New exemption rule in Return of controlled items - no classificaiton required

On December 6, 2010, Japanese METI announced new export control regulation relating to return shipment of controlled items. This new rule is to add new license exemption rule which is facilitating measure to exporters, and will be effective from April 01, 2011.

The new rule is to provide a license exemption to Japanese exporters who implement ICP and have general bulk license. Currently, an export license is required if an exporter return any controlled items (which means items controlled by NSG, AG, MTCR or Wassenaar Arrangement) to original foreign shipper. Under certain condition, a license exemption of return shipment exists, but it is limited to the occasion an items had been originally exported from Japan, then returned and being imported into Japan, then again export the same item for return. This means foreign origin items which was imported into Japan, and found as discrepancy, sample for evaluation to be returned, short quality or whatever reason, such item is not eligible for the return exemption, therefore need product classification, and export license is required if it is the controlled items. The common challenge in such case is the classification difficulty by the Japanese exporters because they are not manufacturer, so they don't have sufficient technical specification to classify correctly. Even if they try to contact foreign manufacturer and to collect technical specification for proper classification, they face difficulties in language barrier in terminology, different classification numbering scheme, and company policy not to disclose technical specification of items, etc, etc.

The new return exemption gives "No License Required" status to such return shipment of foreign origin items for general export license holder automatically, whatever the items are controlled or non-controlled. Such license holders are not required to classify the item in export declaration to customs authority when they make return shipment to original foreign exporter. Just to give the reason of return, the invoice when the item was imported, Import Declaration, and AWB, etc, then the exemption is applied whatever the item is! (You don't have to classify the item.) The release from classification requirement is quite comfortable facilitation who have certain return shipments of controlled items in operation.

However as mentioned in above, this exemption is given only to general license holder who implement ICP. This means the company who don't have ICP cannot make use of this return exemption, typically SMEs. The exporters who submit ICP to METI is said around 1,500 companies all over Japan. This is quite small numbers compared with whole exporters in Japan.

(Source: CISTEC News and METI export control web site - Japanese only)