As of April 01, 2011, additional new obligations and one exemption benefit in General Bulk License (“GBL”) came into effect in Japan based on the amendment of Notification of Bulk License （包括許可取扱要領）which was issued by Ministry of Economy, Trade and Industry (“METI”) on December 6, 2010. This amendment imposes additional end-user screening requirements when GBL holder export eligible items to non-white countries in using this bulk license. The new benefit is that the GBL now covers, as one of its options, an foreign origin dual-use item can be returned for repair or replacement to originating country without individual export license. For convenience of exporter, the GBL holder does not necessarily conduct accurate classification of the item if he/she is not able to do so, as long as it is identified as non-military items.
The additional obligations are following two points, and only applicable to the export transaction to non-white country only. In other words, if the export transaction under GBL is to white country, there is no new obligations at all.
1. To make sure the possible end-user and final destination is compliant in “stock sales”.
If an export transaction is for “stock sales” which is defined as “no end-user is specified at the time of export” or “movement of goods for inventory accumulation”, the GBL holder needs to make sure the possible end-user name, and to confirm an item will not be re-exported to third country where the GBL does not cover as eligible destination. For example, the exporter under GBL needs to keep in record like, “This item is for that industry, possible end-user would be ABC company in XYZ country”. This is the a kind of diversion risk management so that the item is not re-exported to Iran, North Korea, or Iraq etc., which are non-eligible countries of GBL under stock sales operation. In addition, METI impose to GBL holder that this stock sales screening “should be conducted by designated internal procedure”, therefore GBL holder may need to amend Internal Compliance Program (“ICP”) and relevant operational procedures accordingly. There is no requirement to report this stock sales screening each time of the transaction to government authority, but should be kept in record for anticipated audit by METI
2. If the end-user is military entity or relevant to army, police, or intelligence organization, the report to METI is required in advance to the export transaction.
There has been restriction in GBL if an eligible item is likely to be used for Weapon of Massive Destruction (“WMD”) or conventional weapon purpose, the GBL lose its validity or report to METI is required depending on the destination country and the sensitivity of the situation. In addition to the current restriction, if an end-user is military entity, the report to METI is required before the export transaction as additional requirement.
The amendment of GBL obligation is “carrot and stick” to exporter. As benefit to GBL holder, return shipment in free of charge basis is added as new eligible transaction. Although there has been return export exemption in Japan based on Export Trade Control Order Article 4, but the exemption was limited to an item which was originally exported from Japan, thus could not cover the return of foreign origin item. Now for GBL holder with relevant documents stating the reason of return, the import declaration copy, and Bill of Lading in importing, it is possible to export dual-use items without individual license and without classification of items, as long as it is not arms or weapons.
The additional exemption benefit may not be relevant to all exporters, but new requirements are possibly applicable to all GBL holders, because amendment of ICP and operational procedure may be required according to each exporter’s status, regardless of the frequency of the transaction under GBL. In case an exporter amend ICP, it should be submitted to METI within one month. Also, ICP holder must submit annual compliance “check list” to METI in July every year as obligation. The reporting form of this check list is also updated to reflect this GBL obligation amendment, ICP holder is encouraged to review whether these new obligations are relevant to the export operation.
(Reference: http://www.meti.go.jp/policy/anpo/law09.html#015 )
2011年4月30日土曜日
2011年4月26日火曜日
Japan have different legal framwork in mass market exemption
In Wassenaar Arrangement ("WA") dual-use item, Category 5 Part 2 (Information Security) have exemption Note 3, it is so-called mass market exemption. For example, if the encryption goods falling under 5A002 technical parameter, by satisfying below conditions, the goods is treated as "Not Controlled" under 5A002.
1. Over-the-counter transactions;
2. Mail order transactions;
3. Electronic transactions; or
4. Telephone call transactions;
b. The cryptographic functionality cannot easily be changed by the user;
c. Designed for installation by the user without further substantial support by the supplier; and
e. When necessary, details of the items are accessible and will be provided, upon request, to the appropriate authority in the exporter's country in order to ascertain compliance with conditions described in paragraphs a. to c. above. (*)
Note 3 Cryptography Note
a. Generally available to the public by being sold, without restriction, from stock at retail selling points by means of any of the following1. Over-the-counter transactions;
2. Mail order transactions;
3. Electronic transactions; or
4. Telephone call transactions;
b. The cryptographic functionality cannot easily be changed by the user;
c. Designed for installation by the user without further substantial support by the supplier; and
e. When necessary, details of the items are accessible and will be provided, upon request, to the appropriate authority in the exporter's country in order to ascertain compliance with conditions described in paragraphs a. to c. above. (*)
(*) Please be noted (e) is reflected into local regulation in Japan since April 2010, but not all countries are implementing yet.
