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Copyright CISTEC(C) 2016 All Rights Reserved1
Export Control in Japan and CISTEC
Theory and Practice of Export Regulations -2nd Edition-
International Trade Law and Export Regulations
21-22 November 2016Caen
H.RIKOCISTEC
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1949: The Foreign Exchange and Foreign Trade Control Act was promulgated
1952: Japan joined COCOM 1987: Toshiba Machine Co. incident happened 1989: CISTEC was established 2002: WMD catch-all control was introduced 2007: Brokering control and transshipment control were
introduced 2008: Military catch-all control was introduced 2014: The policy of the Three Principles on Transfers of
Defense Equipment and Technology was set out
1. Historical Background
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Law The Foreign Exchange and Foreign Trade Act
(the Act) Cabinet Orders
The Export Trade Control Order (ETCO) The Foreign Exchange Order (FEO)
Subordinate Legislations Numerous Ministerial Ordinances, Notices,
Notifications, and Guidances
2. Legal Structure
Note: This complex, multi-layer structure characterizes the Japanese legal system, making it quite difficult for exporters to understand the legal system.
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The Act is the only law in Japan that states the basic framework and the principles of the control on exports of both arms and dual-use items.
It was originally promulgated back in 1949, when Japan was to start its economic recovery after the war under the policy of foreign trade promotion.
The Act is a principal economic law concerning trade and foreign exchanges covering broad areas of cross-border transactions, and export controls just account for a small portion of the Act.
3. The Foreign Exchange and Foreign Trade Act
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The Act, for the purpose of maintaining peace and security in Japan and in the international community, requires a license when a person intends to export or transfer listed goods or technologies to a foreign country.
4. The Control Principle
Articles 48 and 25 require a license when exporting or transferring controlled goods or technologies to foreign countries.
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5. Regulatory Framework
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The Law The Foreign Exchange and Foreign Trade Act
Article 48 (Exports of goods) Article 25 (Transfer of technologies)CabinetOrders
The Export Trade Control Order The Foreign Exchange Order
ControlLists
The Attachment List No.1(Controlled goods)
The Attachment List(Controlled technologies)
Cat. 1 to 15(List Control)
Category 16(Catch-All Control)
Cat. 1 to 15(List Control)
Category 16(Catch-All Control)
Itemssubject tothe control
Arms andDual-use items
Non-controlleditems
Arms andDual-use items
Non-controlleditems
Destinationssubject tothe control
All destinations All destinationsexcept for specific27 countries (theWhite Countries)
All destinations All destinationsexcept for specific27 countries (theWhite Countries)
The Ministry of Economy, Trade and Industry(METI)
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Trade and Economic Cooperation Bureau
Security Export Control Policy
Division
Trade Control Department
Security Export Control Administration
Division
6. Administrative Authority
Security Export Licensing Division
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The List Control Export of listed goods Transfer of listed technologies
The Catch-All ControlWMD Catch-AllMilitary Catch-All Brokering Control (C-All element is adopted) Transshipment Control (ditto)
7. The Types of the Control
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The export of listed goods to foreign countries/regions requires a license issued by the Minister of Economy, Trade and Industry.
Controlled goods are listed in the Attachment List No.1 to the Export Trade Control Order
8. The List Control: Goods
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The transfer of listed technologies requires a license if: It is from Japan to a foreign country It is from a resident to a non-resident
Controlled technologies are listed in the Attachment List to the Foreign Exchange Order
9. The List Control: Technologies
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Cross-border transferAny person, resident or non-resident, shall obtain a license
when transferring listed technology from Japan to a foreign country.
Transfer within JapanAny resident shall obtain a license when transferring listed
technology in Japan to a non-resident.
Transfer within a foreign countryAny resident shall obtain a license when transferring listed
technology in any foreign country , except when the technology was sourced in a foreign country and the transaction is completed only in a foreign country.
