1 1 Overview of Japan s Export Control System by dJB8N2

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									   Joint Industry Outreach Seminar in the Philippines (Mar. 15, 2012)




         Overview of
Japan’s Export Control System


         Nobuo TANAKA
         Security Export Control Policy Division
         Trade and Economic Cooperation Bureau
         Ministry of Economy, Trade and Industry (METI)
         JAPAN
     Joint Industry Outreach Seminar in the Philippines (Mar. 15, 2012)




Contents

1.Introduction(Importance of Export Control)

2. International Export Control Regimes

3.Japan’s Export Control System

4.Developments of Japan’s Export
  Control in 2009

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      1. Introduction
           (Importance of Export Control)




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       Terrorist attacks and WMD-related activities
     Terrorist attacks
       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)
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
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          Global Peace Index 2011




                                         data from Global Peace Index
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- There are high level of terrorist activities,
  resulting in serious harm to people’s lives.
- Recently, terrorism has increased in Asia.
Terrorist activities (reported in 2010)
  - Number of incidents: 11,604
  - Number of dead: 13,186
Main areas of terrorist activities
  - Iraq, Afghanistan, Pakistan and African countries
  - Recently we see increased terrorist activity in Asia.

- 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.

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                                       2010 NCTC Report on Terrorism
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                                       2010 NCTC Report on Terrorism

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      Terrorism causes not only serious personal
      injury, but also damages the economy and
      industry in affected countries/regions.

Example: 2002 Bali bombings
- Tourist industry is 5% of GDP
- Right after the bombings, hotel occupancy rates decreased
from 70% to single digits
- The number of tourists declined by 0.8 million, to 4.3 million


            Asian countries developing tourism
            and industry are seriously damaged
            by terrorism
   Joint Industry Outreach Seminar in the Philippines (Mar. 15, 2012)



- There are high level of terrorist activities,
  resulting in serious harm to people’s lives.
- Recently, terrorism has increased in Asia.
Terrorist activities (reported in 2010)
  - Number of incidents: 11,604
  - Number of dead: 13,186
Main areas of terrorist activities
  - Iraq, Afghanistan, Pakistan and African countries
  - Recently we see increased terrorist activity in Asia.

- 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.

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      United Nations awaken international tackling
      with WMDs and also adapted some resolutions


                        UNSCR 1540


 Proliferation of WMD and their means of delivery poses
  a threat to international peace and security
 Attempts to prevent WMD and related materials from
  falling into the hands of non-state actors that are of
  concern with regard to proliferation
 All States are to establish relevant domestic controls
            Joint Industry Outreach Seminar in the Philippines (Mar. 15, 2012)



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



                                                                  Terrorists,
Country A                                                     countries of concern




                   circumventing exports                           Threats to
                                                                   world peace
                      Countries not
                   implementing export
                     control systems


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                      North Korea and Iran
    Growing concerns WMD-related activities by North Korea
    and nuclear development by Iran require a coordinated
    response from the international community
- North Korea: Missile launches (July 2006, April and July 2009)
               Announced nuclear tests (October 2006, May 2009)
- Iran: Enrichment-related activities that create suspicion in the international
        community




 UNSCRs
 - North Korea : UNSCR 1695, 1718 and 1874
 - Iran : UNSCR 1696, 1737, 1747, 1803, 1835 and 1929
    Joint Industry Outreach Seminar in the Philippines (Mar. 15, 2012)




Why must companies have export controls?




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     Why must companies have export controls?

- Compliance
- Reduces cost of export procedures
 Companies can simplify export control procedures in
 accordance with their own export systems.
- Social responsibility
 Companies are punished if exported goods are used for
 terrorist activities or countries of concern, regardless of
 regulations.
- Enhanced evaluation by investors
 Companies with export controls are more highly
 evaluated because they pose lower investment risks.


