Decontrol of “Ancillary Cryptography” Items

Perhaps many of you know US EAR implements the decontrol of Ancillary Cryptography items on June 25 by adding Note 4 (following the mass market Note 3) to Category 5, part 2, of the Commerce Control List. http://www.bis.doc.gov/news/2010/encryption_rule_summary.pdf

Items incorporating or using “cryptography” will no longer be classified under Category 5, part 2 if their primary function is not communications, networking, computing or “information security” and the cryptographic functionality is limited to supporting the primary function.
Examples of such items include robotics, household appliances, fire alarm systems, inventory management software, CAD software, and transportation systems.
Such items may be self-classified under another category of the Commerce Control List, or as EAR99.

My interest is then, what other countries implement (or schedule of implementation) this Ancillary Cryptography exemption Wassenaar Note 4 into their own domestic export control regulation.

Already Implemented country: US (June 25, 2010), Japan (April 01, 2010), and Hong Kong (June 14, 2010)

Not yet implementing (as of June 27, 2010): EU, Singapore, Korea, and Taiwan. etc.

Different approach: Canada will not incorporate provisions into law until end of 2010 or early 2011. Instead, have Broadbase permit implementation.
http://www.mccarthy.ca/article_detail.aspx?id=5028

Please bear in mind, even if the item is totally same, the classification of cryptography item may be different from country by country, and therefore need export license (or need to seek license exception).

Japan - Canada agreed AEO Mutual Recognition

On June 25, 2010, Ministry of Finance ("MOF") in Japan announced that Japan and Canada signed the Decision establishing mutual recognition of AEO between the Canada and Japan.

This mutual recognition offers enhanced trade facilitation opportunities provided by customs to certified AEO traders in both sides who have invested in securing their supply chains.

Following the mutual recognition with EU announced on June 24, Canada is 4th country Japan signed AEO mutual recognition, New Zealand, US, and EU.

The contents of the agreement is almost similar to mutual recognition with EU.

In Canada, AEO system is called as Partners in Protection ("PIP")

(Resource: http://www.mof.go.jp/jouhou/kanzei/ka220625.htm )

Japan - EU agreed AEO Mutual Recognition

On June 24, 2010, Ministry of Finance ("MOF") in Japan announced that Japan and EU signed the Decision establishing mutual recognition of AEO between the EU and Japan.
This mutual recognition offers enhanced trade facilitation opportunities provided by customs to certified AEO traders in both sides who have invested in securing their supply chains.

This mutual recognition with EU is 3rd one for Japan, following with New Zealand (signed on May 2008) and with U.S. (signed on June 2009). EU have had mutual recognition with Switzerland and Norway only. Japan is their first AEO mutual recognition country other than Europe area.

The main contents of this agreement is as follows.

1. Both Japan and EU customs authority will reflect the risk analysis of the status of AEO traders in customs examination or inspection when the goods are exported or imported by AEO traders in other side.
2. Both parties will respect the status of AEO traders in other side in application of variety of security operation.
3. Both parties will make effort to develop common system how priorities cargoes are handled in emergency.
4. Both parties will continue discussion of further benefit of mutual recognition.

(Resource Japan : http://www.mof.go.jp/jouhou/kanzei/ka220624.htm )

(Resource EU : http://ec.europa.eu/taxation_customs/resources/documents/common/legislation/proposals/customs/com(2010)055fin_en.pdf )

In addition, according to Nikkei Newspaper on June 25, AEO mutual recognition with Canada is also in progress. The good news with Canada is expected to be announced within this month.

Japan-Mongolia start EPA study

The Governments of Japan and Mongolia have agreed on starting joint public-private research on an economic partnership agreement (EPA).
The first meeting will be held over two days from June 24 (Thu) to June 25 (Fri) in Ulan-Bator, to be attended by experts from industry, government, and academia of both countries.

During the first meeting, the experts will exchange views on topics including bilateral economic relations and items to be included in the possible EPA.

