US EAR relaxation to India

U.S. - India Partnership On Export Controls and Non-Proliferation (Nov. 8, 2010) is worth while reading for export compliance managers. Although this is only direction and not yet in legal implementation, need to understand this policy change.

http://www.whitehouse.gov/sites/default/files/india-factsheets/India-US_Agreement_on_Export_Controls.pdf

In summary, it describes as:

1. The US will support India's full membership in the Nuclear Suppliers Group, the Missile Technology Control Regime, the Australia Group, and the Wassenaar Arrangement over time.

2. The US will remove some India entities from the "Entity List"

3. The US will "realign" India in the Export Administration Regulations (EAR), giving India treatment similar to close allies and partners such as the UK and Canada.

4. BIS will take India out of Country Group D in the EAR, which will significantly narrow, but not eliminate, the US catch-all control prohibiting exports and reexports to missile activities in India.

5. India and the US will expand dialogue on export control issues though the US-India Technology Cooperation Group on topics such as capacity building, best practices sharing and outreach within industry.


By calling to India, "Hey, come to our side, please", this would be effective containment policy toward PRC China, and encourage export of US to emerging market in Asia.

Japan - Peru EPA conclusion of negotiation

On November 14, 2010, MOFA announced joint statement on the Conclusion of Negotiations for an EPA between Japan and Peru.

http://www.mofa.go.jp/region/latin/peru/epa1011/joint1011.html

It is expected this EPA come into force sometime in 2011.

(Ref. METI web site - Japanese: http://www.meti.go.jp/press/20101114001/20101114001.html)

Basic policy of FTA - Japanese government

On November 6th, 2010, Japanese government announced its basic policy on Comprehensive Economic Partnerships on MOFA web site.
This is bearing in mind APEC meeting this week in Yokohama and recent hot topic of TPP (Trans-Pacific Partnership) Agreement.

http://www.mofa.go.jp/policy/economy/fta/policy20101106.html

Overall, it is very general and just announcing basic strategy how Japanese government tackle the future FTA negotiation, while working on domestic policy issue such as measures to be taken to agricultural industry.

The important point in this announcement is the decision of JPN gov't on TPP.
It is described as " it is necessary to act through gathering further information, and Japan, while moving expeditiously to improve domestic environment, will commence consultations with the TPP member countries."

For me, this seems to be vague and unclear message. It looks JPN did not decide to join TPP negotiation, but is interested in it. This is politically technical expression, paying highly consideration to domestic agricultural industry, while just giving impression "we go forward" to industrial sectors who strongly support the TPP.

METI disclose EU-JPN ECCN comparison table on its web site

This is good news for global trader who frequently communicate in Japanese export control matter. Japanese export controlled items are substantially same as EU because JPN is members of international regimes such as NSG, AG, MTCR and Wassenaar Arrangement.
However, the difficulties are in its numbering scheme which is totally different from the rest of the world, and in addition, language barrier always exist.

For example, 5A002.a is defined as 輸出令９項(7) 省令第８条一項九号. In English, it is described as "Export Trade Control Order category 9, (7), Ministerial Ordinance article 8, paragraph (1), item (ix)".

METI announced on Oct 20 that they made up the conversion table of JPN-EU controlled items list in MS-Excel spreadsheet format and disclosed in their web site. It is; http://www.meti.go.jp/policy/anpo/hp/eulist_taihihyo.html

I downloaded and briefly looked through the list. Although it contains more than 2,600 rows, it is simple, concise and easy to use. Looks useful for communicating with counterpart in foreign country because EU list is adopted by Singapore, Hong Kong, and Malaysia etc, and similar to US ECCN. This is good initiative and worth while praising the significant effort by METI.

Export control web site of IBM Japan

I happen to find IBM Japan's export control web site, which advice general export control policy of IBM Japan and the procedure of providing the classification statement (in Japanese!).

http://www-06.ibm.com/ibm/jp/contact/dialibm/exempt.html

I like this site, this is really neat and concise, explaining embargo country policy, what is classification is, and what kind of their product is under control with very simple manner so that normal business people can easily understand.

