Easy-to-understand Security Trade Controls! This is all you need to do

If sophisticated goods and services owned by small and medium-sized enterprises (SMEs) were to be passed, even indirectly, to countries that develop weapons of mass destruction (nuclear, chemical, biological, and missile weapons) or conventional weapons, or to terrorists, it could pose an international threat and destabilize the situation.

In Japan, the Ministry of Economy, Trade and Industry (METI) controls the export of goods and the provision of technology in accordance with the Foreign Exchange and Foreign Trade Law (Foreign Exchange and Foreign Trade Law).

Um, I’m not sure if it is called a weapon, but I don’t think it has anything to do with our product.

First check! Cargo not subject to security trade control regulations

Yes, as you say, some cargoes are not regulated, so please check the following first.

You can find out more about whether your products are subject to the regulation here.

Ministry of Economy, Trade and Industry Security Trade Controls Scope of Catch-all Regulations Table of Items Subject to Section 16 Cargo and Catch-all Regulations 

No action required for non-regulated cargo. Application for a permit to METI is not required.

However, if your company’s product has a “0” in the above list, please continue reading.

Small and medium-sized manufacturing companies should know about the unexpected products and services that can be converted to military use.

reference 

Although it may be difficult for companies that make civilian products to imagine in many cases, their products may unexpectedly be diverted to the development of weapons of mass destruction or other weapons of mass destruction.

machine tools
…May be used in the molding process of centrifuges needed to enrich uranium for nuclear weapons

Triethanolamine in cosmetics, automotive antifreeze, and shampoo
…raw material for chemical weapons such as mustard gas.

Freeze Dryer for Making Instant Coffee
…as it is, a bioweapons manufacturing device.

High performance jet mill for making fine powder
…also used in the production of solid fuel for missiles.

Carbon fiber used in tennis rackets, fishing rods, golf shafts, etc.
…Can be converted into structural components for missiles

Cited by CISTEC Importance of Security Trade Controls 2. International Community and Security Trade Controls

Not only cargo, but also the provision of technology may be diverted to military use.

Source source:

Ministry of Economy, Trade and Industry Export Control for Security
Ministry of Economy, Trade and Industry Security Trade Control Handbook 2019
Ministry of Economy, Trade and Industry Security Trade Control Q&A Technology
Ministry of Economy, Trade and Industry Security Trade Controls 2020

Don’t panic!Let’s make a Certificate of Non-Applicability in advance!

I had no idea that even civilian products like shampoo and fishing rods could be easily converted to military use.

And I can’t believe I have to take care of drawings and technical guidance…. But… However, our products are really ordinary industrial products.

Since these are not goods used for weapons or arms, etc., I wonder? I think so, but as I mentioned earlier, there was a “0” in the list of items subject to the catch-all regulations of the Security Trade Controls.

What does this mean and what should I do?

If it is marked with a check, it means that it is subject to the catch-all controls of the Security Trade Controls.

However, even if a shipment is subject to catch-all controls, if the destination and intended use of the shipment are confirmed and there are no problems, the shipment can be exported without having to apply for a special export license. Even in this case, you may be questioned by the customs office as to whether or not you have made the appropriate determination of applicability.

Therefore, it is advisable to prepare a Certificate of Non-Applicability in advance of receiving an inquiry from an international client or when receiving an order, by referring to the following model together with the supporting documents.

Then, at the time of actual export, it can be smoothly presented to customs via the international shipping company.

Ministry of Economy, Trade and Industry Security Trade Control Not Applicable Certificate (Reference Form) 

This catch-all control, how to check whether or not you need to apply for a permit, is discussed below. Before that, there is one more export regulation: the list regulation.

The mainstay of security trade control is list control, but the applicable goods and services are limited to a certain extent.

In addition, if you look at the matrix table of the List Controls first, it will be too complicated to understand what is what before going to the explanation of the Catch-All Controls. 

Please quickly read the following for more information on the listing controls.

Please tell me about the SME J-net21 list control and the catch-all regulation.

Um, I’m still not following the story,
There are many similar names and I am confused.
What is the difference between security export control and security trade control?

… you can assume that they are the same.

Then, the Export Trade Control Order and the Export Order also

Same.

In other words, the Export Trade Control Order Schedule and the Export Order Schedule are the same.

Huh…

In the first place, does this system mean that we need the government’s permission for certain exports in order to conduct trade transactions?

(Let’s get back to that…)

Yes, it is.

This means that there are certain items that should not be sent out of Japan without permission.

This regulation requires a permit from the Minister of Economy, Trade and Industry for the export of subject goods and the provision of technology,

It is important to consult with METI up front if you believe there are concerns about the application.

Permission from the Minister of Economy, Trade and Industry. …

That’s the level I’m talking about…

Why is List Controls so Difficult?Note the terminology that needs to be changed to read!

