On August 21, 2008, the US Bureau of Industry and Security ("BIS") published a final rule concerning export and re-export requirements for persons and entities on the Entity List.
The changes are effective immediately. The point of the amendments are as follows.
- A newly-established End-User Review Committee ("Committee"), consisting of various US government departments., will have the discretion to add a party to, remove a party from, or modify a party's designation on the Entity List.
- Changes will be made to the Entity List where there is reasonable cause to believe, based on specific facts, that an entity has been involved in, or poses a risk of being involved in, activities that are contrary to the national security or foreign policy interests of the United States.
Note that BIS has stated "US persons" will not be placed on the Entity List under this new procedure. Thus, the Entity List restricts only foreign persons from receiving EAR-controlled items that are exported from the United States or re-exported from abroad.
- BIS now will have the authority to impose foreign policy export and re-export licensing requirements, limit the availability of license exceptions, and establish a license application review policy for export and re-exports to designated entities.
License exceptions will not be available to designated parties named on the Entity List unless specifically noted.
- These amendments reflect BIS's policy statements that US export controls should not only focus on certain countries, but also target individual persons or entities of concern with more effective and specific controls.
The new rule could severely disrupt business with foreign companies. To minimize that risk, US exporters should be particularly vigilant in ensuring they know their foreign customers.
2008年8月26日火曜日
2008年8月25日月曜日
Japan will lower CVD 9.1% to Hynix Korea DRAM
Japan have been imposed 27.2% of Counter Vailing Duty ("CVD") to Hynix Korea DRAM since January 2006. Korean Government argued in WTO that this CVD was not appropriate and WTO advised Japan to make correction based on more accurate investigation.
Based on WTO advisory, Japan will lower CVD to 9.1% from September 1st after the approval of Cabinet. The details of this decision are described in below web site of Ministry of Finance. (Language: Japanese only)
(Source: http://www.mof.go.jp/singikai/kanzegaita/siryou/kanb200822.htm )
Based on WTO advisory, Japan will lower CVD to 9.1% from September 1st after the approval of Cabinet. The details of this decision are described in below web site of Ministry of Finance. (Language: Japanese only)
(Source: http://www.mof.go.jp/singikai/kanzegaita/siryou/kanb200822.htm )
2008年8月22日金曜日
US CBP collect "First Sale" data
On August 20, US Customs and Border Protection ("CBP") announced that they will start to collect the statistics of using "First Sale" data in customs declaration. This is an interim rule and first step action for importer declaration requirement utilizing the "First Sale Rule".
The First Sale rule is a beneficial rule for importer because they can save duty amount based on the payment by first shipper to middle men, not by transaction price by importer to middle men.
CBP once tried to eliminate this rule in January 2008, but due to strong opposition from business society, CBP announced the withdrawal of their proposal.
In case an importer use "First Sale" price of goods when they declare in customs, they need to insert a single code "F" on CBP form 7501 at the line item level. This new rule is effective immediately but they have grace period until September 19, that means the input will not be rejected.
By collecting statistics how the First Sale rule affect customs and business, CBP may seek further action for this rule.
(Source: Bryan Cave LLP, International Regulatory Bulletin No. 400 on August 21, 2008 http://www.bryancave.com/bulletins/)
The First Sale rule is a beneficial rule for importer because they can save duty amount based on the payment by first shipper to middle men, not by transaction price by importer to middle men.
CBP once tried to eliminate this rule in January 2008, but due to strong opposition from business society, CBP announced the withdrawal of their proposal.
In case an importer use "First Sale" price of goods when they declare in customs, they need to insert a single code "F" on CBP form 7501 at the line item level. This new rule is effective immediately but they have grace period until September 19, that means the input will not be rejected.
By collecting statistics how the First Sale rule affect customs and business, CBP may seek further action for this rule.
(Source: Bryan Cave LLP, International Regulatory Bulletin No. 400 on August 21, 2008 http://www.bryancave.com/bulletins/)
2008年8月20日水曜日
US request for a panel to examine EU's duty to IT products
According to Nikkei Press on Aug. 19, US requested to WTO for a panel to examine its complaint against the EU's imposition of customs duties on imports of IT products. This panel request was made together with Japan and Taiwan, as their discussion with EU was not successful.