Mongolia don't have any FTA with other countries, this is first FTA trial for them.
Mongolia's economy is centered on agriculture and mining. Mongolia has rich mineral resources, and copper, coal, molybdenum, tin, tungsten, and gold account for a large part of industrial production. For Japan, these natural resource is very attractive trade interest. Among export amount from Mongolia, the mining industry consists of 80% approximately.

Japan put Eritrea as UN arms embargo country group of Conventional Weapon Catch-all

Japan Ministry of Economy, Trade and Industry ("METI") issued News Release that they amend Export Trade Control Order ("ETCO") so that Eritrea is included into UN Arms Embargo Countries Group (ETCO annex #3-2 in Japanese legal term). The promulgation date is June 23, 2010, and the implementation date is September 1, 2010.

By including Eritrea as UN Arms Embargo countries group, an exporter in Japan need to apply export license to METI if the end-use is conventional military purpose. The scope of goods is very broad industrial goods except food and wooden items. Please be noted this catch-all scheme is NOT for Weapon of Massive Destruction ("WMD") rule, but under conventional weapon catch-all rule which was introduced in November 2008. The enforcement practice is slightly eased compared with WMD, e.g. "storage" of conventional weapon is out of scope in end-use, while "storage" is controlled end-use under WMD catch-all.

Eritrea is a country in the Horn of Africa. It is bordered by Sudan and Ethiopia, and have an coastline on the Red Sea. The estimated population is 5 millions. As for trade with Japan, the annual export amount from Japan to Eritrea is approx. 400 millions yen (US$4 millions) in 2007, quite a small amount. The main export item is automobiles, truck and bus etc.

(Source: http://www.meti.go.jp/press/20100618001/20100618001.html )

AJCEP - Philippines entry into force on July 1, 2010

On May 28 (Fri), 2010, the Republic of the Philippines made the notification on the completion of its internal 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 (Japan-ASEAN Comprehensive Economic Partnership Agreement).

With this notification, the Agreement will enter into force on July 1 (Thu), 2010 in relation to the Republic of the Philippines.

This Agreement has already entered into force among Japan, Singapore, Laos, Viet Nam, Myanmar, Brunei, Malaysia, Thailand and Cambodia.
After Philippines implementation, the remaining country who don't enter into force will be Indonesia only.

HKG implement new control list on June 14, 2010

As reported in this blog on April 30, 2010, Hong Kong update their import & export control list by reflecting recent Wassenaar dual-use items up to end of 2009.

According to the announcement by Trade and Industry Department ("TID"), the revised control list becomes effective on 14 June 2010.
http://www.stc.tid.gov.hk/english/circular_pub/2010_stc04.html

Thai Customs Re-launched Voluntary Self Disclosure Program in May 2010

The Thai Customs Department has recently authorized the Post-Clearance Audit Bureau to re-launch a voluntary disclosure program from 15 May 2010 to 30 September 2010, where the importers, exporters and related parties can audit themselves and voluntarily disclose to the Customs on any potential customs risks or customs offences found from their self-audit.

Those who voluntarily reports to the Customs Department on the potential customs risks and/or customs offences that result in shortage of import duties and taxes, e.g. false declaration of tariff code, undervalue declaration, misuse of customs privilege and BOI privilege,...etc., shall be eligible for a waiver of import duty penalty and VAT penalty and shall only be subjected to the payment of import duty shortage, VAT shortage and surcharge 1.5% per month. Such waiver is based on 2 conditions as follows:

1) The customs risks and/or customs offences are not caused or made intentionally, and

2) The right to participate in the Customs Voluntary Disclosure Program is just 1 time per a company (those who previously utilized the right shall not be able to join this program).

Importation of restricted goods without import licenses and hand-carrying or smuggling goods into Thailand without duly processing import customs formality will be deemed as intentional customs offences and will not be eligible for a waiver of penalties under the Customs Voluntary Disclosure Scheme.

Related parties therefore are advised to take this golden opportunity by making self-audit and declaring any potential customs risks found to the Customs Department during 15 May 2010 to 30 September 2010so as to minimize duty exposures and comply with customs regulations.