Japan implement this mass market exemption substantially in local regulation, but the difference of legal framework tend to create some disparities in communication with foreign supplier/customer.
Here is the logic of exemption in Japan.
In Japan's control list, WA Category 5 Part 2 Note 3 is NOT incorporated into the control list, but incorporated into Export Trade Control Order ("ETCO") Article 4 and its subsequent Notification. The Japan's control list only provide technical parameter equivalent of 5A002 without Note 3. Therefore, the No License Required ("NLR") logic of 5A002 equivalent item is like "Controlled, but exempted by Order and its subsequent Notification".
As US EAR or EU list incorporate Note 3 into the list, it is merely indicated as "Not Controlled under 5A002".
Eventually it is NLR, but wrong understanding may arise in communication with foreign partners.
If your Japanese partner advises to you, "This encryption item is controlled but exempted.", it means "Not controlled as 5A002 by Note 3". Please communicate carefully about "Controlled" or "Not Controlled" in 5A002.
To make things complicated, Note 4 (Ancillary encryption exemption) is reflected different manner from Note 3. Note 4 is not in ETCO with relevant Notification, but other Notification called "Unyo Tsutatsu".
For the countries who adopt EU list would not have such communication difficulty. This kind of problem arise in Japan because Japanese regulation have different numbering system from WA type list.
2011年4月25日月曜日
Extra-territorial provision of Japan's export control?
Japan's export control is defined in the Foreign Exchange and Foreign Trade Law ("FEFTL"). The goods trade is prescribed in Article 48, and the technology transmission is in Article 25.
If you closely read the FEFTL, you may find Article 5 define the scope of application of FEFTL, and it gives impression that Japan's FEFTL has extra-territorial provision.
(Scope of Application)
Article 5: This Act shall also apply to acts committed in a foreign state by a representative, agent, employee or other worker of a juridical person having its principal office in Japan in regard to the property or business of the juridical person. The same shall apply to acts committed in a foreign state by a person having his/her domicile in Japan, or an agent, employee or other worker of that person in regard to the property or business of the person.
People may have question, hey, Japan's export control is extra-territorial effect in its implementation?
The answer is mostly No under export control.
The Article 5 provides the exception of the "principle of territorial jurisdiction". FEFTL may be applied to Japanese company's employee or subsidiary overseas regardless of its residency. Because the entity who is under influence of Japanese company and represent its interest should be restricted under the FEFTL for its strict enforcement.
However, in its interpretation and practice in this FEFTL Article 5, it is considered this provision is not applied to export of goods, but only to the transactions with non-resident such as international payment prescribed in Article 16.
Also, it is important to note there is no Order, Ordinance, or Notification regarding re-export of Japan origin goods. Japan don't regulate re-export of items from one foreign country to another foreign country.
What coming to my mind about this FEFTL Article 5 is that Malaysia Strategic Trade Act ("STA") which have extra-territorial clause in the STA. STA Clause 4 is clearly titled as "Extra-territorial application", but it is very short and general, and the re-export (like US EAR) is not in scope of STA. No regulation about re-export is found in Malaysia's export control scheme. I'm wondering Malaysia STA's Clause 4 is just expected similar effect and with intention like Japan's FEFTL Article 5?
If you closely read the FEFTL, you may find Article 5 define the scope of application of FEFTL, and it gives impression that Japan's FEFTL has extra-territorial provision.
(Scope of Application)
Article 5: This Act shall also apply to acts committed in a foreign state by a representative, agent, employee or other worker of a juridical person having its principal office in Japan in regard to the property or business of the juridical person. The same shall apply to acts committed in a foreign state by a person having his/her domicile in Japan, or an agent, employee or other worker of that person in regard to the property or business of the person.
People may have question, hey, Japan's export control is extra-territorial effect in its implementation?
The answer is mostly No under export control.
The Article 5 provides the exception of the "principle of territorial jurisdiction". FEFTL may be applied to Japanese company's employee or subsidiary overseas regardless of its residency. Because the entity who is under influence of Japanese company and represent its interest should be restricted under the FEFTL for its strict enforcement.
However, in its interpretation and practice in this FEFTL Article 5, it is considered this provision is not applied to export of goods, but only to the transactions with non-resident such as international payment prescribed in Article 16.
Also, it is important to note there is no Order, Ordinance, or Notification regarding re-export of Japan origin goods. Japan don't regulate re-export of items from one foreign country to another foreign country.