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2. International Export Control
            Regimes




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                                                                         Conventional
                                     WMDs                                  Weapons

             Nuclear          Biological/chemical          Missiles
             weapons          weapons

                NPT           BWC              CWC
 Treaties,   Nuclear         Biological    Chemical
Convention   Non-            Weapons       Weapons
             Proliferation   Convention    Convention
             Treaty
                             1975           1997
               1970
               1977                  1985                  1987               1996

               NSG                        AG              MTCR                WA
 Export       Nuclear             Australia Group       Missile
              Suppliers
 Control      Group
                                                        Technology        Wassenaar
                                                        Control Regime    Arrangement
 Regime




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 Control 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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   Website(AG)




•AG:http://www.australiagroup.net/en/index.html
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     Website(MTCR)




• MTCR: http://www.mtcr.info/english/index.html
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 Website(WA)




• WA: http://www.wassenaar.org/
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  Some exports can be used for military purposes
  and are called “dual use” items.

To avoid criminal involvement, exporter must
confirm whether or not your export item is dual-use.

                             Military Use              Civilian Use
                            Gas centrifuge for            Watches,
Titanium alloy
                           uranium enrichment          eyeglass frames


                                                       Golf club shafts,
Carbon fiber                Missile components
                                                        fishing rods


Tri-ethanolamine            Chemical weapons               Shampoo


Freeze-drying
                            Biological weapons           Instant coffee
equipment
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3. Japan’s Export Control System




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               The legal structure in Japan

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


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             Outline of Japan’s Export Control System
   In order to ensure the agreement of Treaties and
   International Regimes
• Legislation ・・・ The Foreign Exchange and Foreign Trade Act

• Two types of control         List Control
                               Exporters should obtain a license when
                                exporting items listed in the Control List.
                                The Control List harmonizes with
                                 International Regimes

                               Catch-all control (End-use Control)
                                Exporters should obtain a license in case
                                 where they aware the item may contribute
                                 WMDs programs, or informed by METI



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                  Contents of Japan’s control list & Relation between Japan’s
                  control list & International Export Control Regime
Section No                   International Export Control Regime            Items

1            Weapons                      WA

2                                                   NSG            Nuclear related Items


3                                                                  Chemical weapon related Items
                                                    AG
3/2                                                                Biological weapon related Items

4                       WMD Related                 MTCR           Missile related Items
                                                                                           Special Materials and Related
5                                                                  Category 1
                                                                                           Equipment
6                                                                  Category 2              Materials Processing

7            Dual-use                                              Category 3              Electronics

8                                                                  Category 4              Computers
                                                                                           Telecommunications & information
9                                                                  Category 5
                                                                                           Security
                        Conventional Weapon
10                                                  WA             Category 6              Sensors and Lasers
                        Related
11                                                                 Category 7              Navigation and Avionics

12                                                                 Category 8              Marine

13                                                                 Category 9              Aerospace and Propulsion

14           Others                                                Munition Items other than Section No1

15           Dual-use                                              VSL Items in WA's control list

16                                                                 Catch-all control Items
   Joint Industry Outreach Seminar in the Philippines (Mar. 15, 2012)

  Comparison table between Japan’s control list & EU dual-use list




http://www.meti.go.jp/policy/anpo/eulist_taihihyo.html
            Joint Industry Outreach Seminar in the Philippines (Mar. 15, 2012)


           A Flowchart of the classification procedure
                           in companies



                                     none      Check on            none
Business                                                                            No
                   Check on                    Catch-all                         License
 Inquiry
                   List                        Control
                   Control                     (End-use &
                                                 End-user)


                                        may use
            listed item                 for WMD



                          Need to apply for License
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         Joint Industry Outreach Seminar in the Philippines (Mar. 15, 2012)


                              List control
  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



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            Joint Industry Outreach Seminar in the Philippines (Mar. 15, 2012)


           A Flowchart of the classification procedure
                           in companies



                                     none      Check on            none
Business                                                                            No
                   Check on                    Catch-all                         License
 Inquiry
                   List                        Control
                   Control                     (End-use &
                                                 End-user)


                                        may use
            listed item                 for WMD



                          Need to apply for License
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                    Limitations of List Control

-   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

          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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         Catch-all Control (WMDs) – End Use Control
   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.
(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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  a. Preliminary Consultation
   Consultation service for exporters


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.




