Joint Industry Outreach Seminar in Malaysia (Nov. 17, 2011) Overview of Japans Export Control System Nobuo TANAKA Security Export Control Policy Division

Joint Industry Outreach Seminar in Malaysia (Nov. 17, 2011)

Overview of Overview of Japan’s Export Control SystemJapan’s Export Control System

Nobuo TANAKASecurity Export Control Policy DivisionTrade and Economic Cooperation BureauMinistry of Economy, Trade and Industry 　 (METI)JAPAN


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１． Introduction （ Importance of Export Control)

２． Japan’s Export Control System

３． Recent Developments of Japan’s

　　 Export Control

Contents


1. Introduction　　　　　　　　　（ Importance of

Export Control)

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Terrorist attacks and WMD-related activities

A.Q. Khan Network (2004) North Korean missile tests (July 2006, April and July 2009) North Korean announcement on nuclear tests (October

2006, May 2009) Iranian issues

Terrorist attacks

WMD-related activities

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Sarin gas attack on the Tokyo subway （ March 1995) 9/11 attacks (September 2001) Bali bombings (October 2002, October 2005) Madrid train bombings (March 2004) London bombings (July 2005) 2008 Mumbai attacks (November 2008) Moscow bombings (February 2010, January 2011)


Global Peace Index 2011

data from Global Peace Index


Terrorist activities (reported in 2010) - Number of incidents: 11,604 - Number of dead: 13,186Main areas of terrorist activities

- Iraq, Afghanistan, Pakistan and African countries 　 - Recently we see increased terrorist activity in Asia.

- There are high level of terrorist activities, resulting in serious harm to people’s lives.- Recently, terrorism has increased in Asia.

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- WMD (weapons of mass destruction) proliferation is occurring in countries of concern and with terrorists (non-state actor).- The United Nations has requested the introduction of export control systems.


72010 NCTC Report on Terrorism


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2010 NCTC Report on Terrorism


Terrorist activities (reported in 2010) - Number of incidents: 11,604 - Number of dead: 13,186Main areas of terrorist activities

- Iraq, Afghanistan, Pakistan and African countries 　 - Recently we see increased terrorist activity in

Asia.

- There are high level of terrorist activities, resulting in serious harm to people’s lives.- Recently, terrorism has increased in Asia.

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- WMD (weapons of mass destruction) proliferation is occurring in countries of concern and with terrorists (non-state actor).- The United Nations has requested the introduction of export control systems.


Terrorists or countries of concern can procure items through countries that do not implementexport control systems.

Country ACountry A

circumventing exports

Countries notimplementing export

control systems

Countries notimplementing export

control systems

Terrorists,countries of concern

Terrorists,countries of concern

Threats to world peace

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Why must companies have export controls?


Why must companies have export controls?

- Compliance

- Social responsibility Companies are punished if exported goods are used for terrorist activities or countries of concern, regardless of regulations.

- Reduces cost of export procedures Companies can simplify export control procedures in accordance with their own export systems.

- Enhanced evaluation by investors Companies with export controls are more highly evaluated because they pose lower investment risks.

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2. Japan’s Export Control System

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Treaties,Convention

Export Control Regime

ＢＷＣＣＷＣ

Biological/chemicalweapons

Biological Weapons Convention

ＡＧ

Australia Group

ＭＴＣＲ

Missiles

Missile Technology Control Regime

ＷＡ

Wassenaar Arrangement

ＮＰＴNuclear Non-Proliferation Treaty

Nuclear weapons

ＮＳＧNuclear Suppliers Group

Conventional Weapons

ChemicalWeapons Convention

WMDs

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１９７０１９７７

１９７５

１９９７

１９８５

１９８７

１９９６


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Control Lists of the International RegimesControl Lists of the International Regimes

1. Nuclear Suppliers Group Trigger List (Part 1) 　　 Dual-Use List (Part 2) 　

2. Australia Group Chemical Weapons Precursors 　 Biological Agents 　 Plant ／ Animal Pathogens 　 Dual-Use Chemical/Biological Facilities and Equipment

　　　　　　　　　　　　　　　　　　3. Missile Technology Control Regime Category I 　 Category II 　

4. Wassenaar Arrangement Munitions List 　 Dual-Use List (BL, SL, VSL) 　


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Website(NSG)

• NSG: http://www.nuclearsuppliersgroup.org/Leng/default.htm


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•AG:http://www.australiagroup.net/en/index.html

