iran was added in the list. With this update, the total number of entities are 247 companies/organizations. Among them, North Korea (82 entities) and Iran (80 entities) consist 66% of WMD concerned parties.

The additional entities are as follows.

Iran: Hong Kong Electronics (aka: Hong Kong Electronics Kish Co.)
North Korea:
- General Bureau of Atomic Energy (GBAE) (aka: General Department of Atomic Energy(GDAE))
- Korea Tangun Trading Corporation

(Source: http://www.meti.go.jp/policy/anpo/kanri/user-list/list.htm )

2009年7月22日水曜日

Canada, Jordan signed FTA deal

Canada has signed a free trade agreement with Jordan, its first with an Arab country.

The agreement will give Jordan preferential trade conditions, including full exemption from customs duties on Jordanian exports to Canada.

In return, Jordan will reduce customs duties on Canadian products over a transitional period of four years.

Canada's forestry, manufacturing, agriculture and agri-food sectors, meanwhile, will receive immediate duty-free access to Jordan. Jordan reopened its market to Canadian beef and cattle in February, and the deal will give Canadian beef producers competitive advantages in a market the Canadian Beef Export Federation estimates to be worth $1 million.

Jordan was the first Arab country to sign a free-trade agreement with U.S., is a member of the WTO and has an association accord with the EU that paves the way for full lifting of tariffs and customs. Western firms see Jordan as a regional hub for wider business access to Iraq and neighbouring countries.

(Source: http://www.bilaterals.org/article.php3?id_article=15452 )

2009年7月18日土曜日

EU and Korea agreed Free Trade Talks

After years of negotiations, the European Union and South Korea have reached an agreement of bilateral free trade agreement ("FTA").
According to South Korean, the pact will bring greater changes to his country's international trade than a pact with any other economy, particularly for key sectors like industrial products, manufacturing, machinery, chemicals, and pharmaceuticals.
The European Union is Korea’s second-largest export destination, and Korea is the EU’s fourth-biggest non-European trade partner. Two-way trade reached $98.4 billion last year.

The agreement will eliminate the tariffs on 96 per cent of goods from the EU into Korea in three years and go fully duty-free in seven years, excluding rice and some other sensitive products.
EU will lift import duties for 99 per cent of Korean goods in three years before fully opening its market in five years.

The deal still faces domestic opposition, most fervently from European carmakers and Korean cattle and dairy farmers. A European automobile industry association last week described it as "unacceptable," raising concerns about the home market being flooded with cheaper Korean cars.

EU side especially complained about Seoul’s refunding of tariffs on imported parts when manufacturers export the final products. European companies said Korea could cut prices by using cheap Chinese products. This drawback scheme was one of key sources of contention between the Korean government and the European Commission. They at last agreed that they maintain the rule but will cap the refund if there is a significant increase in the amount of imported parts and components used by Korean companies.

It's expected the agreement will be signed next January or February and will come into force in June 2010.

(Reference: bilaterals.org web site http://www.bilaterals.org/article.php3?id_article=15549 )

2009年7月17日金曜日

AEO status shorten Customs clearance lead time 0.1 hour

Japanese Ministry of Finance ("MOF") have investigated customs clearance turn around lead time in Japanese air/sea port, and have released the result in every 3 years time.
On July 16, 2009, MOF released the latest customs clearance turn around lead time, and found AEO related shipment shows very short lead time, as 0.1 hour in both sea and air customs clearance. For MOF in Japan, this short lead time is honorable to demonstrate its AEO initiative they have endeavoured to set up for years.

The definition of customs clearance lead time is from customs declaration time to customs approval time in import customs procedure. Therefore, this lead time does not include cargo handling time such as vessel port loading time or container de-vanning time.

The comparison with normal non-AEO shipment is as follows.
- AEO shipment: 0.1 hours (both air and sea)
- Normal shipment (Air): 0.4 hours
- Normal shipment (Sea): 3.1 hours

MOF encourage traders to apply and make use of AEO, by emphasizing this favorable result.

In order to understand whole picture of Japanese import operation time, below lead time should be noted. This lead time is from the vessel (or flight) arriving time to customs import approval time.

- Air cargo: 34 hours (1.4 day)
- Sea cargo: 62.4 hours (2.6 days)

Also, from this arriving - customs clearance lead time, the AEO shipments shows much shorter lead time as follows.