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               Examples of 40 items with high risk of diversion for development
               of WMDs
                                                               Type of WMD N&M
                                                        2.Carbon fiber, Glass fiber, Aramid fiber
          1. TRIBUTYL PHOSPHATE (TBP)                                                                 23.Pulverizing mills
          5. Aluminum alloys Tubes with an              3.Titanium alloys
                                                        4.Maraging steels                             24. Karl Fischer Moisture Titrators
            outside diameter of more than 75 mm
          10. Frequency changers                        6. Flow forming machines                      25.Equipment for producing prepregs
                                                        7.Numerically controlled machine tools        27.Gyroscope
Type of
          11. Mass spectrometers & its ion sources                                                                                           Type of
          16. Oscilloscopes & Waveform digitizers,      8.Isostatic presses
WMD
                                                                                                      28. Rotary encoder                     WMD
              capable of measuring high frequency       9. Filament winding machines
               waves                                                                                  29.Large trucks (including tractors,      M
   N                                                    12. Vibration test machines                      trailers & dump trucks)
          17. High-power direct current power
              supplies with current or voltage          13. Centrifugal multiplane balancing
                                                                                                      30.Crane trucks
              stability                                      machines
                                                        14. Pressure measuring machines with          39.UAV, incorporating an aerosol
          18.Large capacity Generator
                                                            corrosion-resistant                          dispensing system/mechanism
          19.Large size vacuum pump                     15. Large size non-destructive testing        40. Aerosol dispensing system/mechanism
          20. Radiation- Proof Robot                        machines                                     specially designed for UAV
                                                        21. TIG or Electron beam Welding
          22. Radiation measuring instruments
                                                           machines
                                                        26.Graphite

                          Type of               31. Fermenters without the propagation of aerosols
                          WMD                   32. Centrifugal separators
                                                33.Freeze drying equipments
                               B
                                                39. UAV, incorporating an aerosol dispensing
                                                    system/mechanism
                                                40. Aerosol dispensing system/mechanism specially
                                                designed for UAV

                                                34.Reaction vessels with corrosion-resistant
                          Type of
                                                35.Agitators with corrosion-resistant
                          WMD
                                                36.Heat exchangers or condensers with corrosion-resistant
                               C
                                                37.Distillation or absorption columns with corrosion-resistant
                                                38.Remotaly operated filling machines with corrosion-resistant
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         c. Risk Information of end-user
  Foreign End-user List - Not an embargo list
  374entities on which there are concerns for development
  of WMDs.
     If the end-user is the listed end-user, exporter has to
      check carefully using *the guideline provided by METI.
                                                                        License
 If end-use has clearly not a concern with WMDs
                                                                      not needed
        If end-use has a minor concern or                                License
            a clear concern with WMDs                                    needed
*The guideline to clear the concern
There 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… 36
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                    Foreign End-user List (Revised Dec. 2011)
                   Foreign End-user List (extraction)
     国名、地域名                                                                         懸念区分
No                         企業名、組織名                                 別名
      Country or                                                                    Type of
.                       Company or Organization               Also Known As
       Region                                                                        WMD
      イスラエル        Ben-Gurion University (of the                                      核
1                                                                                             Country          Number
       Israel      Negev)                                                             N

      イスラエル        Nuclear Research Center Negev                                      核       Israel              2
2
       Israel      (NRCN)                                                             N
                                                                                              Iran             182
                                                   ・7th of Tir Complex
                                                   ・7th of Tir Industrial Complex             India              12
                                                   ・7th of Tir Industries
3
        イラン
                   7th of Tir
                                                   ・7th of Tir Industries of I        核       North Korea      111
         Iran                                       Isfahan/Esfahan                   N
                                                   ・Mojtamae Sanate Haftome Tir               Syria              13
                                                   ・Sanaye Haftome Tir
                                                   ・Seventh of Tir                            Chinese Taipei      2
        イラン                                                                           核       China              15
4                  Abzar Boresh Kaveh Co.          ・BK Co.
         Iran                                                                         N
                                                                                              Pakistan           33
        イラン        Aerospace Industries Organisation ・Sazemane Sanaye Hava Faza     ミサイル
5
         Iran      (AIO)                                                              M       Afghanistan         2

