Overview of Export Control System in Japan

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Overview of Export Control System in Japan
Ministry of Economy, Trade and Industry
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Outline

• 1. Legal Framework
• (1) Legislation Export Control Authority
• (2) Target on Control
• (3) Types of Control
• a. List Control
• b. Catch-all Control
• 2. Licensing
• (1) Basic Stance
• (2) Key Elements in Licensing
• 3. Enforcement
• (1) Cooperation among Agencies
• (2) Types of Violations
• (3) Penalties
• 4. Update on Japans Export Controls
• (1) Revision of Bulk License System etc
• (2)Statement for Further Export Controls from
  the Minister of METI
• (3) Others

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Legal Framework

• Legislation and Export Control Authority

• Foreign Exchange and Foreign Trade Act
• Law states basic frameworks and thoughts
• Cabinet, ministerial orders and other
  notifications prescribe details of implementation
• METI is in charge of export controls with close
  cooperation with Customs

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1. Legal Framework
(2) Target on Control

• Transfers of both items and technologies are
  controlled
• Technology means any specific information
  required for the development, production, or use
  of any items controlled
• Technology may take the form of technical data or
  technical assistance
• Technical data blueprints, software, etc.
• Technical assistance instruction of skills,
  training, etc.
• Transfer of technology also requires an export
  license

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1. Legal Framework
(3) Types of Control

• Two types of export control
• a.List Control Controls on listed items
• b. Catch-all Control Controls on unlisted items

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Legal Framework
(3) Types of Control a. List
Control

• Export licenses are required in advance for the
  export of listed items
• Wide range of dual-use items are listed, which
  are based on export control regimes

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Limitation of List Control

• All items related to WMD cannot be covered by
  export control regimes because items are selected
  by some criteria (sensitivity, controllability,
  etc.)
• - Some unlisted items can be used for the
  development of WMD
• Revising the lists takes a long time in export
  control regimes

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Legal Framework (3) Types of Control b.
Catch-all Control

• Exporters are required
• to apply for export licenses in cases where
  items or technologies are not on control lists
  but could contribute to WMD proliferation
  programs
• Preliminary Consultations
• Inform
• Risk Information for Exporters

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Preliminary Consultation

• Number of consultations about 200 / year

Inform
METI notifies exporters to apply for export
licenses in cases where they attempt to export
items or technologies that could contribute to
WMD proliferation without a license
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Risk Information for Exporters

• End-User List (EUL)
• 191 entities about which there is concern over
  WMD or their means of delivery
• Not an embargo list
• Commodity Watch List (CWL)
• Examples of 40 items with high risk of
  diversion for development of WMD or their
  delivery
• Not a controlled list

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Catch-all Control System
List Control
Exporter
METI /
Licensing
Embargo
Objective Condition End-use/End-user Condition
Export
Application
Inform Condidtion
Catch-all Control
Approval
EUL 187 organizations
Application
Inform
Non-controlled items Groceries, wood, etc
CWL 40 items
Export
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2. Licensing
(1) Basic Stance

• WMD
• ? Never Approve
• Conventional Arms
• ? Three Principle of Arms Exports
• Dual-use Items
• ? Depends on End-Use

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(2) Key Elements in Licensing
2. Licensing
? Whether the items will actually reach the
stated end-user ? Whether the stated end-user
will really use the item ? Whether the use will
not be really used for concerned use ? Whether
the stated end-user will strictly control them

• Exporters are required to provide related
  information such as importers / end-users
  existence and end-users business activities.

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3. Enforcement
(1) Cooperation among Agencies

• Sharing information on suspicious end-users and
  items of special concern
• Targeting suspicious custom declarations
• Daily information exchange on specific cases
• Penalties for violations

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3. Enforcement
(2) Types of Violations
Mistake in confirmation of shipment 8
Willfil violation or negligence 12
Insufficient export control systems 35
Non-compliance with licensing conditions 15
Misjudgment of applicable articles 30
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Most Illegal Exports are Unintentional
Willfil violation or negligence of the law 12
Unintentional export 88
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• In many cases, cause of a violation is lack of
  knowledge or awareness or carefulness
• METI encourages exporters to establish or develop
  ICP (Internal Compliance Program)

STOP ! VIOLATION
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3. Enforcement
(3) Penalties

• Criminal Penalty
• Imprisonment for up to five years
• Fine of up to the greater of \ 2,000,000 or
  five times the value of the exports
• Administrative Sanction
• The denial of export privileges for up to
  three years
• Caution against Violators
• Giving a caution, and publicizing the case

• Public announcements are effective tools as a
  social sanction, for they impose sufficient/
  significant damage to the credit and reputation
• of the company.

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4. Update on Japans Export Controls
(1) Revision of Bulk License System
Bulk license system in Japan Allows exporters to
export certain less sensitive items to certain
less sensitive destinations without individual
license applications for three years, once they
have obtained approval for a bulk license.
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Previous system Exporters were not required to
establish or enforce an Internal Control Program
(ICP) to be granted a bulk license.
Present system Japan has revised its system to
require exporters to establish or enforce ICPs to
be granted bulk licenses.
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Recent Improvements
(2) Revision of Controls on Transshipment
Present System Weapon License is required in
transshipping any weapons. Other items No
license is required.

New System (Start from June 1. 2007) Weapon
License is required in transshipping any weapons.
Other items License is required in case an
exporter notices that the transshipping item is
going to be used for WMD proliferation or an
exporter is informed to apply for license by
METI.
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Recent Improvements
(3) Revision of Controls on Brokering
Present System Weapon License is required in
brokering any weapons. Other items No
license is required.

New System (Start from June 1. 2007) Weapon
License is required in brokering any weapons.
Other items License is required in case a
broker notices that the brokering item is going
to be used for WMD proliferation or a broker is
informed to apply for license by METI.
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4. Recent Improvements
(4) Revision of License Exemptions
Before revision No license is required in
exporting some items that value is less than 1
million yen to all countries except for Iran,
Iraq, North Korea and Libya. No license is
required in exporting some items that value is
less than 50 thousand yen to Iran, Iraq, North
Korea and Libya.

After revision No license is required in
exporting some items that value is less than 1
million yen to all countries except for Iran,
Iraq and North Korea. No license exemption is
available in exporting any item to Iran, Iraq
and North Korea.
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• 4. Recent Improvements
• (2)Statement for Further Export Controls from
  the Minister of METI

• Checks on Compliance
• Enhancing Awareness
• Control of Goods and Technology
• Supporting Export Controls in Overseas
  Subsidiaries

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4. Recent Improvement (3) Others
July. 2006 Multiple missile launches from DPRK

• Embargo against specific DPRK ship
• Prevention of the transfer of financial
  resources to
• 15 entities and 1 individual considered to be
  involved in WMD
• program

N O
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4.Recent Improvement (3)Others

• Oct. 2006 Proclamation by DPRK that a nuclear
  test was conducted

• Embargo against all DPRK flagged vessels
• Ban from importing all items which original
  or shipping place is DPRK
• Ban from exporting or brokering 24 luxury
  goods for DPRK

N O