Overview of

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Overview of Japans Export Control System
Nobuo TANAKA Security Export Control Policy
Division Trade and Economic Cooperation
Bureau Ministry of Economy, Trade and Industry
(METI) JAPAN
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Contents

• 1.Introduction(Importance of Export Control)
• 2. International Export Control Regimes
• 3.Japans Export Control System
• 4.Developments of Japans Export
• Control in 2009

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• 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 peoples 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
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- There are high level of terrorist activities,
resulting in serious harm to peoples 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

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Terrorists or countries of concern can procure
items through countries that do not
implement export control systems.
Terrorists,countries of concern
Country A
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
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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 Weapons
WMDs
Biological/chemical weapons
Nuclear weapons
BWC
CWC
NPT
Treaties, Convention
Nuclear Non-Proliferation Treaty
Chemical Weapons Convention
Biological Weapons Convention
1975
1997
1970
1977
1985
1987
1996
AG
NSG
WA
Export Control Regime
Nuclear Suppliers Group
Australia Group
Wassenaar Arrangement
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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/de
  fault.htm

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Website(AG)

• AGhttp//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.
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3. Japans 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
• - List of goods
• Foreign Exchange Order
• - List of technologies
• (3)Ministerial Orders
• - Details(specifications
• and interpretations
• of listed items

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Outline of Japans 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 Japans control list Relation
between Japans control list International
Export Control Regime
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Comparison table between Japans control list
EU dual-use list
http//www.meti.go.jp/policy/anpo/eulist_taihihyo.
html
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A Flowchart of the classification procedure in
companies
No License
Check on List Control
Check on Catch-all Control (End-use End-user)
none
none
Business Inquiry
may use for WMD
listed item
Need to apply for License
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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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A Flowchart of the classification procedure in
companies
No License
Check on List Control
Check on Catch-all Control (End-use End-user)
none
none
Business Inquiry
may use for WMD
listed item
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

Its 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 NM
2.Carbon fiber, Glass fiber, Aramid
fiber 3.Titanium alloys 4.Maraging steels 6.
Flow forming machines 7.Numerically controlled
machine tools 8.Isostatic presses 9. Filament
winding machines 12. Vibration test machines 13.
Centrifugal multiplane balancing
machines 14. Pressure measuring machines with
corrosion-resistant 15. Large size
non-destructive testing machines 21. TIG
or Electron beam Welding machines
26.Graphite
1. TRIBUTYL PHOSPHATE (TBP) 5. Aluminum alloys
Tubes with an outside diameter of
more than 75 mm 10. Frequency changers 11. Mass
spectrometers its ion sources 16. Oscilloscopes
Waveform digitizers, capable of
measuring high frequency waves 17.
High-power direct current power supplies
with current or voltage stability 18.Large
capacity Generator 19.Large size vacuum pump 20.
Radiation- Proof Robot 22. Radiation measuring
instruments
23.Pulverizing mills 24. Karl Fischer Moisture
Titrators 25.Equipment for producing
prepregs 27.Gyroscope 28. Rotary encoder 29.Large
trucks (including tractors, trailers dump
trucks) 30.Crane trucks 39.UAV, incorporating an
aerosol dispensing system/mechanism 40.
Aerosol dispensing system/mechanism
specially designed for UAV
Type of WMD M
Type of WMD N
31. Fermenters without the propagation of
aerosols 32. Centrifugal separators 33.Freeze
drying equipments
Type of WMD B
39. UAV, incorporating an aerosol dispensing
system/mechanism 40. Aerosol dispensing
system/mechanism specially designed for UAV
34.Reaction vessels with corrosion-resistant 35.Ag
itators with corrosion-resistant 36.Heat
exchangers or condensers with corrosion-resistant
37.Distillation or absorption columns with
corrosion-resistant 38.Remotaly operated filling
machines with corrosion-resistant
Type of WMD C
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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.
If end-use has clearly not a concern with WMDs
Licensenot needed
If end-use has a minor concern or a clear
concern with WMDs
License needed
The guideline to clear the concern There are 17
items to confirm whether there is a concern or
not, such as - The customers 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
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Foreign End-user List (Revised Dec. 2011)
Foreign End-user List (extraction)
http//www.meti.go.jp/policy/anpo/law_document/tut
atu/t08kaisei/111209EUL/t08kaisei_userlist_kohyo.p
df
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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.

application
documents
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

• Will items actually reach the stated end-user?
• Will the stated end-user really use the item?
• Will the actual use exactly match the stated
  end-use ?
• Will the stated end-user strictly control the
  item?

Japans licensing requirements are all to be
confirmed by licensing officer.
The requirements are different according to the
items or destinations.
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?Will items actually reach the stated end-user?
?Will the stated end-user really use the item?
Factory for dice
Are there consistent contacts from the exporter
to the end-user through the importer?
Is the business of the end-user consistent with
the uses of the items?
Are there any unnatural route from exporter to
end-user?
Is the number of items consistent with the scale
of business?
Unnatural route?
Very small factory
Nomal route
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?Will the actual use exactly match the stated
end-use?
?Will the stated end-user strictly control the
item(s)?
The main customers are
We deal
Does the end user deal with military items?
Is the place where item is used decided?
Does end user concern with the military industry?
Are the items controlled appropriately?
Company related to Military
Fund from the Military
Maintain appropriate depository
Restricted entries of outsiders
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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 Japans 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 companys rules according to the
Compliance Standard to observe Export
Control Law
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1. Reviewing export control on technology transfer
Before
After

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

• Limitation of dealing
• between residents and
• non- residents

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1. Reviewing export control on technology transfer
After
Border
Before
offer
Need a license
Need a license
Any person
Any person

offer
offer
Need a license
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

After
Before

• 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

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

? 80JPY 1 USD
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3. Establish the companys 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

After
Before

• Defined clearly in law
• All exporter need to
• establish
• the Compliance standard

• Necessary condition
• just for Bulk License

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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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