Home » Customs & Trade, Features » Exporters liable if controlled goods reach “bad actors”

Philippine exporters, other players in the supply chain and even the Philippines, are liable to the United Nations Security Council if dual-purpose goods reach the so-called “bad actors” who may use them for illegitimate or terrorist activities.

Emmarita Z. Mijares, deputy executive director of the Philippine Export Development Council, said the implications and technical analysis needed to implement export control laws on dual-purpose goods are quite extensive.

Dual-use goods refer to products and technologies which can be used for both military and “civilian” purposes. These are already covered by measures that double as trade controls against weapons of mass destruction (WMD).

WMD-related export controls cover dual-use items, munitions (conventional military weapons and WMD) and other products under a catch-all provision. For instance, carbon fiber can be used for golf clubs and fishing rods, or for missile components; triethanolamine can be used for shampoo or for chemical weapons.

The dual-use goods coverage is more broadly described as “strategic goods”, which include hardware, software and technology relating to the design, development, production, stockpiling and/or use of chemical, biological, radiological and nuclear weapons, as well as conventional arms and military equipment and their delivery systems.

In identifying the risks, the regulatory agency mandated to issue clearances for these goods have to look at the product inputs or make, importers’ purpose for importing and even quantity of products bought to ensure dual-purpose goods will not be used for terrorism or other harmful activities.

The process can take long and may cause delay in the actual shipment of the said goods. Thus, there is need for the exporter to be alert and to work with the clearance agency early on or as soon as he gets the order for a dual-use good.

Mijares attended technical and legal workshops and trainings on strategic trade control in the United States and Japan as part of the capability building and advocacy for this purpose.

Heavily affected are exporters dealing with dual-use goods, including individuals, researchers, institutions, manufacturers, trading companies, resellers, and third-party logistics providers. However, businesses often overlook that many of these controls also apply to private individuals because of the extent of product and technology application.

Trade controls also apply to the movement of all products and the sharing of information or communications sent electronically or documents given to an overseas party. All businesses must check whether embargoes or licensing requirements apply, by screening against regularly updated lists of commodities, persons and countries. These lists include the EC dual use and embargo regulations and the U.S. Export Administration Regulations (EAR), International Traffic in Arms Regulations (ITAR) and sanctions lists.

Various control lists are provided. For WMDs, these are made principally under the “The Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies” and various watchlists of its 41 participating states. They include the United States and the European Union.

Trade control systems require export licenses. They are usually based on international agreements such as the 2004 United Nations Security Council Resolution No 1540 which called on all states to establish domestic export controls to guard against WMDs.

Mijares said the Department of Trade and Industry may serve as the licensing agency in the Philippines for this purpose.

The Philippines, along with Indonesia, Thailand and Vietnam, is preparing to comply with such export control laws that started to be stringently imposed following the World Trade Center September 11, 2001 terrorist attacks.

Related Philippine initiatives are being handled by the Office of the Special Envoy on Transnational Crime (OSETC) created on January 23, 2004 under Executive Order No.265 “Defining the Approach and Institutional Mechanism for the Government’s Comprehensive Program on Combating Transnational Organized Crime”.

There are pending Philippine bills on dual use and strategic goods. House Bill 4030 “Regulating the proliferation of strategic and dual-use goods and services, providing penalties for violation thereof” is pending at the Committee of Public Order and Safety. The proposed measure aims to institute stringent strategic trade controls over the import, export and transhipment of strategic and dual-use commodities that could have the potential of being used in the illicit development, production or stockpiling of weapons of mass destruction.

Counterpart bills are also pending in the Senate. Both the House and Senate versions establish a control list, provide an inter-agency council to prepare the list and oversee the implementation of the law, set the OSETC as secretariat for the Council, and designate the incumbent Special Envoy for Transnational Crime at the time of the law’s passage as the first Chair of the Council.

Violations of U.S. and E.U. export controls carry severe consequences, from significant fines, even imprisonment, and the revocation of export authorizations and special privileges already granted, to the risk of violators themselves being added to a sanctions list. Among businesses that have been sanctioned are traders, shipping companies, and banks that dealt with controlled goods.


Photo of Worried Businessman On Phone by David Castillo Dominici


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