THE STRATEGIC TRADE ACT STA 2010 FACILITATING TRADE

THE STRATEGIC TRADE ACT (STA) 2010 “FACILITATING TRADE IN A SECURE TRADING ENVIRONMENT” Industry Outreach Seminar 7 – 8 January 2016 Taipei, Taiwan Strategic Trade Secretariat Ministry of International Trade and Industry MALAYSIA ‘Driving Transformation, Powering Growth’

Points to Ponder Trade Promotion and Strategic Trade Management are two sides of the SAME coin v MITI’s long standing rapport and frequent interactions with the business community has been extremely crucial in STA 2010 implementation. National and Regional Security Economic Interest Good Diplomatic Relations TRICKY BALANCE OF: Responsible Trading Nation Trade Facilitation 2

Initial Challenges i. Implementation of STA 2010 • Too many agencies involved in the issuance of permits, different segments ie. policy, licensing, enforcement, technical experts Best Practice • Strategic Trade Secretariat, MITI as the focal point • Establishment of Inter-Agency Consultative Committee in MITI to address issues S. T. S Fostering understanding of the role and work of other agencies. Trust and mutual respect. (understanding the scope and expertise) Ensuring effective communication and information exchange. (relevant information and approvals from Police and NACWC) Establishing effective leadership among agencies. (leaders who have the big picture in mind and who do not work in silos) Securing commitment at all levels. (establishing common goals that are linked to agency objectives) 3

Initial Challenges ii. Trade Facilitation vs Security Obligations • Strict regulation to control transit and transshipment • Permits required for multiple items and clients, hassle for frequent exporters Best Practice • Single Online System for Registration and Permit Application, self-declaration • 5 working days to issue permits, excepts Special Permits) • Exemption for transit and transshipment for large number of products and destination (95% of strategic items) • Bulk and Multiple Permits, valid for 2 year for exporters who fulfill certain requirement (ICP) 4

Initial Challenges iii. Low awareness in public and private sectors • Most Government agencies and industries have minimum exposure to export control and STA 2010 Best Practice • Frequent outreach and dialogue • Strategic collaboration • Capacity building programs engagements with industry in cooperation with partner countries • Targeted participants, business friendly visit • Change in mindset: MNCs and SMEs – different approach needed • Dedicated webpage on STA 2010 in MITI website, email address (admin. sts@miti. gov. my) 5

Example: Dedicated Outreach/ Dialogue General ML 10 7 A 003 9 A 001 9 A 003 • If the aircraft part is designed and used for civil use, it’s not a strategic item and not controlled under STA 2010. • If the aircraft part is designed and used for military, STA permit is required. • If the aircraft part is designed for military but certified for civil use by the civil aviation authority, it is excluded from STA permits. • If the inertial navigation system is certified for civil use by the civil aviation authority, it is excluded from STA permits. • If the aero gas turbine engines is certified for civil use by the civil aviation authority, it is excluded from STA permits. 6

Example: Dedicated Outreach/ Dialogue Description is too general. No indication whether it is for civil or military use. 7

Example: Dedicated Outreach/ Dialogue • Exporters to give more details in the declaration form “aircraft parts for commercial/civil or military use” • STS coordinate with RMC to do post-shipment evaluation/audit. Targeting companies that export aircraft parts • Follow-up letters to RMC and industry (AFAM, CAPEX) on this measures. 8

Initial Challenges iv. Timeline for Implementation • Too fast implementation will be trade disruptive • Time required for compliance ie End Use Statement, Internal Compliance Program etc Best Practice • Phase implementation of STA 2010 • Pre-Registration to expedite the issuance of permits • Checklist for ICP PR E-R EG –I MP OR TER DE TA I LS 9

Phase Timeline 2 0 1 5 STA 2010 25 Mar 5 Apr 6 May Cabinet Parliament 2 Jun 10 Jun Royal Assent Gazette 31 Dec 1 Jan Gazette Regulations & Orders Enforcement Category 0 2011 1 Apr 2012 1 Jul Enforcement 1 Mar 2013 Permit Validation by Customs Online Permit Application 2014 STA Review e-STA, Outreach, STA Evaluation Training, Capacity Building Programmes, Enforcement & Investigation, ITT, PF

Best Practice: Internal Compliance Program 1 Elements of ICP 5 Management Commitment 2 3 Screening Process 4 Record-keeping Training Audit

Best Practice: Internal Compliance Program Management commitment • Nomination of person responsible for ICP and authorised personnel for permit application • Written policy on export control • Awareness on export control within company • Export control clause in sales contract Screening Process • Screening of products • Screening of end user • Screening of end use • Screening of destination • Red flag indicators Know Your Product Know Your Customer Red Flag Indicators Export er/ Broker

Best Practice: Internal Compliance Program Training • Training plan – for personnel involved in export control (once in 18 months) • Incorporate export control into training program for all employee Record keeping • Proper record keeping (6 years) • Hardcopy / softcopy Audit • • System audit Process audit Documentation audit Annually

Findings - Common Mistakes Awareness & Commitment e • e Delivery Verification Statement Screening & End Use Statement (EUS) Strategic Item Declaration (K 2 Form) Poor Understanding Communication Breakdown Wrong Declaration Lack of Awareness Lack of Commitments Poor Training Ø Educating Poor Record Keeping Ø Corrective Not Serious Poor Screening Ø Improvement 14

Q&A STRATEGIC TRADE SECRETARIAT MITI KUALA LUMPUR Thank you Menara MITI No. 7, Jalan Sultan Haji Ahmad Shah, 50480 Kuala Lumpur, Malaysia Tel: 603 -8000 | Fax: 603 -6201 2337 | Email: webmiti@miti. gov. my | Website: www. miti. gov. my