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IRR of PH strategic goods law requires registration of LSPs

The Philippine government has finally released the implementing rules and regulations (IRR) of the Strategic Trade Management Act (STMA), which requires among others the registration of traders, transport companies, and logistics service providers moving strategic goods.

The IRR implements Republic Act (R.A.) No. 10697, or “An Act Preventing the Proliferation of Weapons of Mass Destruction (WMD) by Managing the Trade in Strategic Goods, the Provision of Related Service, and for Other Purposes.”

The law was signed in 2016 to comply with United Nations Security Council Resolution 1540, which “imposes binding obligations on all states to adopt legislation to prevent the proliferation of nuclear, chemical and biological weapons, and their means of delivery, and establish appropriate domestic controls over related materials to prevent their illicit trafficking.”

READ: Transporting strategic goods in PH to require DTI registration, license

Strategic goods are products that, due to security reasons or to international agreements, are considered to be of such military importance that their export is either subject to specific conditions or prohibited altogether.

Lorenz Anthony Fernando, Strategic Trade Management Office (STMO) trade-industry development specialist, earlier explained that some goods manufactured and used by legitimate businesses can be used to develop WMD or war systems.

Fernando said R.A. 10697 aims to know where sensitive goods and technology are going and to provide a secure trade environment for them.

The IRR covers any natural or juridical person operating within the Philippines who engages or intends to engage in the following: export of strategic goods from the Philippines including from designated special economic and Freeport zones; import of strategic goods into the Philippines; or transit or transhipment of strategic goods through the Philippine territory and the provision of related services. The IRR also covers all Filipino persons providing these services wherever they may be located.

The IRR also covers the re-export of strategic goods that have been exported from the Philippines to a foreign country, and the reassignment of strategic goods exported from the Philippines to a new end-user in the country of import subject to the provisions of the STMA.

Strategic goods list to be published

The National Strategic Goods List (NSGL), which will describe specifically the strategic goods subject to authorization, shall conform to international commitments and non-proliferation obligations pursuant to bilateral and multilateral treaties, international conventions and international non-proliferation regimes.

Once established, the NSGL shall be published in the Official Gazette and in at least two newspapers of general circulation. The NSGL shall be reviewed and updated regularly by the NSC-STMCom.

The NSGL shall comprise three annexes: military goods, dual-use goods, and nationally controlled goods.

The Military List includes items, software, and technology that are specifically designed, developed, configured, adapted, or modified for military end-use.

Dual-Use goods, on the other hand, are items, software, and technology which can be used for both civil and military end-use, or be used to develop, produce, handle, operate, maintain, store, detect, identify, or disseminate WMD or their means of delivery.

Nationally controlled goods, meanwhile, are goods placed under unilateral control for reasons of national security, foreign policy, anti-terrorism, crime control, and public safety.

The IRR also orders the creation of the National Security Council-Strategic Trade Management Committee (NSC-STMCom), a permanent committee under the NSC that will be the central authority on all matters relating to strategic trade management.

Among NSC-STMCom’s functions are to formulate and adopt strategies, policies, and guidelines for the effective implementation of the STMA; establish, publish, review, and update the NSGL; and develop a standard end-user’s certification.

NSC-STMCom shall also monitor and evaluate the implementation of plans, programs, and activities of the Strategic Trade Management Office or STMO.

STMO, which is under the Department of Trade and Industry (DTI), will serve as the executive and technical agency of the government in establishing the management systems for trade in strategic goods pursuant to STMA.

Under the IRR, any person who engages or intends to engage in the export, import, and re-export of strategic goods or provides related services shall register directly with the STMO prior to applying for an authorization or a governmental end-use assurance.

An authorization shall be issued when an application is approved by the STMO. The authorization permits only a specific transaction, or series of transactions, as described in the application and any supporting documents. An application may be approved in whole or in part, or limited by conditions, or other restrictions appearing in the authorization itself.

A government end-use assurance, meanwhile, is the formal security guarantee issued by STMO, in consultation with NSC-STMCom, upon request of the country of origin of the strategic items, certifying the end use of those goods in the Philippines based on the International Import Certificate, End-use Certificate, and Delivery Verification Certificate submitted by the applicant.

The application forms and the format of the authorizations and end-use documents shall be provided by the STMO.

Validity of authorization

An individual authorization for export, import, re-export, or re-assignment of strategic goods or for the provision of related services shall be valid for up to two years. An individual authorization for transit or transhipment, meanwhile, shall be valid for up to six months. A global authorization shall be valid for a maximum period of five years, while the government end-use assurances issued by STMO must be presented to the appropriate authorities within six months.

The authorization can be extended, annulled, revoked, limited, modified, or suspended based on certain conditions listed in the IRR. Similarly, the government end-user assurance can also be limited, suspended, revoked, or annulled based on conditions set under the IRR.

In order to export strategic goods, a person shall submit a copy of the authorization to the Bureau of Customs (BOC) and to any other relevant authorities. For importing, a copy of the authorization shall also be submitted to BOC in the course of customs formalities upon entry into the national territory and to any other relevant authorities for the release of goods from customs supervision.

For transit and transhipment, a copy of the authorization must also be submitted to BOC before the shipment exits the port of entry. A provider of related services and a person that transfer technology electronically shall also submit a copy of the authorization to the relevant supervisory agency upon request of that agency.

The customs broker or any authorized agent in the trade of strategic goods shall submit to BOC a copy of the authorization and a copy of the extract of the manifest of the carrier, in or on which the strategic goods were loaded prior to its departure or arrival.

The relevant commercial documents relating to export, re-export, import, transit, or transhipment of strategic goods shall clearly indicate that those are strategic goods subject to controls. Relevant commercial documents include, in particular, any sales contract, order confirmation, invoice, or dispatch note.

Goods exempted

Exempted from the authorization requirement are import of strategic goods by the government for the use of the Philippine military or police forces; temporary export of strategic goods by the government for the use of the Philippine military or police forces assigned outside the country; export, transit, and transhipment of strategic goods which are provided in connection with a military, peacekeeping, or government humanitarian mission; and any other circumstances provided by the NSC-STMCom.

Any information obtained under the STMA and its IRR that is marked confidential business information shall not be disclosed to any other party except in furthering justice and law enforcement, national security, or foreign policy interest, as determined by the STMO, unless the party providing the information has consented to its disclosure.

Any person found to have committed violations under the STMA shall be imposed administrative penalty, which includes limitation, revocation, or annulment of any authorization and/or registration; and the imposition of fines of up to P250,000 or twice the value of the strategic good or related service under the contract, or as assessed by the STMO.

Upon request of the Securities and Exchange Commission, DTI, or any other relevant government agencies, STMO can also order the cancellation or suspension of the registration and authorization to operate the partnership, corporation, association, and other juridical entity.

Earlier, Fernando said that once STMA’s IRR are released, the law will be implemented in phases so as not to burden stakeholders. Under the plan, there will be six phases: registration, export, import, transit/transshipment, re-export/re-assignment, and related services. – Roumina Pablo



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