- Air cargo: AEO 20 hours (0.8 day) vs Normal 34 hours (1.4 day)
- Sea cargo: AEO 38 hours (1.6 day) vs Normal 62.4 hours (2.6 day)

The specific lead time varies depending on the cargo type (container, bulk or courrier etc) and the relevant legal requirement (food, alcohol beverage or medical etc).
The more in depth investigation result is available in appendix of below MOF web site.
http://www.mof.go.jp/jouhou/kanzei/ka210716.htm

2009年7月11日土曜日

Japan's export control list update in coming October

Japenese METI officially announced on July 10 that the export control list will be udpated and it will be in force on October 1, 2009. The change of the list reflect the change of list in world wide regime such as Wassenaar and MTCI in 2007. The summayr of change is noted in this blog in May 27.

http://japantradecompliance.blogspot.com/2009/05/japan-will-update-export-controlled.html

(Source: http://www.cistec.or.jp/export/express/090710/houdou.pdf)

2009年7月3日金曜日

GE India approved as first Indian VEU

According to the BIS news letter on July 2, 2009, General Electric India (GE India) has been approved as the first Indian company to qualify as a validated end-user (VEU) in India, allowing the company to enter a pre-approved, export express lane as a trusted end user.
There already have been several VEU between US and China, but first with India.

After an extensive background review, the VEU designation allowed GE India to receive certain controlled items from the United States, including civilian aircraft technology and explosive detection equipment (such as 1C002, 9E003 etc.) without an individual license, making the flow of trade more efficient between the countries.
(See details in Federal Register: http://www.bis.doc.gov/news/2009/fr_07022009.pdf )

End-users that apply and are qualified by BIS as validated end-users are eligible to receive specified items under the general authorization “Authorization Validated End User” instead of under individual transaction-specific licenses. Companies in India participating in VEU must pass a rigorous national security review and agree to strict follow-on compliance obligations prior to qualification. Qualification for VEU benefits both the foreign participants and U.S. exporters by limiting the paperwork that must be completed for shipment authorization, thereby allowing export on demand as well as resource savings.

(Source: http://www.commerce.gov/NewsRoom/PressReleases_FactSheets/PROD01_008103 )

2009年6月30日火曜日

Japanese Trader arrested in violation of Catch-all


According to various newspaper report, the president of small trade house in Tokyo, Toko Boeki, and the president of two other companies who cooperated with Toko Boeki were arrested in violation of Foreign Exchange and Foreign Trade Law ("FEFTL") by attempting the export of magnetic measuring devices supposedly to North Korea via Myanmar and Malaysia.
A magnetic measuring device is considered as dual-use item which can be used for development and manufacturing of missile. Any of news report don't indicate the ECCN for this device, and reported as violation of Catch-all control. In Japanese classification, it is reported as Category 16 in Export Trade Control Order Appendix I, which covers almost all general industrial goods except food and wooden products.

Actually, the name of Toko Boeki is not new in the export violation to North Korea. It was reported in end of Feb this year.

Newspaper resource report Toko Boeki was once "informed" by METI to apply export license, but they disregarded this warning from METI, and tried to export again without license in Customs declaration under another exporter's name. The companies who cooperated with Toko Boeki are as below.
Taikyo Sangyo Co., Ltd. http://www.taikyosa.co.jp/index.html
Riken Denshi Co., Ltd http://www.rikendenshi.co.jp/

Toko Boeki tried to export the device with receiving order inquiry from the Beijing office of North Korea related entity. This entity is reported as "New East International Trading Ltd." which have close relation with North Korea government and have been involved in Weapon of Massive Destruction ("WMD") and listed as restricted entity in METI's proliferation end-user list.

With the recent development of missiles and nuclear facility in North Korea, the export control is getting more focused in terms of risk management of company. It is critical for trader to understand and manage export control properly, and is encouraged to conduct end-use screening and minimize diversion risk as due diligence.

2009年6月29日月曜日

US-Japan agreed mutual AEO program

According to the press release from Ministry of Finance ("MOF") in Japan, U.S. Customs and Border Protection ("CBP") and Japan Customs and Tariff Bureau in MOF signed the mutual recognition agreement in AEO (Authorized Economic Operator) program.
The trade operators who have solid security and compliance program are approved as AEO operator. With the mutual recognition agreement in US and Japan, such AEO operators will be treated well as superior trader, will have certain benefit in customs clearance, thus contribute to the smooth and safety trade between US and Japan.