10. Transfer of Technology
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11. The Listed ItemsJapaneseCategorynumber
Controltypes
Classification of the Items InternationalRegimes
1
List Control
Militaryitems
Arms WA/ML
2Dual-useitems
WMD-related
Nuclear items NSG
3 Chemical weapons AG
3-2 Biological weapons AG
4 Missiles MTCR
5Conventionalarms-related
Advanced materials WA Cat. 1
6 Material processing WA Cat. 2
7 Electronics WA Cat. 3
8 Computers WA Cat. 4
9 Communication/Information security
WA Cat. 5
10 Sensors and lasers WA Cat. 6
11 Navigation/avionics WA Cat. 7
12 Marine WA Cat. 8
13 Aerospace/propulsion WA Cat. 9
14 Other ML items Except for WA/ML
15 Sensitive items WA very sensitive
16 Catch-AllControl
Items other than those under Categories 1 - 15
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WMD Catch-All and Military Catch-All Category 16 items (Those subject to the Catch-
All control) “Informed” condition and “Objective” condition The End User List (entities of WMD concern) The 27 “White Countries” (license is exempted) The Commodity Watch List The catch-all elements are also adopted in the
Brokering Control and Transshipment Control
12. The Catch-All Control
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13. The WMD Catch-All Control
Conditions thatinvoke the control
A license is required:
“Informed” condition If an exporter is instructed by METI to apply for a license.
“Objective”Condition
(“Know” condition is objectified)
End-usecondition
If an exporter is aware, through written information heobtained, that the item will be used for the development,manufacture, use, or storage of WMD (WMD activities).If an exporter is aware, through written information heobtained, that the item will be used for specific NCB-relatedactivities listed by the authority.
End-usercondition
If an exporter is aware, through written information heobtained, that the end-user has been engaged, or used to beengaged, in the WMD activities.If the end-user is on the End User List published by METI,unless it is apparent that the item will not be used for the WMDactivities.
Note: Exports to the 27 White Countries are not subject to the Catch-All control – both WMD and Military.
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14. The Military Catch-All Control
Destination Condition A license is required:Countries underUNSC ArmsEmbargo
“Informed”condition
If an exporter is instructed by METI toapply for a license.
“Objective”(end-use)condition
If an exporter is aware, through writteninformation he obtained, that the item willbe used for the development, manufacture,or use of conventional weapons.
Other countries “Informed”condition
If an exporter is instructed by METI toapply for a license.
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The End User List is a list published by METI that contains entities which are suspected of being involved in WMD activities.
Exporters are required to check the end-use very carefully when exporting any items to an entity on the list.
As of October 2015, a total of 527 entities in eleven countries/regions are listed.
15. The End User List
Note: The current list is published at the following site:http://www.meti.go.jp/press/2015/04/20150415001/20150415001-2.pdf
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A list of 40 goods with high risks of diversion to WMD applications. (In addition, 12 more items are designated specifically for the exports to Syria)
Example:1.Tributyl Phosphate (TBP) (N)2.Carbon fibre・Glass fibre・Aramid fibre( N, M)3.Titanium alloy (N, M)4.Maraging steel (N, M)
Exporters are required to check and verify the end-use and end-user very carefully when exporting any items on the list.
When exporting any items on the list to any entity on the End User List, a license is required should the attached WMD symbols agree to each other.
16. The Commodity Watch List
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Brokering of arms and related technology under Category 1 of the Control List requires a license.
Brokering of other items requires a license if: The person conducting the transaction has been
informed by METI, or The person knows, through written information he
obtained, that the item will be used for WMD activities.
This control does not apply, however, if the item moves to or from any of the 27 White Countries.
17. The Brokering Control
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Transshipment is defined as an act to transship foreign goods at seaports or airports in Japan.
Transshipment of arms requires a license. Transshipment of other goods requires a
license if: The person conducting the transaction has been
informed by METI, or He knows, through written information he obtained,
that the item will be used for WMD activities. Transshipment control does not apply if the
destination is any of the 27 White Countries.
