Japan: Proposed changes, trade control and import/export procedures

Japan: Trade control and import/export procedures

Japan’s Cabinet has approved a bill that would provide for partial revision of the Foreign Exchange and Foreign Trade Act—that serves as the legal basis for Japan’s export controls and is administered by Japan’s Ministry of Economy, Trade and Industry (METI).

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The partial revisions are aimed at strengthening Japan’s trade control regime through:

  • Enhanced fines and penalties for export violations
  • Enhanced administrative sanction regulations (e.g., import/export bans)
  • Prior notification and evaluation requirements related to foreign direct investment in Japanese companies with sensitive technology

 

Read a March 2017 release (English) from the Japanese government. The following provides a summary of certain implications of these revisions.

Enhancement of penalties

Strengthening of administrative sanction regulations

The bill includes measures that would:

  • Introduce new rules to deter actions designed to avoid administrative sanctions (e.g., export / import bans). For example, board members of a sanctioned company would be prevented from serving as board members of other companies operating in the same industry, and also would be prohibited from starting a new personal business operating in the same industry
  • Extend the maximum import/export prohibition time period from one year to three years for violations of import and export laws and regulations related to commercial transactions
  • Authorize onsite inspections of exporting intermediaries to evaluate compliance with export laws and regulations

Strengthening of inward direct investment regulations

Other measures in the bill would:

  • Implement a prior notification system requiring foreign investors to report potential acquisitions or investments when sensitive technologies to allow for evaluation for potential risks to Japan’s national security
  • Introduce provisions that would require a foreign investor to take certain action as specified by the Japanese government (for example, a requirement to sell stock) in the event prior notification was not given of such investments or acquisitions and when a risk has been identified

 

For more information, contact a professional with KPMG’s Trade & Customs practice in Japan:

Masaharu Umetsuji | +81 3 6229 8070 | masaharu.umetsuji@jp.kpmg.com 

Takayuki Kozu | +81 3 6229 8205 | takayuki.kozu@jp.kpmg.com

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