For Japan, this AEO mutual recognition is second agreement next to New Zealand.
For U.S., this is 4th agreement, next to New Zealand, Canada, and Jordan.

From Japanese trade operator point of view, their goods import into U.S. will be favorably treated in customs declaration and inspection. However, it is important to note, as U.S. AEO program is solely for import into U.S. (No AEO program for export from U.S.), the import into Japan is NOT in scope of this AEO mutual recognition.

In addition, although the AEO status is respected in both countries in customs clearance and other security related measure, what specifically is the beneficial point in actual implementation?
It is still uncertain.

Nevertheless, it is good direction to move forward. Japan is considering to have AEO mutual recognition with EU and Canada.

(Source: http://www.mof.go.jp/jouhou/kanzei/ka210626.htm - Japanese only)

2009年6月26日金曜日

Taiwan to be a part of GPA on July 2009

On July 15, 2009, Taiwan will become the 41st member of the Government Procurement Agreement ("GPA") of the World Trade Organization ("WTO").

As a member of the GPA, Taiwan is committed to open most of its government procurements valued over NT$6,520.- (approx. US$194,000) to international bidding by other GPA members.
Similarly, Taiwanese goods and services will be eligible to compete in the procurements of other GPA members above a certain monetary threshold.
The limit of value for bidding is case by case depending on its contents of the contract.
(For Japan's case see http://www5.cao.go.jp/access/japan/chans/tekiyouhyou.html )

Foreign companies competing for Taiwanese government contracts can now also expect equal treatment as well as a higher level of transparency and predictability. The GPA requires that members treat products and services from other members in a non-discriminatory manner.
Any disputes concerning these procedures or unequal treatment could be heard under the WTO Dispute Settlement Understanding.

Taiwan began the process to join the GPA soon after its accession to the WTO in 2002.
Objections from China prevented the conclusion of the negotiation until December of 2008, when the WTO Committee on Government Procurement finally approved Taiwan's application.

GPA accession is an option in WTO members, this means not all WTO members are a part of GPA. Taiwan will be the fifth signatory of the GPA in East Asia, following Japan, South Korea, Hong Kong and Singapore. Other members of the GPA include the 27 members of the EU and the United States, Canada, Iceland, Israel, Norway, Liechtenstein, Switzerland, and Dutch Aruba. China has begun its accession talks, but is not expected to become a member in the near future.

2009年6月23日火曜日

Documents retention period to be extended in Japan

With the coming revision of the Foreign Exchange and Foreign Trade Law ("FEFTL"), the relevant Orders such as Foreign Exchange Order will be revised. On June 22, Ministry of Economy, Trade and Industry ("METI") announced draft version of relevant Orders in the web site to seek public comment. I have read through the draft Orders and found most of the revised points are reasonable to prevent unnecessary duplicated license authorization.

One point to noteworthy and applicable to all traders in Japan is that the export documents retention period will be extended from current 5 years to 7 years.
Let me explain the legal reason of it.

Under current FEFTL penal provision, the maximum penalty imprisonment is "not more than five years". This will be enforced to extend to "not more than ten years" for violation of WMD related case. The document retention period is based on the the statute of limitations under Code of Criminal Procedure Article 250. The statute of limitation is proportional to imprisonment term. Therefore, with the extension of imprisonment term, the statute of limitation is also extended. For imprisonment "not more than 10 years", the statute of limitation is 7 years and the company need to retain export related documents for 7 years accordingly.

With the revision of FEFTL, which increase the penalty, the document retention period affects almost all traders, they have to make change their internal operational rule, and some need to revise ICP accordingly. The revision of FEFTL is expected entry into force in end of this year or earlier next year.

(Source: http://www.cistec.or.jp/service/090227gaitamehoukaisei/090622point.pdf - Japanese only.)

2009年6月17日水曜日

Japan totally prohibit export to N. Korea

On June 16, 2009, Japanese Ministry of Economic, Trade and Industry ("METI") announced Japan totally ban export to North Korea based on the UN Security Council resolution 1718.
The summary of this announcement is as follows.

- Prohibit export of ALL goods to North Korea by imposing export approval based on Export Trade Control Order Article 2, 1-1-2. (This imply even if an exporter apply export approval to METI, they never approve it.)

- Prohibit brokering of trade by Japanese resident, of the goods shipped from third country to North Korea based on Foreign Exchange Order Article 18, 3.