        イラン                                                                           核       UAE                 2
6                  AMA Industrial Company          AMA Industrial Co.
         Iran                                                                         N
                                                                                                     Total     374


         http://www.meti.go.jp/policy/anpo/law_document/tutatu/t08kai
                  sei/111209EUL/t08kaisei_userlist_kohyo.pdf
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                             Licensing Procedure

• 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.



                documents                             application



the end user                      the exporter                                METI


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Application Form (Goods)                       Application Form (Technology)




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    Exporters are required to submit documents as follows;
•     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


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              Key points for Export Authorization
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?

             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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 ①Will items actually reach the stated            ②Will the stated end-user really use
               end-user?                                         the item?




                  Importer
                                                    Factory for dice
    Exporter                         End-user

 Are there consistent contacts                     Is the business of the end-user
from the exporter to the end-                       consistent with the uses of the
  user through the importer?                                    items?

                                                         Is the number of items
Are there any unnatural route
                                                       consistent with the scale of
 from exporter to end-user?
                                                                business?

                        Unnatural
                         route?




                                                                                    Very small
                             Nomal                                                  factory
                             route
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③Will the actual use exactly match the                        ④Will the stated end-user strictly
            stated end-use?                                           control the item(s)?

         The main
     customers are …           We deal …




  Does the end user deal with                                  Is the place where item is used
        military items?                                                    decided?


Does end user concern with the                                      Are the items controlled
      military industry?                                                 appropriately?



 Company related to Military     Fund from the Military




                                                                                            Maintain appropriate
                                                          Restricted entries of outsiders   depository
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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 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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4.Developments of Japan’s Export Control
  in 2009




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        Amendment of Foreign Exchange and
               Foreign Trade Act
                                      Date of issue: 30th Apr. in 2009
                                      Effective: 1st Nov. in 2009

Main points of amendment
1. Reviewing export control on technology transfer

2. Strengthening the penalties

3. Establish the company’s rules according to the
   Compliance Standard to observe Export Control Law



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      1. Reviewing export control on technology transfer



Before                                       After



- Limitation of dealing                    - Target all persons who
 between residents and                      offer or tend to offer
 non- residents                             to foreigners




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             Joint Industry Outreach Seminar in the Philippines (Mar. 15, 2012)

      1. Reviewing export control on technology transfer

                                              After
                                                                Border
Before
                                                                offer


         Need a license                      Any person Need a license Any person



              offer
                                               Need a license                    offer
Resident              Non-resident                                      Any person
                                                            USB etc
                                                   offer

                                           Resident   Non-resident


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            2. Strengthening of penalty


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

Before                                   After
                                      - Imprisonment up to seven years,
                                       fine up to 7 million JPY
- Imprisonment:                       - Especially in case of WMD,
   up to five years                    imprisonment up to ten years,
- Fine:                                fine up to 10 million JPY
   up to 2 million JPY
                                      - Establish new punishment for
                                       obtaining of license through
          ※ 80JPY = 1 USD
                                       illicit means

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         3. Establish the company’s rules according to the
            Compliance Standard to observe Export Control
            Law

- Establishment of the Compliance Standard
- Making instructions, counseling and orders to
  exporters not to observe the Compliance Standard

Before                                          After

                                              - Defined clearly in law
- Necessary condition
                                              - All exporter need to
  just for Bulk License
                                               establish
                                               the Compliance standard

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 Joint Industry Outreach Seminar in the Philippines (Mar. 15, 2012)




  Thank you
  for your attention




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



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