One thing noteworthy is that IBM Japan declare they "don't issue parameter sheet". Perhaps this implies they issue self-classification statement whether the product is controlled or non-controlled and ECCN, but don't provide technical specification with parameter sheet as supporting document. This practice is actually not welcomed in Japanese business society, most of Japanese customers who intend to export the products by themselves strongly require parameter sheet by manufacturer. IBM Japan's decision is operational-friendly, but may not be customer-friendly in Japanese business perspective. I would like to see whether their practice will be accepted in Japan.

Japanese Customs Published Results of Annual Post-Entry Audit

In an effort to ensure compliance with Customs laws, particularly with regard to making correct import declarations and paying the correct taxes and duties, Japan Customs under the Ministry of Finance (“MOF”) conducts post-entry audit every year. The post-entry audit is conducted to review the import declarations of importing companies and determine if correct duties and taxes have been paid. On October 19, 2010, the MOF published on their website the results of the post-entry audit conducted between the period from July 2009 to June 2010. During this period, the Customs team conducted post-audits on a total of 6,204 companies. The post-entry audit team’s findings are summarized as below:

Amount of penalty collected on incorrect import declarations is the highest based on historical records
The total non-declared and short-declared related value of all investigated companies was approximately JPY198 billion (approximately US$2.4 billion). The amount of penalty including shortage of duty & tax was approximately JPY14.5 billion (approx. US$179 million), an increase of 12% compared with previous year’s post audit results. This amount of duty & tax shortage and its penalty are the highest and worst in the history of customs valuation relating to import declarations.

Increased Number of Non-Compliance Companies
The post-entry audit team investigated a total of 6,204 companies. Of these, 4,356 or 70.2% of companies investigated were found to have failed to make correct import declarations, the numbers of non-compliant companies increased 1.3% compared with previous year. The average penalty amount per company was JPY3.3 millions (approx. US$41,100).

The top 5 product categories and its short duty & tax declarations amount are as follows. These top 5 categories make up 52.2% of short duty/tax amount.
1. Electrical Machinery (Chapter 85) JPY2.63 billions
2. Processed Food (Chapter 21) JPY1.67 billions
3. Machine and Mechanical appliances (Chapter 84) JPY1.26 billions
4. Apparel and clothing knitted or crocheted (Chapter 61) JPY0.75 billions
5. Apparel and clothing not kitted or crocheted (Chapter 62) JPY0.73 billions

Typical short-declaration case examples are as follows;
- The cost of material which was provided free of charge basis to an exporter of finished goods was not included in the import declaration value.
- The transaction price was variable depending on the sales result in Japan and it was retroactively adjusted. The variance amount was paid to an exporter, and the adjusted amount was not included in customs declaration.
- False application of preferential tariff. Although an importer don’t have appropriate certificate of preferential tariff for importing goods from China, declared as eligible goods of preferential tariff.

Japanese Customs conduct this post audit in customs valuation every year by randomly picking up the target companies. For recent years, the non-compliance rate continue to be higher in level of approx. 70%, the penalty amount is slightly increasing year by year, and no sign of decreasing. Non-compliance with customs laws may result in imposition of huge penalties and loss of credibility, it is encouraged for importers to conduct customs health check in order to find potential problem and manage the penalty risk.

Japan request for WTO consultation on certain Local Content Requirements in the Feed-in Tariff Program in Ontario, Canada

WTO related news released from METI on Sept 13, 2010, requesting WTO consultation in the unfair treatment against Ontario, Canada.

See this news release from METI: http://www.meti.go.jp/english/press/data/20100913_01.html

"The Government of Ontario has established a Feed-in Tariff Program, in which electricity generated by using renewable energy (e.g. solar and wind energy) is subsidized.
The Program sets forth certain local content requirements, which accords less favorable treatments to imported equipments than those made in Ontario.
These requirements imposed by the province of Ontario are inconsistent with the Canada’s obligations under the WTO Agreement. Thus, Japan requested for consultations with the Canadian government."