Website(AG)


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• MTCR: http://www.mtcr.info/english/index.html

Website(MTCR)


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• WA: http://www.wassenaar.org/

Website(WA)


(1)Law or Act Foreign Exchange and Foreign Trade Act　　　　－ Basic frameworks and thoughts(2)Cabinet Orders　　　 Export Control Order　　　　－ List of goods　　　 Foreign Exchange Order　　　　－ List of technologies(3)Ministerial Orders　　　　－ Details(specifications　　　　　　 and interpretations of listed items

The legal structure in Japan

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Outline of Japan’s Export Control System

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In order to ensure the agreement of Treaties and International Regimes


Check on List Control

BusinessInquiry

Need to apply for License

Check on Catch-all Control（ End-use & End-user ）

none none

listed item

may use for WMD

NoLicense

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An export license is required for the export of listed items

- An export license is required even if items are exported for own company/factory in a foreign country.

- License exceptions

• Shipment of Limited value

• Replacement of parts and equipment etc

- Bulk license

List control

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Check on List Control

BusinessInquiry

Need to apply for License

Check on Catch-all Control（ End-use & End-user ）

none none

listed item

may use for WMD

NoLicense

A Flowchart of the A Flowchart of the classification classification procedure procedure in companiesin companies

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- All items related to WMD cannot be covered by export control regimes’ lists

- It takes time to revise lists in the export control regimes, but technologies continue to advance

　　

Limitations of List Control

It’s difficult to implement sufficient export controls by list control only!

Non-listed control, Catch-all control is necessary for effective export control

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Target All of the items except which do not clearly contribute to WMDs proliferation programs

Licensing Conditions

(1) Judgment by exporters- End-use: whether the exporters are aware that the items are used for the development of WMDs. - End-user: whether the exporters are aware that the end-user got involved in development of WMDs.

Catch-all Control (WMDs) – End Use Control

(2) Informed by METI Exporters are informed of the need for licensing by METI

Assistance Tools for Effective Enforcement a. Preliminary Consultation b. Risk Information of end-use （ Commodities ） c. Risk Information of end-user

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b. Risk Information of end-use （ Commodity)

Commodity Watch List - Not a controlled list

　　　 Examples of 40 items with high risk of diversion for development of WMDs.

a. Preliminary Consultation

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Consultation service for exporters


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c. Risk Information of end-user

Foreign End-user List - Not an embargo list

354 entities on which there are concerns for development of WMDs.

*The guideline to clear the concernThere are 17 items to confirm whether there is a concern or not, such as: - The customer’s need for the items is reasonable for their business and their technological capabilities. - The requirements for spare parts are not excessive. - The shipping route is reasonable for export items and destination. etc…

If the end-user is the listed end-user, exporter has to check carefully using *the guideline provided by METI.

If end-use has clearly not a concern with WMDs

If end-use has a minor concern or a clear concern with WMDs

Licensenot needed

Licenseneeded

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Foreign End-user List (extraction)

Country Number

Israel 　　　２

Iran 　１６４

India 　　１２

North Korea 　１１１

Syria 　　１３

Chinese Taipei 　　　２

China 　　１５

Pakistan 　　３３

Afghanistan 　　　２

　　 Total 　３５４

Foreign End-user List (Revised Sep. 201１ )

Ｎｏ．

国名、地域名Country or

Region

企業名､組織名Company or Organization

別名Also Known As

懸念区分Type of WMD

1イスラエル

IsraelBen-Gurion University (of the Negev)

　核N

2イスラエル

IsraelNuclear Research Center Negev (NRCN)

　核N

3イランIran

7th of Tir

・ 7th of Tir Complex・ 7th of Tir Industrial Complex・ 7th of Tir Industries・ 7th of Tir Industries of I Isfahan/Esfahan ・ Mojtamae Sanate Haftome Tir・ Sanaye Haftome Tir ・ Seventh of Tir

核N

4イランIran

Abzar Boresh Kaveh Co. ・ BK Co.核N

5イランIran

Aerospace Industries Organisation (AIO)

・ Sazemane Sanaye Hava Faza ミサイルM

6イランIran

AMA Industrial Company　 AMA Industrial Co.