- Humanitarian aid is treated as the exception of export prohibition.

- This prohibition is effective on June 18, 2009 to April 13, 2010.

- The violation of this would be penalized based on Foreign Exchange and Foreign Trade Law, Article 70. Imprisonment not more than 3 years and monetary penalty. In addition, as administrative sanction, the prohibition of export not more than 1 year may be imposed.

On the same day, the notification by Director General of Customs and Tariff Bureau was announced to rigidly follow this announcement. Export by detour via a third country toward North Korea must be checked, the inspection by Customs to suspicious export case will be tighten. In case by case, Customs official may check the export contract or other supporting documents in export declaration to Customs to strictly inspect the final destination of the goods.

The actual trade amount from Japan to North Korea was approx. 8 millions US dollar in 2008, and it continued to decline for years. Therefore, the negative impact to Japanese trade economy is considered as very limited.

2009年6月15日月曜日

UN Security Council impose new sanction to North Korea

Recently these days, we find quite a lot of TV news and newspaper articles relating to North Korea trade sanction. They are broadcasted many times with each progress, it is not easy to understand whole picture.

See below URL articles regarding North Korea sanctions, it is summarised concisely in one page.

The bottom line is, the new sanctions do not extend to trade in civilian goods and services.
The ultimate impact of the new sanctions will depend on the extent to which governments’implementing laws and regulations. The best way to understand the situation correctly is to consult local export compliance professional in each country.

Source: http://www.bryancave.com/files/Publication/77853ea9-fc1a-42e0-9ca4-3e6541ad7e76/Presentation/PublicationAttachment/ee00571a-2cdc-47d2-aa33-4928759ba128/IRB442.pdf

2009年6月8日月曜日

EC export control new regulaiton

EU will introduce new regulation for export control of transfer, brokering and transit of dual use items. It was published in the Official Journal of the European Union (Council Regulation (EC) No. 428/2009). It will come into effect on August 27, 2009 and will replace the current regulation.

This new regulation reflect the UN Security Council Resolution 1540 (2004), which is requirement of "brokering" and "transit" control of dual use items.
"Brokering" is the transaction of controlled items from a third country outside the EU and to a another third country outside the EU. The license may be required for a potential WMD end-use. The items are defined to include software and technology.

Similar export regulation is also imposed in Japan based on US Security Council Resolution 1540, in terms of brokering service. However, the difference (or, say, loophole of Japan's regulation) is that Japan regulate only the goods, don't regulate technology brokering under FEFTL.

(Source: http://www.bryancave.com/files/Publication/b69b1fe6-698c-458d-bbe5-37d863f91e5f/Presentation/PublicationAttachment/ab7674bf-b862-4e12-bda2-3c1d1627df8d/IRB441.pdf)

2009年5月29日金曜日

FCPA - US cracks down on corporate bribes

A bit apart from customs and trade matters, but getting important for companies which operate globally, it is enforcement of FCPA (Foreign Corrupt Practice Act).

The FCPA prohibit US companies from paying or offering to pay, foreign-government officials or employees of state-owned companies to gain a business advantage. It covers non-monetary gifts or offers in addition to cash payments. The gray area of the law sometimes apply to actions, for example, the giving of seasonal gifts that is common in Japan or some other Asian countries.

This law applies not only US nationals but also for other foreign nationals working for US companies, or foreign companies which issue ADR (American Depository Receipts) in US. For example, a Japanese manager in Bridgestone Corporation was accused of violation of FCPA, allegedly involved indirectly bribe-related activity of marketing in South America.

Recently, the crackdown under the FCPA now extend across world-wide and penetrates entire industries. The Justice Department is increasing its prosecutions of alleged acts of foreign bribery by US corporations, forcing them to take costly steps to defend against scrutiny.

Here is examples of Lucent Technologies Inc. In 2007, the Justice Department settled charges against Lucent for failing to properly record millions of dollars in travel to Disney World, Las Vegas and other sightseeing destinations for about 1,000 Chinese Foreign officials who worked for state-controlled telecom companies. Lucent had characterized the trips as factory tours, but admitted to the conduct and paid $2.5 millions in fines.