While the cargoes and technologies that fall under the list control are as follows, 

1. Weapons
2. Nuclear power
3. chemical weapons
4. missile
5. Advanced materials
6. Material Processing
7. Electronics
8. Computer
9. Communication
10. Sensor
11. Navigation equipment
12. Ocean-related
13. Propulsion system
14. Other
15. Sensitive items

To find out specifically whether your products fall under this category, you need to look at the following matrix table one by one.

For cargo
・Paragraphs 1-15 of “Export Order, Appended Table 1” (Matrix table of cargo (Excel version))
In the case of technology
・Paragraphs 1-15 of the “Foreign Exchange Order, Appended Table” (Matrix Table of Technology (Excel version))

It is. The latest Excel file can be downloaded from the following site.
https://www.meti.go.jp/policy/anpo/matrix_intro.html

If you are a small or medium-sized company whose products are subject to the Listing Regulations and you have exported indirectly in the past, you may have been asked by a trading company, etc., to make a determination of applicability. (You may have already prepared a certificate of applicability/non-applicability at that time.)

However, if a company has no international transactions at all and is exporting for the first time and finds that its products may fall under the listing regulations, it may be difficult for the company alone to determine whether or not its products fall under the regulations.

For example, when searching for your company’s products, you cannot search for terms that are not used in the matrix table, so you need to refer to the following “terms that need to be read (examples)”.

Terms that need to be replaced (examples)

Source: Ministry of Economy, Trade and Industry Security Trade Controls Cargo and Technology Matrix

Risk Regulation Method of determination of applicability

If you would like to try to make the relevant judgment at your own company, you can refer to CISTEC “Introduction to Applicability Judgment” (PDF). It describes the procedure in detail.

If you feel frustrated because of the difficulty, you may want to consult with CISTEC for assistance in making a determination of applicability, although there is a fee for this service.

Catch-all controls: What can I do to check by myself?

Now we come to the explanation of the catch-all control.
What should be confirmed is the destination and use.

Source: Ministry of Economy, Trade and Industry Security Trade Control Application Procedures 

1.  First, make sure you do not fall under the listing regulations (this is a prerequisite, just to be sure).
2. Destination countries are Argentina, Australia, Austria, Belgium, Bulgaria, Canada, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Luxembourg, Netherlands, New Zealand, Norway and Poland, Portugal, Spain, Sweden, Switzerland, the U.K., and the U.S. do not need to apply for a permit.
3. If the destination country is a country other than 2, check whether the goods will be used for weapons of mass destruction, etc. or development, etc., as described below.
   • Nuclear Weapons
   • Chemical products for military use
   • Bacterial products for military use
   • Equipment for spraying chemical or bacterial agents for military use
   • Rocket capable of carrying more than 300 km
   • Unmanned aerial vehicle capable of carrying more than 300 km
   • Development of nuclear fuel materials or nuclear raw materials, etc.
   • Research on nuclear fusion
   • Development, etc. of nuclear reactors (excluding light water reactors for power generation) or their components or auxiliary equipment
   • Production of heavy water
   • Processing of nuclear fuel materials
   • Reprocessing of nuclear fuel materials
     a Development or manufacture of chemical substances
     b Development of microorganisms or toxins, etc.
     c Development of rockets or unmanned aerial vehicles, etc.
     d. If the product is being used for space-related research or for the development, manufacture, or use of conventional weapons in Afghanistan, Central Africa, Democratic Republic of Congo, Iraq, Lebanon, Libya, North Korea, Somalia, South Sudan, or Sudan, and if these countries are not being used, and if the consumer has not been confirmed (based on the contract and the communication received from the importer), then no application for a license is required. If these are not being used, and if the consumer is not yet confirmed (based on the contract or the contact information received from the importer), no application for a permit is required.
4. Even if the demander is confirmed, no permit application is required if the demander does not fall under the foreign user list.
5. Review the above and apply for individual permits if there are concerns.

 Source: Ministry of Economy, Trade and Industry, Security Trade Controls, Notice on Application and Consultation

Conclusion This is all you need to do

Huh, that was difficult!

But we found out in the end that the list control is not relevant to us, and the catch-all control is applicable to us.

And since there is no concern about the objective requirement, we cleared it by creating a single Word file of the Certificate of Non-Applicability! Now, it looks like we can export.

At the time of export, the international shipping company may ask you to provide a document called “〇〇” or have a document called “△ △ △” because you may be subject to export restrictions.

If you know in advance, you won’t panic, but after the shipment is made, for example, at export customs clearance or at the stage of putting it on an aircraft or ship,

Do you have a document called ________? If you are asked, “Do you have a document called ________? If you start looking up “what is ________”, your response will come too late. It is good that you were able to prepare in advance this time.

So when are you planning to export?

That is, anytime as long as there is an order!

Aha, that’s what you mean!