On February 27, 2009, the government of Japan published a notice that within the next 12 months it will implement specific amendments of the Japanese Foreign Exchange and Foreign Trade Law (“FEFTL”) to impose more strict export controls on technology transfers and increases penalties for export control violations. The changes will not take effect until implementing regulations are issued, which is expected to occur later this year. The amendments are as follows:
· Technology Transfer: Current export controls on technology transfers apply only to transfers from a Japanese resident to a non-resident. Under the new regulations, technology transfers of items considered a potential threat to national security will be subject to a license requirement whenever moving across the border, even if at that time they are in the possession of a Japanese resident. Taking such technology abroad and sending it to another country via the Internet will both be subject to licensing requirements. The Ministry of Economy, Trade and Industry (“METI”) indicates that this amendment is intended to conform the Japanese rules to the prevailing international standards followed in the United States and the EU.
· Increased Penalties: Current law provides for imprisonment of up to 5 years and a fine of up to 2 million yen for export control violations. The amendment increases these penalties to 10 years and 10 million yen, or five times the value of the items unlawfully exported, whichever is greater. The level of penalty imposed will depend upon the destination country, whether the export violation involved goods, software or technology controlled for WMD reasons and whether the items are considered sensitive for other reasons.
· Export Compliance Programs: The new regulations will require each exporter who deals in sensitive items to have thorough export compliance programs. Failure to do so will subject the exporter to a warning, an order requiring specific compliance steps or, in severe cases, monetary penalties.
The extent of the new regulations’ impact will clearly depend upon the how the implementing regulations define the key concepts of “transfer” and “sensitive” items.
Full details of the amendment of the FEFTL is available in following METI web site, but only in Japanese.