What coming to my mind about this FEFTL Article 5 is that Malaysia Strategic Trade Act ("STA") which have extra-territorial clause in the STA. STA Clause 4 is clearly titled as "Extra-territorial application", but it is very short and general, and the re-export (like US EAR) is not in scope of STA. No regulation about re-export is found in Malaysia's export control scheme. I'm wondering Malaysia STA's Clause 4 is just expected similar effect and with intention like Japan's FEFTL Article 5?
2011年4月15日金曜日
Self-Certification of Origin by ASEAN
Singapore, Malaysia, and Brunei conduct pilot program of ASEAN Self-Certification Scheme since 1st November 2010 for a one year period. It is expected to roll out in all ASEAN member states by 2012.
Trade professionals who have business with EU countries are perhaps familiar with self-certification of origin, as most of EU's FTA have this self-certification system. In Japan's FTA, only Japan-Switzerland FTA adopt this scheme since 2009.
This pilot program is applicable only to intra-ASEAN trade, it means that trader make use of self-certification instead of apply for Form D. Exporter can simply self-declare the country of origin for their goods on the commercial invoice, or if the invoice is not available at the time of export, on a billing statement or delivery order. Currently, 22 certified traders in Singapore participate in this project.
Although the registration to Singapore Customs are required in advance, the exporter can enjoy benefits of self-declaration, e.g. eliminating the Form D application cost which is about S$15, simplifying the administrative operation, and flexible in operational timeline.
(Reference: Singapore Customs News Letter http://www.customs.gov.sg/insync/Issue11/article_5.html )
2011年4月14日木曜日
Whether sanction is applied to "Southern" Sudan?
On April 12, 2011, Office of Foreign Assets Control ("OFAC") in Department of the Treasury announced as a guidance that the sanction to (current) Sudan will continue to be applied, but Southern Sudan will NOT be subject to the sanction. The new state of Southern Sudan will no longer be directly subject to OFAC sanctions.
However, tricky thing is that the guidance indicates that "the sanction will continue to prohibit U.S. persons from dealing in property and interests in property of the Government of Sudan, from performing services that benefit Sudan or the Government of Sudan, from engaging in transactions relating to the petroleum or petrochemical industry in Sudan, and from participating in exports to or imports from the new state that transit through Sudan."
As the map shows, Southern Sudan does not face ocean, surrounded by land boarders, so they have no sea ports for export/import. For international trade with other countries, Southern Sudan may need to rely (current) Sudan in some cases.
Traders should be cautious with this point in interpretation of this OFAC guideline.
(Reference: OFAC guidance http://www.treasury.gov/resource-center/sanctions/Programs/Documents/sudan_secede_guide.pdf )
2011年4月12日火曜日
It was "out of assumption" in license exemption
The earthquake and tsunami disaster in Japan is called “out of assumption” for its immeasurable power and devastating damage. Japanese government’s slow and insufficient response to the post-earthquake activities are sometimes criticized and they apologize because the earthquake power was “out of assumption”. Here is one short story & fact relating to export control in Japan to illustrate their comment is true.
Japan’s Export Trade Control Order (“ETCO”) have exemption of license requirement in one of the provision in Article 4 for exporting free of charge goods.
“Goods imported without charge for the purpose of export without charge, which are specified by the METI in public notice.” This case is subject to license exemption.
As noted in Article 4, the applicable case is specified in METI notification, such as re-export of repaired or replacement of goods, re-export after the exhibition in Japan, or re-export by ATA Carnet etc.
On March 16, 2011, one additional case was announced in METI notification and implemented immediately upon the announcement. The summary of this additional case is that:
“Re-export of the goods used for nuclear disaster relief by foreign government or international organization after the rescue completed.”
OK, this is great. Nobody have objection under such disaster emergency and appreciate immediate action by METI.
However, it is irony. Actually similar case has been exempted under ETCO Article 4 since long time ago in opposite case for nuclear disaster relief in:
“Goods to be exported without charge for the purpose of import without charge, which are specified by the METI in public notice.”
In notification, this exemption case is stated, in summary like, “Export of goods which are requested by foreign government who suffered nuclear disaster, and being returned & imported into Japan after the rescue complete.”
This means, Japanese government have expected Japan help foreign country in nuclear disaster, but did NOT expect Japan is rescued by foreign government, therefore the such case was not included in the exemption notification.
Now Japan definitely needs the assistance of US and France in Fukushima Dai-Ichi nuclear plant accident, so METI quickly issued new notification after 5 days earthquake happened. This apparently shows the nuclear disaster in Japan and rescue by foreign government was “out of assumption” for METI.