18. The Transshipment Control
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19. The Licensing System
Category No. Name of the licenses
IndividualLicense
1 Individual Export License
Bulk License
2 General Bulk Export License
3 Special General Bulk Export License
4 Special Bulk Export License
5 Special Bulk Export License for Repair orReplacement
6 Special Bulk Export License for OverseasSubsidiaries
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No. Eligible items Eligible destinations Other conditions ICP Pre-audit by METI
2 Controlled but less sensitive
27 countries(White countries)
Electronic application only
Not Required
Not Required
3 Same as above
Except Iran, Iraq, DPRK,UN arms embargo Countries
Reference to matrix table which defines certain conditions
Required Required
4 Specific itemsrepeatedly ordered
Specific Customers with repeated orders
Export record report to METI
Required Required
5 Arms and arms related
27 countries(White countries)
Only to original exporter
Required Required
6 Specific itemsrepeatedly ordered
Except Iran, Iraq, DPRK,UN arms embargo Countries
Subsidiarieswith majority share
Required Required
20. The Bulk Licenses
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Low value goods Re-export of goods imported for repair A controlled item incorporated into an end
product as a non-principal element Technology in public domain or related to basic
scientific research Technology transfer in association with an export
of listed goods Technology transfer in association with an export
of listed software
21. License Exemptions
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A person who conducts exports of controlled items is legally required: To place a person ultimately responsible for export
controls in the organization, To establish a proper export control organization, To establish proper product classification procedures,
transaction screening procedures, and shipment control procedures,
To conduct auditing and training, To keep related documents properly for certain years, To report any violation cases to the authority.
22. Exporters’ Compliance Standard
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An ICP is beneficial for both companies and the government.
A company can register its ICP with METI if it meets certain standard set by the authority.
Further, if the company so wishes, METI publishes its name on the Website.
Currently, about 1,500 ICPs are registered, of which 603 company names are published.
23. The ICP Registration System
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24. Penalties
Violations PenaltiesAn export or brokerage ofcontrolled goods or technologyrelated to WMD without license.
Imprisonment for not more than tenyears or a fine not more than tenmillion yen, or not more than fivetimes of trade amount ,or both.
An export or brokerage of othercontrolled goods or technologywithout license.
Imprisonment for not more thanseven years or a fine not more thanseven million yen, or not more thanfive times of trade amount ,or both.
An export or transmission ofdocuments, drawings orrecorded media that containcontrolled technology withoutlicense.
Imprisonment for not more than fiveyears or a fine not more than fivemillion yen, or not more than fivetimes of trade amount ,or both.
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Since 1967 until recently, Japan, as a peace-loving nation, had maintained its policy of blanket ban of arms exports (but with some exceptions) based on the policy guideline called the “Three Principles on Arms Exports.”
However, on 1 April 2014, the Japanese government changed its arms export control policy, replacing the 47-year old principles with the new guideline called the "Three Principles on Transfers of Defense Equipment and Technology.”
The government now allows arms exports under the new guideline, which is nonetheless as strict as ever.
25. Japan’s Arms Export Control Policy
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1. A transfer is prohibited if it:(1) violates Japan’s obligations under international treaties, etc.(2) violates UN Security Council Resolutions.(3) is to a country involved in armed conflicts.
2. A transfer is permitted if it:(1) helps promote Japan’s peace-building and international cooperation.(2) serves Japan’s national security.
(a) International joint development/production(b) Enhancement of defense/security cooperation(c) Support of SDF’s overseas operations (d) Safety assurance of Japanese nationals abroad
3. Proper control(1) Permission is granted only when the government of the recipient country can assure proper control over an unauthorized use and a third‐country re‐transfer.(2) The recipient country is required to get a prior consent of the Japanese government if it intends to do the above.
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26. The New Principles
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Internationalization of the classification numbering system
Create a single set of export control law and regulations, replacing the current system (future)
Raising awareness of STC in Academia and SME
27. Challenges
About CISTEC
Founded in April 1989 non-profit, non-governmental organization
dealing with security export control issues comprehensively.
Associated members: 436(as of Nov.7 2016) Associated University members:35( ditto )
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28. CISTEC
CISTEC Organizationconsisted of
members from
Industry
Chair
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Export Control Research Committee
‐ Policy, Rules and Procedures Board and related Committees of1. Export control policy2. Rules and procedures3. International research4. International relations
‐ Goods and Materials Board and related Committees of1. Dual-use items for WMD 2. Advanced materials 3. Industrial machinery 4. Electronics 5. Information technologies 6. Sensors, lasers, navigations & avionics
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NOTE : The Sectors are as Specified by the Securities Identification Code Committee (SICC), and the Sectors in “Others” include Transportation Equipment, Chemicals, Services, Glass & Ceramics etc.