US insist EU have violated the provision of ITA (Information Technology Agreement), which indicate an abolition of customs duty on IT products. EU express their intention to dispute against this in the panel process. It will be discussed in WTO on Aug 29 whether or not the panel will be established.
EU impose the customs duty on PC, monitor, multi-function printer, TV set top box etc. EU's interpretation of ITA is that such products are electrical commodities rather than genuine high-tech products, therefore they are not subject to duty exemption granted in ITA.
US insist EU have violated the provision of ITA (Information Technology Agreement), which indicate an abolition of customs duty on IT products. EU express their intention to dispute against this in the panel process. It will be discussed in WTO on Aug 29 whether or not the panel will be established.
EU impose the customs duty on PC, monitor, multi-function printer, TV set top box etc. EU's interpretation of ITA is that such products are electrical commodities rather than genuine high-tech products, therefore they are not subject to duty exemption granted in ITA.
2008年8月14日木曜日
Reality in Japanese small & medium companies
As reported in this Blog on Aug. 01, Japanese machine tool maker, Horkos, was raided by Police under the violation of export control law.
They are allegedly investigated the exportation of license required machine tool to South Korea without license. The machine tool is said to be license required item due to its high technical specification. The company recognized it, but they declared its technical specification falsely to Customs, with intention to skip the troublesome export licensing application, and expected to cut lead time of shipment. In addition, their products may be re-exported to North Korea or Iran.
Horkos has 665 employees and its sales turn over is 21 billions yen, according to their web site.
The result of police investigation is still uncertain.
This kind of violation case is actually commonly happens (and unfortunately will continue to happen) in Japan, especially for small or medium sized company.
I pick up some reasons why.
1) Complicated regulation and implementation
Japanese export control law is too complicated to fully understand, even for educated business people. In order to correctly understand and know what to do, people must understand the combination of Law, Order, ministerial order, notification and circulars from METI. These are written with "law words", therefore normal Japanese cannot understand what it states.
2) Resource shortage
As export control skill is very niche category, not many trained employees are available who understand export control law. Even for logistics manager, many are not familiar with export control. Big companies such as Toshiba, Cannon, Mitsubishi etc. have experts in-house, however small and medium companies don't have such human resource.
3) Expensive advisory cost of CISTEC
There is official and public advisory organization in export control, such as CISTEC.
They offer advisory, training seminar, and books etc. to members companies.
However, the annual member fee is expensive, JPY800,000 (US$7,300) per company with its capital exceeding JPY100 millions, or JPY400,000 (US$3,600) for small companies with its capital below JPY100 millions. Small companies hesitate to be a member of CISTEC. Although CISTEC's service is available to non-members, the seminar fee and the books are priced as double of that of members. Currently, CISTEC members companies are only 338 as of August 1, 2008.
4) Classification difficulty
Much of operational difficulty is in classification of items, whether the items are required export license or not. The classification technique is relied on both technical knowledge and legal knowledge. Either one is not enough, definitely needs both area of knowledge and experience. There are not many engineers who has export control legal knowledge. In addition, basically METI don't touch the classification of items. I know in some countries government organizations take care of items classification, but in Japan, it is totally responsibility of exporter.
5) Export license application
When applying export license to METI, it takes much time. Maximum would be 90 days but basically in case by case. Not only the lead time, but documents preparation is troublesome. Exporter must prepare and submit a contract, a written pledge, or any other possible documents METI request. Such things motivate exporter to skip license application as much as possible. This circumstance is one of the reasons Horkos Corp. exported their items illegally. In addition, Yamazaki Mazak gave up building the new factory in India as reported in this Blog on Aug. 5. It is said they just gave up before applying export license to METI, possibly due to this reason.
6) Customer and business driven ethics
In Japan, business ethics are more in customer oriented (or sales oriented) than compliance. It is more important to expand business than to be compliant to law.