(Reference: 輸出貿易管理令第四条第一項第二号のホ及びヘの規定に基づく経済産業大臣が告示で定める無償で輸出すべきものとして無償で輸入した貨物及び無償で輸入すべきものとして無償で輸出する貨物の一部を改正する件（平成２３年経済産業省告示第四十二号）
http://www.meti.go.jp/policy/anpo/law09.html#016
Japan’s Export Trade Control Order (“ETCO”) have exemption of license requirement in one of the provision in Article 4 for exporting free of charge goods.
“Goods imported without charge for the purpose of export without charge, which are specified by the METI in public notice.” This case is subject to license exemption.
As noted in Article 4, the applicable case is specified in METI notification, such as re-export of repaired or replacement of goods, re-export after the exhibition in Japan, or re-export by ATA Carnet etc.
On March 16, 2011, one additional case was announced in METI notification and implemented immediately upon the announcement. The summary of this additional case is that:
“Re-export of the goods used for nuclear disaster relief by foreign government or international organization after the rescue completed.”
OK, this is great. Nobody have objection under such disaster emergency and appreciate immediate action by METI.
However, it is irony. Actually similar case has been exempted under ETCO Article 4 since long time ago in opposite case for nuclear disaster relief in:
“Goods to be exported without charge for the purpose of import without charge, which are specified by the METI in public notice.”
In notification, this exemption case is stated, in summary like, “Export of goods which are requested by foreign government who suffered nuclear disaster, and being returned & imported into Japan after the rescue complete.”
This means, Japanese government have expected Japan help foreign country in nuclear disaster, but did NOT expect Japan is rescued by foreign government, therefore the such case was not included in the exemption notification.
Now Japan definitely needs the assistance of US and France in Fukushima Dai-Ichi nuclear plant accident, so METI quickly issued new notification after 5 days earthquake happened. This apparently shows the nuclear disaster in Japan and rescue by foreign government was “out of assumption” for METI.
(Reference: 輸出貿易管理令第四条第一項第二号のホ及びヘの規定に基づく経済産業大臣が告示で定める無償で輸出すべきものとして無償で輸入した貨物及び無償で輸入すべきものとして無償で輸出する貨物の一部を改正する件（平成２３年経済産業省告示第四十二号）
http://www.meti.go.jp/policy/anpo/law09.html#016
2011年4月11日月曜日
BIS support Japan emergency and humanitation relief efforts
On April 6, 2011, BIS posted below announcement on the top page for Japan's humanitarian relief support activity. Appreciating flexible license practice for emergency support to Japan!
"The BIS supports all efforts for Japan involving items subject to the EAR. However, most shipments of dual-use items extended to Japan do not require a Commerce license. If you plan to export items in support of current relief efforts in Japan and you think that a license may be required, you should contact BIS for guidance. If a license is required, expedited processing may be requested."
"The BIS supports all efforts for Japan involving items subject to the EAR. However, most shipments of dual-use items extended to Japan do not require a Commerce license. If you plan to export items in support of current relief efforts in Japan and you think that a license may be required, you should contact BIS for guidance. If a license is required, expedited processing may be requested."
2011年4月6日水曜日
Japan extend ban on all trades North Korea
On April 5, 2011, Ministry of Economy, Trade and Industry ("METI") announced on its press release that Japan continue the ban on all export and import with North Korea, which have been imposed since 2006 with one year term extension each year. This measure is substantially trade embargo, including prohibition of export, import, brokering, and financial transaction for all items, based on Foreign Exchange and Foreign Trade Law ("FEFTL").
Outline of the measure
1. Prohibition of export of all items to North Korea by imposing an approval by METI. (Implying the denial of all approval) - FEFTL Article 48 (3)
2. Prohibition of import of all items from North Korea or originating items of North Korea by imposing an approval by METI (implying the denial of all approval) - FEFTL Article 52.
3. Prohibition of brokering between third country and North Korea (including buy/sell, lease and donation of all items) - FEFTL Article 25 (6).
4. Prohibition of payment for importing goods from North Korea or North Korea origin item (without approval by METI) - FEFTL Article 16 (5).
However, an exemption of above restriction may apply to humanitarian purpose aid. This notice is valid from April 14, 2011 until April 13, 2012 for one year.
Tips for legal professional:
It is important to know the difference between "permission" and "approval" of export license under FEFTL. Here is quick comparison below.
- Permission （許可） is under FEFTL Article 48 (1) which is used for trade control of national security, international peace, or trade of dual-use controlled items, such as NSG, AG, MTCR, and Wassenaar Arrangement.