核N

http://www.meti.go.jp/policy/anpo/law_document/tutatu/t08kaisei/100903EUL/t08kaisei_userlist_kohyo.pdf

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• An exporter needs to apply the Ministry of Economy, Trade and Industry (METI) or its regional branches for the export license.• An exporter is required to attach documents including the documents provided by an end user such as the Letter of Assurance.• METI will examine the application referring to the criteria to issue an export license.

the end user the exporter METI

applicationdocuments

Licensing Procedure

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Application Form （ Goods ）　　　 Application Form （ Technology ）


• Application Form (available from the METI website)

• Supplementary Details regarding the Application– Name of manufacturer– Quantity and Value – Outline of end use etc.

• Back Ground Documents (e.g. a written contract)– Back ground documents are required to check whether the

transaction meets the Export Licensing Criteria.

• Other Documents– Commodity in Detail (e.g. catalogue)– End-User in Detail (e.g. leaflet)– The Letter of Assurance by the End-User– Any other documents requested by METI

Exporters are required to submit documents as follows;

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① Will items actually reach the stated end-user?② Will the stated end-user really use the item?③ Will the actual use exactly match the stated end-use ?④ Will the stated end-user strictly control the item?

Key points for Export Authorization

Japan’s licensing requirements are all to be confirmed by licensing officer.

The requirements are different according to the items or destinations.

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Exporter

Importer

End-user

①Will items actually reach the stated end-user?

②Will the stated end-user really use the item?

Factory for dice

Very small factory

Unnatural rout

e ？

Nomal route

Are there consistent contacts from the exporter to the end-user through the importer?

Are there any unnatural route from exporter to end-user?

Is the business of the end-user consistent with the uses of the

items?

Is the number of items consistent with the scale of

business?

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We deal …

The main customers are

…

Company related to Military Fund from the Military

Restricted entries of outsiders

Maintain appropriate depository

③Will the actual use exactly match the stated end-use?

④Will the stated end-user strictly control the item(s)?

Does the end user deal with military items?

Does end user concern with the military industry?

Is the place where item is used decided?

Are the items controlled appropriately?

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Enforcement

Cooperation with relevant organizations

• METI cooperates with other related government agencies to enforce export control

− Customs− National Police Agency (NPA)− Ministry of Foreign Affairs (MOFA)− Japan Coast Guard (JCG), etc.

Cooperation with relevant organizations

• METI cooperates with other related government agencies to enforce export control

− Customs− National Police Agency (NPA)− Ministry of Foreign Affairs (MOFA)− Japan Coast Guard (JCG), etc.

Cooperation with private companies etc• METI encourages exporting companies and universities to strengthen their export control, and provides them with a variety of support.

− Measures for promoting ICP− Guidance for the control of sensitive technologies (ITT)− Outreach seminar, etc.

Cooperation with private companies etc• METI encourages exporting companies and universities to strengthen their export control, and provides them with a variety of support.

− Measures for promoting ICP− Guidance for the control of sensitive technologies (ITT)− Outreach seminar, etc.

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3. Recent Developments of Japan’s Export Control


Amendment of Foreign Exchange and Foreign Trade Act

1. Reviewing export control on technology transfer

Date of issue: 30th Apr. in 2009Effective: 1st Nov. in 2009

2. Strengthening the penalties

Main points of amendment

3. Establish the system according to the standard to observe ICP (Internal Compliance Programme)

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- Target all persons who offer or tend to offer to foreigners

- Limitation of dealing between residents and non- residents


Before After

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Resident

Need a license

offer

Non-resident

offer

Need a license

Before

After


Any person

Any person

Border

Any person

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USB etc

offer

offer

Need a license

Resident

Non-resident


- Imprisonment up to seven years, fine up to 7 million JPY- Especially in case of WMD, imprisonment up to ten years, fine up to 10 million JPY- Establish new punishment for obtaining of license through illicit means

After

- Imprisonment: up to five years- Fine: up to 2 million JPY

Before

- Tighten punishment of control- Establish new punishment for obtaining of license through illicit means

2. Strengthening of penalty

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※７７ JPY = 1 USD


- Defined clearly in law- All exporter need to observe the standard of ICP

After

- Necessary condition just for Bulk License

Before

- Establishment of the standard to observe for exporters- Making instructions, counseling and orders to exporters not to observe the standard of ICP

3. Establish the system according to the standard to observe ICP (Internal Compliance Programme)

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Security Export Control Policy Division 、Trade and Economic Cooperation Bureau, Ministry of Economy, Trade and Industry (METI)