Such culture is more emphasized in small companies with slow economy, and especially in provincial companies where the economy is much worse than Tokyo area. Culture doesn't change soon. In addition, generally, sales managers have much more political power than operation guys in the organization. Sales logic and ethics tend to move the business to skip export license applicaiton or false classification.
They are allegedly investigated the exportation of license required machine tool to South Korea without license. The machine tool is said to be license required item due to its high technical specification. The company recognized it, but they declared its technical specification falsely to Customs, with intention to skip the troublesome export licensing application, and expected to cut lead time of shipment. In addition, their products may be re-exported to North Korea or Iran.
Horkos has 665 employees and its sales turn over is 21 billions yen, according to their web site.
The result of police investigation is still uncertain.
This kind of violation case is actually commonly happens (and unfortunately will continue to happen) in Japan, especially for small or medium sized company.
I pick up some reasons why.
1) Complicated regulation and implementation
Japanese export control law is too complicated to fully understand, even for educated business people. In order to correctly understand and know what to do, people must understand the combination of Law, Order, ministerial order, notification and circulars from METI. These are written with "law words", therefore normal Japanese cannot understand what it states.
2) Resource shortage
As export control skill is very niche category, not many trained employees are available who understand export control law. Even for logistics manager, many are not familiar with export control. Big companies such as Toshiba, Cannon, Mitsubishi etc. have experts in-house, however small and medium companies don't have such human resource.
3) Expensive advisory cost of CISTEC
There is official and public advisory organization in export control, such as CISTEC.
They offer advisory, training seminar, and books etc. to members companies.
However, the annual member fee is expensive, JPY800,000 (US$7,300) per company with its capital exceeding JPY100 millions, or JPY400,000 (US$3,600) for small companies with its capital below JPY100 millions. Small companies hesitate to be a member of CISTEC. Although CISTEC's service is available to non-members, the seminar fee and the books are priced as double of that of members. Currently, CISTEC members companies are only 338 as of August 1, 2008.
4) Classification difficulty
Much of operational difficulty is in classification of items, whether the items are required export license or not. The classification technique is relied on both technical knowledge and legal knowledge. Either one is not enough, definitely needs both area of knowledge and experience. There are not many engineers who has export control legal knowledge. In addition, basically METI don't touch the classification of items. I know in some countries government organizations take care of items classification, but in Japan, it is totally responsibility of exporter.
5) Export license application
When applying export license to METI, it takes much time. Maximum would be 90 days but basically in case by case. Not only the lead time, but documents preparation is troublesome. Exporter must prepare and submit a contract, a written pledge, or any other possible documents METI request. Such things motivate exporter to skip license application as much as possible. This circumstance is one of the reasons Horkos Corp. exported their items illegally. In addition, Yamazaki Mazak gave up building the new factory in India as reported in this Blog on Aug. 5. It is said they just gave up before applying export license to METI, possibly due to this reason.
6) Customer and business driven ethics
In Japan, business ethics are more in customer oriented (or sales oriented) than compliance. It is more important to expand business than to be compliant to law.
Such culture is more emphasized in small companies with slow economy, and especially in provincial companies where the economy is much worse than Tokyo area. Culture doesn't change soon. In addition, generally, sales managers have much more political power than operation guys in the organization. Sales logic and ethics tend to move the business to skip export license applicaiton or false classification.
2008年8月13日水曜日
Export Controls in One Page
To reduce all of export control decision-making down to one page.
REQUIRED QUESTIONS TO ANSWER BEFORE ENGAGING IN AN EXPORT TRANSACTION:
(1) What is at issue, i.e., hardware, software, or information ("item"), or a service?
(2) What is the jurisdictional status of the item or service, i.e., is it controlled by the Export Administration Regulations ("EAR") or International Traffic in Arms Regulations ("ITAR")?
(3) What is the classification status of the item or service, i.e., if EAR-controlled, what is its Export Control Classification Number ("ECCN"), or, if ITAR-controlled, what is its U.S. Munitions List ("USML") subcategory number?
(4) Does the applicable ECCN or USML subcategory require a license or other authorization for exports to the country or the foreign persons (even if in the U.S.) at issue? (If EAR, check "Reasons for Control." If ITAR, worldwide.)