- Approval （承認） is under FEFTL Article 48 (3) which is used for equilibrium of international balance of trade or for achievement of sound development of foreign trade, such as for CITES Washington Convention or Hazardous wastes under Basel Convention.
The difference of this license type leads to the different window of license application to METI, different procedure, different penalty and sanction in case of violation. As for penalty under FEFTL, the violation "without permission" is much severer than "without approval". For example, the sanction of export prohibition to offender is not more than 3 years for "without permission" of FEETL Article 48 (1), but for offender of "without approval" of Article 48 (3), it is not more than 1 year.
In other words, if a guy sends WA dual-use items illegally to North Korea, it is "without permission".
If a guy sends Gucci handbag to North Korea illegally, it is "without approval" and the penalty is less severe than dual-use items export.
Outline of the measure
1. Prohibition of export of all items to North Korea by imposing an approval by METI. (Implying the denial of all approval) - FEFTL Article 48 (3)
2. Prohibition of import of all items from North Korea or originating items of North Korea by imposing an approval by METI (implying the denial of all approval) - FEFTL Article 52.
3. Prohibition of brokering between third country and North Korea (including buy/sell, lease and donation of all items) - FEFTL Article 25 (6).
4. Prohibition of payment for importing goods from North Korea or North Korea origin item (without approval by METI) - FEFTL Article 16 (5).
However, an exemption of above restriction may apply to humanitarian purpose aid. This notice is valid from April 14, 2011 until April 13, 2012 for one year.
Tips for legal professional:
It is important to know the difference between "permission" and "approval" of export license under FEFTL. Here is quick comparison below.
- Permission （許可） is under FEFTL Article 48 (1) which is used for trade control of national security, international peace, or trade of dual-use controlled items, such as NSG, AG, MTCR, and Wassenaar Arrangement.
- Approval （承認） is under FEFTL Article 48 (3) which is used for equilibrium of international balance of trade or for achievement of sound development of foreign trade, such as for CITES Washington Convention or Hazardous wastes under Basel Convention.
The difference of this license type leads to the different window of license application to METI, different procedure, different penalty and sanction in case of violation. As for penalty under FEFTL, the violation "without permission" is much severer than "without approval". For example, the sanction of export prohibition to offender is not more than 3 years for "without permission" of FEETL Article 48 (1), but for offender of "without approval" of Article 48 (3), it is not more than 1 year.
In other words, if a guy sends WA dual-use items illegally to North Korea, it is "without permission".
If a guy sends Gucci handbag to North Korea illegally, it is "without approval" and the penalty is less severe than dual-use items export.
2011年4月4日月曜日
Violation case study - import prohibition sanction
On April 01, 2011, Ministry of Economy, Trade and Industry ("METI") announced the trade sanction to a Japanese national individual who violated the import control of Foreign Exchange and Foreign Trade Law ("FEFTL"). The sanction is the prohibition of any kind of import (including the import transaction through third party) for 1 month from April 08, 2011 to May 07, 2011 based on Article 53 (2) of FEFTL.
The law prescribe the sanction is for a period of not more than one year, therefore the 1 month sanction is not so severe one. The violation of this individual was to import bird's feather from United States which is restricted under CITES without import approval. (Violation of Article 52 of FEFTL). The bird's feather is in CITES Appendix I, that are threatened with extinction and the trade in wild-caught specimens of these species is illegal (permitted only in exceptional licenced circumstances).
So, why this guy imported the feather into Japan? What purpose? If you search this guy's name in google, you can easily find his profile and web site. He sold the bird's feather as fishing imitation bait through online sales! I'm not so familiar with fishing technique, but the CITES Appendix I bird's feather is worth while violating FEFTL?
(Source: http://www.meti.go.jp/press/2011/04/20110401012/20110401012.html )
The law prescribe the sanction is for a period of not more than one year, therefore the 1 month sanction is not so severe one. The violation of this individual was to import bird's feather from United States which is restricted under CITES without import approval. (Violation of Article 52 of FEFTL). The bird's feather is in CITES Appendix I, that are threatened with extinction and the trade in wild-caught specimens of these species is illegal (permitted only in exceptional licenced circumstances).
So, why this guy imported the feather into Japan? What purpose? If you search this guy's name in google, you can easily find his profile and web site. He sold the bird's feather as fishing imitation bait through online sales! I'm not so familiar with fishing technique, but the CITES Appendix I bird's feather is worth while violating FEFTL?
(Source: http://www.meti.go.jp/press/2011/04/20110401012/20110401012.html )
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