2010年1月23日土曜日

All exporters in Japan require CP implementation???

I happen to get trade bulletin which explain Japan's recent export control regulatory development, but provide apparently wrong information. This bulletin was provided by one of big prestigious consulting firms. The topic and content is as follows.

Japan
Implementation of internal export control compliance programme (CP) requirement for all exporters.
Under existing practices, only exporters who wish to obtain bulk export licenses are required to submit a CP to the Ministry of Economy, Trade and Industry (METI) for approval.
However, in the revision of the Japanese Foreign Exchange and Foreign Trade Law (FEFTL), effective from 1 April 2010, all exporters will be required to implement CP..... (continue)

Above statement provide wrong information. For those who follow the recent FEFTL revision in Japan, it is easy to guess the author of this article apparently confuse the CP and "Exporter Compliance Standard" which was newly set forth in the FEFTL article 55-10.
Article 55-10 do NOT require all exporters to implement CP, but follow the compliance "Standard" which METI sets separately in Ministerial Ordinance. Otherwise, Guidance, Advice, Recommendation, Order and otherwise Penalty will be forced by METI. Exporter Compliance Standard just describe very very basic matters to be followed by exporters to be compliance to export control regulation. Normal CP (e.g. sample recommended by CISTEC) generally covers such basic export compliance matters, therefore CP holders do not need any additional new requirement after April 2010.

Just think with some common sense, you can find above information is rather strange.
FEFTL Article 1 states the purpose of FEFL as "on the basis of the freedom of foreign exchange, foreign trade and other foreign transactions, ....... through the minimum necessary control or coordination of foreign transactions", it may be against this purpose.
Also from practical operational point of view, if government force "millions of" all exporters in Japan to implement and submit CP to METI, that will jeopardize their operational capacity.

The trade bulletin provided by big consulting firm is really really excellent one, only except this Japanese export control topic. I won't disclose the name of this firm, but keep in my mind as a lesson, that I also should be careful to provide correct information.

2010年1月15日金曜日

ASEAN-6 Achieves Zero Tariffs

Starting the first day of 2010, Brunei Darussalam, Indonesia, Malaysia, Philippines, Singapore and Thailand can import and export almost all goods across their borders at no tariff.

As of 1 January, for ASEAN-6 an additional 7,881 tariff lines will come down to zero tariffs, bringing the total tariff lines traded under the Common Effective Preferential Tariffs for ASEAN Free Trade Area (CEPT-AFTA) to 54,457 or 99.11%. Additionally, with the reduction, the average tariff rate for these countries is expected to further decrease from 0.79% in 2009 to just 0.05% in 2010. In 2008, intra-ASEAN import value of commodities for these 7,881 tariff lines amounted to US$ 22.66 billion, or 11.84% of ASEAN-6 import value within ASEAN.

The tariff lines include final consumer products such as air conditioners; chilli, fish and soya sauces; as well as intermediate materials such as motorcycle components and motor car cylinders. Other products include iron and steel, plastics, machinery and mechanical appliances, chemicals, prepared foodstuff, paper, cement, ceramic and glass sectors.

The elimination of tariffs by ASEAN-6 underscores ASEAN’s commitment to dismantle tariffs and keep intra-ASEAN trade open. It will also serve as a catalyst for the development of the single market and production base projected by the ASEAN Economic Community (AEC) Blueprint.

The actual impact and how much this final instalment will be translated as savings for consumers will depend on the market dynamics of the respective ASEAN-6 countries. The Secretary-General of ASEAN, Dr Surin Pitsuwan, said that “We sincerely hope that all parties will act to ensure that the man on the street will benefit from these reductions in tariffs.”

As for the business community, especially the downstream producers, Dr Surin said that they also stand to gain. “Lower cost of inputs will allow the business community a wider choice of goods, and in the process, they will move towards becoming more competitive globally, as envisaged in the AEC Blueprint,” he added.

The CEPT-AFTA covers the whole range of products traded by the ASEAN Member States and provides for the gradual reduction in tariffs of these products, which has been ongoing since 1993. Under the CEPT-AFTA schedule for tariff reduction, each ASEAN Member State is allowed to place their products in the normal track, where the commitment is for the tariffs to be reduced to zero by 2010 for ASEAN-6 and 2015 for the remaining four countries, namely Cambodia, Lao PDR, Myanmar and Viet Nam. In 2010, these countries will also see tariff reductions under the CEPT-AFTA commitments to 5%, where the average tariff rate will decrease from 3% in 2009 to 2.61%.

Under the CEPT-AFTA, agricultural products such as tobacco, coffee, live animals and animal products, which come under the Sensitive List (SL), will have their tariffs reduced to 5% on 2010 and to zero tariff by 2015. The Highly Sensitive List (HSL), comprising rice, will have their tariffs capped on a specified date. As for the General Exclusion List (GEL), the tariffs will remain based on factors such as national security and morals/health/aesthetic/archaeological grounds (e.g.: weapons and opium). As of today, 487 tariff lines or 0.89% of tariff lines for ASEAN-6 still remain in the SL, HSL and GEL categories.

Besides tariff liberalisation, ASEAN is also embarking on parallel initiatives in trade facilitation to complement tariff reduction. ASEAN is also actively working on formulating streamlined and simplified customs procedures for clearance of goods, eliminating non-tariff measures, developing the ASEAN Single Window and the ASEAN Trade Repository, improving investment protection, providing for dispute settlement and better Intellectual Property Rights regime and removing the obstacles hindering the movement of professional and skilled workers.