(5) If so, are there any exceptions or exemptions in the EAR or ITAR, as applicable, that would allow the item or service to nonetheless be exported without a license?
(6) Regardless of the answers to the foregoing questions, is a General Prohibition applicable to the transaction, i.e., is there a prohibited end-use (e.g., one related to weapons of mass destruction), prohibited end-user (e.g., a Specially Designated National ("SDN")), prohibited destination (e.g., an embargoed country), or knowledge that a violation or other red flag exists in connection with the item or service?
(7) Regardless of the answers to the foregoing questions, are there any applicable licenses, license conditions, or provisos that affect or limit the proposed activity?
(8) Regardless of the answers to the foregoing questions, are there any known U.S. Government concerns or issues, from a policy or other perspective, with respect to the proposed transaction?
(9) Regardless of the answers to the foregoing questions, will all registration, recordkeeping, and document creation requirements be satisfied with respect to the proposed export activity?
(10) Are there related limitations or issues, such as those imposed by contract terms, payment issues (e.g., with letters of credit); intellectual property rights, internal business policies, conflict of interest rules, foreign export and import laws, or hazardous materials or other safety-related regulations?
(Source: Author: Kevin Wolf, Esq., Bryan Cave LLP)
REQUIRED QUESTIONS TO ANSWER BEFORE ENGAGING IN AN EXPORT TRANSACTION:
(1) What is at issue, i.e., hardware, software, or information ("item"), or a service?
(2) What is the jurisdictional status of the item or service, i.e., is it controlled by the Export Administration Regulations ("EAR") or International Traffic in Arms Regulations ("ITAR")?
(3) What is the classification status of the item or service, i.e., if EAR-controlled, what is its Export Control Classification Number ("ECCN"), or, if ITAR-controlled, what is its U.S. Munitions List ("USML") subcategory number?
(4) Does the applicable ECCN or USML subcategory require a license or other authorization for exports to the country or the foreign persons (even if in the U.S.) at issue? (If EAR, check "Reasons for Control." If ITAR, worldwide.)
(5) If so, are there any exceptions or exemptions in the EAR or ITAR, as applicable, that would allow the item or service to nonetheless be exported without a license?
(6) Regardless of the answers to the foregoing questions, is a General Prohibition applicable to the transaction, i.e., is there a prohibited end-use (e.g., one related to weapons of mass destruction), prohibited end-user (e.g., a Specially Designated National ("SDN")), prohibited destination (e.g., an embargoed country), or knowledge that a violation or other red flag exists in connection with the item or service?
(7) Regardless of the answers to the foregoing questions, are there any applicable licenses, license conditions, or provisos that affect or limit the proposed activity?
(8) Regardless of the answers to the foregoing questions, are there any known U.S. Government concerns or issues, from a policy or other perspective, with respect to the proposed transaction?
(9) Regardless of the answers to the foregoing questions, will all registration, recordkeeping, and document creation requirements be satisfied with respect to the proposed export activity?
(10) Are there related limitations or issues, such as those imposed by contract terms, payment issues (e.g., with letters of credit); intellectual property rights, internal business policies, conflict of interest rules, foreign export and import laws, or hazardous materials or other safety-related regulations?
(Source: Author: Kevin Wolf, Esq., Bryan Cave LLP)
2008年8月11日月曜日
India - Asean FTA filalizing the agreement
According to Nikkei press on Aug. 11, the on-going India and Asean FTA is finalizing and will be signed on Dec. 2008.
Both parties will reduce the import duty to 5% to promote the goods trade. India will reduce the average duty rate from 30% to 5%, and Asean will reduce from 10% to 5%. This will certainly helpful for Japanese traders which have facility in Asean.
For Asean, India is 4th FTA agreement, followed by China, Korea and Japan.
Both parties will reduce the import duty to 5% to promote the goods trade. India will reduce the average duty rate from 30% to 5%, and Asean will reduce from 10% to 5%. This will certainly helpful for Japanese traders which have facility in Asean.
For Asean, India is 4th FTA agreement, followed by China, Korea and Japan.
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