(NOTE)
Electric Appliances Machinery Wholesale Trade
Information & Communication Precision Instruments Others
29. CISTEC Members Proportion by Sector
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Academia
Government Industry
CISTECLinkage Channel
30. Linkage Channel among Industry, Government and Academia
Linkage Channel Organigram
Government
CISTEC
Industry Standard
Explanation, Practical RequestRecommendation
Policy Proposal,Understanding,Amendment of Policy, Respect of Industry Standard
Industry
Exchange of Information and Opinions
Agreed
Agreed Output
Model ICP
Product Classification Guidance
Academia
Committees
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Linkage Function of CISTEC For the Government, CISTEC
・provide professional technical/commercial advices
・sound industry out on new policy plan of METI・explain views/thoughts of industry/academia
For Industry/Academia, CISTEC・integrate opinions from Industry/Academia into
common one ・recommend it to METI on behalf of whole
industry/Academia・provide occasion of dialogue with METI officers
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1.Research , Integrate Comments and Recommendation to the Government Collect and Analyze Fundamental Data on Goods and Technologies Research and Study for Domestic and International Export Control Regulations Integrate comments from Industry and Recommend them to the Government
2. Support Industry /Academia to establish Export Control System Provide individual Consultation Assist to establish Internal Compliance Program (ICP) Assist commodity/technology classification and provide tools for classification Provide various Training Seminars for Industry Hold Exams for Security Trade Certification
3. Provide information on security trade control Publish Journals and other publications Provide DB services of updated Information on concerned End-Users etc.
4. International cooperation on security trade control Hold annual Asia Export Control Seminars Networking with Foreign Governments, Industrial Associations and Research
Institutions etc.
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31. Four Major Activities of CISTEC
- Guidance, Manuals, Handbooks
- Parameter-sheets for Commodity Classification
- Commodity Guidance
- CISTEC Journal
Publications
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Conventional Seminars (FY 2015, 34times) - Basic Courses (Procedures, License, Classification)- Course for Top Management/ Executives - Theme-Oriented Courses
(US Re-Export Controls, EU Export Controls, etc.)- Specific sector Course (Machine tool, Carbon fiber etc.)
Web Seminars - DVD with video-recorded conventional seminars- e-learning
Dispatching Instructors (FY 2015)- On-site and order-made seminars (88 times)
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32. CISTEC Seminars
Classification Assistance・assisting exporters to make proper commodity
classification for license application Audit Assistance/STC System Establishment Assist.
STC Certification Programs・CISTEC provides certification of Expert, Advanced and Associate(Associate:26,603 Advanced:781 Expert:847)
Database Service (Fee-Based)・ Consolidated Parties List of Reference Information・Parameter Sheet for Commodity Classification・Japanese Export Control Laws and Regulations
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33. Other Services
Classification Assistance Service
CISTEC Started the 2 types of Commodity /Technology Classification Assistance Servicesince April 2012
General Service: Verify the classificationdone by customer and issue the Verification CertificateFull Support Service: Instruct customer basicshow to make classification and issue theVerification Certificate
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STC Certification Program
NOTES :- The “ONLY” Certification of Knowledge and Skills on STC- “Good Motivation” for examinee- “Incentives” for STC Certification holders- Advantageous to promotion, change of job etc.- Regarded as an Effective Capacity-building tool
Type of Qualifications No. of Holder(Nov.2016)
Strat time.No. of
ExecutionSTC-Expert 408 Since 2005
Once a yearSTC-Legal expert 311
STC-Semi-Legal expert 128
STC-Advanced 781 Since 2015 Twice a year
STC-Associate 26,603 Since 20043 times a year
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- Started from 2009 (35Members as of Nov. 2016)
- Free supply of various basic Guidance - Free Basic Seminars up to 5 persons - Free Dispatch of Instructor for In-House
Training (once a year)- Free Consultant service upto15 times a year - Community site for university on CISTEC HP
and More…
University Membership Program
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Thank you!
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