Another example of non-US company, Siemens AG, German industrial conglomerate. Siemens agreed in December 2008 to pay $800 millions in US fines to settle bribery investigations involving alleged payments to government officials around the world to win infrastructure contracts. This fine amount is the largest foreign-bribery fine ever. Also, the cost of addressing its own corrupting allegations was nearly as much as its total fine of $1.7 billions, including the fines to the German government. Siemens is spending more money now on compliance programs and a government-mandated monitor.

Among the companies currently under Justice Department review, Sun Microsystems, which is in the midst of a potential $7.4 billions purchase by Oracle Corp., said in a regulatory filing that it might have violated bribery laws in an unnamed country. Both Sun and Oracle declined to elaborate on whether the potential violations would affect the merger deal. Oracle has said in an SEC filing that Sun informed it out the matter.

The conclusion: It is absolutely wiser and less costly to have an adequate compliance system in place and a corporate culture that stands for clean business.

2009年5月28日木曜日

2009 Report on Compliance published by METI

Report on Compliance by Major Trading Trade Partners with Trade Agreements - WTO, FTA/EPA, BIT, is an official report by Japanese METI and have been published once a year.
On May 27, 2009 version was published on METI web site. As of now, the report is in Japanese version only, English version will be put on place later, currently up to 2008 version is available on METI web site.

The report covers broad range of trade issues, Part I is the specific trade issues per country, such as bringing the CCC (Chinese Compulsory Certification) issue in China. Part II is for WTO agreement matters, e.g. MFN principle, tariff, anti-dumping, or rule of origin, etc. Part III covers FTA/EPA issues.

Actually, this report covers almost same issues every year, and repeat same insistence from Japanese perspective.
For example in export control matter which request to US, Japan have insisted that US re-export extra-territorial requirement is a potential violation of international law. As Japan is a member of all major international export control regimes and have solid export control regulation fully and effectively. Therefore, Japan have requested US to exempt Japanese exporters as exempt of US re-export control regulation.

Reference:
2009 report (in Japanese): http://www.meti.go.jp/report/data/g90527c01j.html
English version (2009 report is not yet available) : http://www.meti.go.jp/english/report/index_report.html#wtoinconsistency

2009年5月27日水曜日

Japan will update export controlled items list

(Turboprop engine model)



Japanese METI announced the pre-evaluation notice of export controlled items list update on its web site on May 27. Japan have joined major International Regimes such as NSG, AG, MTCR and Wassenaar Arrangement. The agreements in these International Regimes are to be reflected into Japanese export control regulation, usually it is updated once a year.

METI announced updated controlled list (draft) in Ministerial Ordinance and start to accept public comment from today until June 25. The updated point this time is reflecting the agreements in November and December 2007 of International Regimes.
(Please be noted the list of Wassenaar Dec 2008 is already available, but the latest 2008 list is NOT included in it.)

Some of the examples of newly added into controlled items list are such as a turboprop engine and its manufacturing equipments, advanced raw material for Semiconductor Integrated Circuit board, and an equipment for invalidating IED (Improvised Explosive Device) etc.

After accepting the public comment, METI will then officially announce the new controlled list and implement with affordable period for making known public. Most likely, the implementation will be around January 2010, based on the past practice.

(Source: http://search.e-gov.go.jp/servlet/Public?CLASSNAME=Pcm1010&BID=595109033&OBJ )

2009年5月26日火曜日

Japan will relax ban on Arms Exports

According to Nikkei newspaper on May 24, 2009, Japanese government decided on a course to relax the ban of arms export. Japanese government has been taking a tough stance against arms exports. At present, arms exports are basically prohibited except for return shipment of foreign military items for repair or replacement, or for some specific export in accordance with a government-to-government agreement.

New policy will allow the co-development or co-manufacturing of weapons with allied countries, which could help efficient development of next generation jet fighter, or help reducing the military related cost. Otherwise, the cost for developing and maintaining the military equipments would be higher and heavy burden in national budget.

The Nikkei news don't report any change of FEFTL (Foreign Exchange and Foreign Trade Law) and Export Trade Control Order. This direction change would be considered as internal policy change and the implementation of export license management may be modified in future.

(Source: Nikkei Net http://www.nikkei.co.jp/news/main/20090524AT3S2300Y23052009.html )


Overview of "Three Principles on Arms Export"

This policy is based on the statement the Japanese government made in the Diet in 1967, which is called "Three Principles on Arms Exports". This principle prohibits arms export to the following countries.