(Source: http://www.aseansec.org/24146.htm )

2010年1月13日水曜日

Thailand Implements ASEAN-India Free Trade Agreement on 1 January 2010

On 29 December 2009 Thailand has issued the MOF Notification regarding the implementation of tariff reduction and exemption under the ASEAN-India Free Trade Agreement (“AIFTA”). The tariff reduction started on 1 January 2010 and is, at present, being applied to goods originating from India, Malaysia, and Singapore, which are the countries which have also implemented the pact. Goods originating from other ASEAN countries will be eligible for the AIFTA tariff reduction and exemption privileges when they have completed their internal procedures for the ratification of AIFTA and informed the Thai government in writing. The list of countries which have completed such procedures will then be announced by the Thai Customs.

In order to claim the tariff reduction and exemption privileges under AIFTA, importers must comply with the criteria and procedures set in the Customs Notification No. 105/2552 (http://www.customs.go.th/Declaration/DeclarationResult.jsp?Docidt=A01261&tlechk=1), as well as obtain a certificate of origin Form AI, issued in accordance with AIFTA rules of origin, at the time of importation. The AIFTA rules of origin require goods to meet the following rules.

1) General Rule: Regional value content (RVC) of at least 35% of F.O.B. value and a change in 6 digits Tariff Sub-Heading (CTSH);
or
2) Product Specific Rules (PSRs): At present, ASEAN and India are still to finalize the PSRs.

In addition, AIFTA does facilitate the trading through ‘third party invoicing’ and ‘Back-to-Back Form AI’ schemes.

Under AIFTA, Thailand, as well as India and other 4 ASEAN countries (i.e. Brunei, Indonesia, Malaysia, and Singapore) commits to the tariff reduction modality as shown below. Please note that the tariff reduction of the rest of ASEAN countries (i.e. the Philippines, Cambodia, Laos, Myanmar, and Vietnam) follows a different reduction modality.

  • Normal Track 1: Tariff on about 71% of total traded goods to be gradually reduced to 0% by 31 December 2013.
  • Normal Track 2: Tariff on about 9% of total traded goods to be gradually reduced to 0% by 31 December 2016.
  • Sensitive Track: Tariff on about 10% of total traded goods to be gradually reduced to 5% by 31 December 2016.
  • Standstill Items: Tariff on goods not exceeding 50 items will be maintained at 5%.
  • Highly Sensitive List: Tariff on certain number of goods (14 in case of Thailand, and 5 in case of India) will be reduced by about 25-50% to agreed rates by 31 December 2019.
  • Exclusion List: In case of Thailand, there will be no tariff reduction for 463 items while India has put 489 items in the Exclusion List.

Thailand’s tariff rates under AIFTA for each tariff line can be found at the Thai Customs website at http://www.customs.go.th/Declaration/DeclarationResult.jsp?Docidt=A01259&tlechk=2.

2010年1月6日水曜日

US companies failed to screen restricted Chinese entities

An interesting case study of trade compliance violation is posted in Wall Street Journal on January 5th.
http://online.wsj.com/article/SB126256626983914249.html?mod=googlenews_wsj

Many US companies failed to screen trade with restricted Chinese entity, China Precision Machinery Import-Export Corp ("CPMIEC"), which is listed in Specially Designated Nationals List issued by OFAC, and imported various products from the affiliated companies in China.
For most US companies, it looks no willful violation intention, and just missed the screening.
The cause of screening failure is that the company name is not exactly match by using similar name or affiliated name, or a unit of CPMIEC with different name, etc. There are so many aka (also known as) names in one entity. It is easy to rename or make front company. OFAC added one more aka name for CPMIEC in SDN list on Dec 31, but it is like a endless race.

I understand the difficulty of this kind of screening, as I have similar experience in screening failure when I worked in US computer company. For example, there are some Japanese individuals who are listed on US Denied Persons or Debarred list. Call center happen to receive the call from one of these restricted entities in Japan and provided verbal technical service. Call center of this US company have capability to check such restricted entities by using the list in database, however the name of the person is always recognized in Kanji (Chinese character).
US government don't provide the name of restricted entities in local language, but provide only in alphabetical words. Japanese name expressed by alphabetical words often lead to so many types of Kanji names, so it is really difficult to exactly find the entity only by alphabetical name.

2010年1月5日火曜日

Australia, New Zealand FTA with ASEAN implemented

On January 1st, 2010, Australia and New Zealand's FTA with ASEAN ("AANZFTA") came into effect.
This FTA remove tariffs on grape exports to Malaysia, and wheat sales to the Philippines.

The agreement is the Australia's largest FTA, and covers 12 economies and 600 million people with a combined GDP of US$2.8 trillion. By 2020, the deal will eliminate tariffs on 96 percent of Australia's export to Asean nations.

Australia and New Zealand, which have had their own trade agreement since 1983, are seeking to tap into Asia's growth with Brunei, Myanmar, Malaysia, Singapore, Vietnam and the Philippines. The remaining Asean members, Indonesia, Cambodia, Laos and Thailand, are expected to ratify the agreement later this year.

(Source and reference: bilaterals.org http://www.bilaterals.org/rubrique.php3?id_rubrique=181&lang=en )