1) Communist bloc countries
2) Countries subject to arms export embargo under the UN Security Council's resolution
3) Countries involved in or likely to be involved in international conflict

Subsequently in 1976, the Japanese government expanded the policy by issuing following statement.

1) Arms export to countries to which the Three Principles applied shall not be permitted.
2) Arms export to countries to which the Three Principles does not apply would be also be restraint.
3) Export of weapon producing facilities shall be treated pursuant to arms export.

Japanese government further expanded the policy by prohibiting export of weapon-related technology as well. As a result, it is now prohibited to export arms and related items under Category 1 of the control list, which is described in the Export Trade Control Order Attachment List No. 1.

(Reference: Japan's Policies on the Control of Arms Exports http://www.mofa.go.jp/policy/un/disarmament/policy/index.html )

2009年5月23日土曜日

Vietnam - Japan EPA still awaiting approval by Diet in Japan

Vietnam-Japan Economic Partnership Agreement (VJEPA) is a comprehensive bilateral trade agreement, which was signed in Tokyo last December.
Vietnam has ratified this EPA last month April, but awaiting the ratification by Japan side.

The Prime Minister Nguyen Tan Dung, he visits Tokyo and Prime Minister Taro Aso had a top level meeting yesterday on May 22.
During this meeting, Prime Minister Dung requested Japan to ratify VJEPA as early as possible.
Prime Minister Aso responded that the deliberation in Diet has just started today (May 22) , and makes effort to ratify it as soon as possible after approval in Diet.

This EPA will enter into force on the first day of the second month following the month in which each country exchange diplomatic notes informing each other that their respective legal procedures have been completed, according to EPA article 128.

(Source: MOFA Press release: http://www.mofa.go.jp/mofaj/area/vietnam/visit/0905_sk.html )

2009年5月19日火曜日

AJCEP - Thailand entry into force on June 1, 2009

According to press release on May 18, 2009 on Ministry of Foreign Affairs of Japan, on April 30 (Thu) , 2009, Thailand made the notification on the completion of its legal procedures necessary for the entry into force of the Agreement on Comprehensive Economic Partnership among Japan and Member States of the Association of Southeast Asian Nations (AJCEP - Japan-ASEAN Comprehensive Economic Partnership Agreement).

With this notification, the Agreement will enter into force on June 1 (Mon), 2009 in relation to Thailand.

This Agreement has already entered into force among Japan, Singapore, Laos, Viet Nam, Myanmar, Brunei and Malaysia.

(Source: MOFA web site http://www.mofa.go.jp/announce/announce/2009/5/1191758_1134.html )

Trader arrested for export violaiton to North Korea


According to various news papers as of May 19, a trader in Kyoto is arrested in violation of Foreign Exchange and Foreign Trade Law ("FEFTL"), attempt to export Truck with tank to North Korea. This is considered as violation of Catch-all control provision, which imposes export license to a trader when the items are possibly to be used for WMD (Weapon of Massive Destruction) purpose.

This trader exported the Truck via Korea, where is the exemption of Catch-all control regulation as white country.
He then tried to transfer the truck to North without importing into Korea by arranging with shipping company there, but the cargo was captured by Korean customs authority. The end-user in North Korea is reported as "Korea Paekho 7 Trading". This company is listed as WMD related company in End-User list provided by METI.
The export to the listed company require export license by METI. (But only if the item is apparently NOT used to WMD activity, the license is not required.)

The truck (and its tank) is essential equipment for launching the missile by carrying the missile and its fuel.

2009年5月13日水曜日

English translation site of Japanese Law

Japanese Ministry of Justice (MOJ) launched new web site which is database of English translation for Japanese Law. This is official translation and very helpful. Good initiative by MOJ and I really appreciate their hard work on this!

The site url is http://www.japaneselawtranslation.go.jp/

However for customs and trade professional, we still have challenges mainly in following points.

1) Export control - Only FEFTL (Foreign Exchange and Foreign Trade Law), Export Trade Control Order, and Foreign Exchange Order are available. There are no English translation for Ministry Ordinance and Notices, which include critical information when resolving operational inquiry from industry.

2) The translation is not for the latest one. For example, the translation of Export Trade Control Order doesn't reflect recent change in Nov. 2008, which should reflect catch-all control for Conventional Weapon.

3) Customs Law - No translation at all! These are under Ministry of Finance, but there is no customs related Law or Order.

MOJ states they continue to add, improve, or update the English translation.
Stay tuned and continue to monitor this web site.