International Trade Law News

In what could be the wave of the future in export compliance by producers of export controlled products, Mazak Corporation, the North American manufacturing, sales and support arm of Japan-based Yamazaki Mazak Corporation recently announced that it has begun installing relocation detectors on all of its products to prevent the unauthorized export of the products to unauthorized destinations and to comply with U.S. and Japanese export control laws.

According to the company, the relocation detector is a permanent device that resides in the electrical cabinet of the machine. The device will signal an alarm and completely shut down the machine upon any repositioning and/or relocation of the machine. A new password is required each time a machine is relocated to verify the location. While the technology to do this has been available for some time, this is the first implementation designed to prevent violation of U.S. and Japanese export laws.

The initiative to include relocation detectors on its products was launched by Mr. Tomohisa Yamazaki, president of Yamazaki Mazak Corporation, and will apply to every machine shipped by any Mazak plant to any location throughout the world.

During the past few years, a number of Japanese companies have been involved in export control violations. For example, in 2006 Japanese precision measurement instrument maker Mitutoyo Corporation admitted that it violated Japan's Foreign Exchange and Foreign Trade Acts in exporting sophisticated measuring devices that can be used to produce nuclear weapons.

In mid-2007, a Japanese court sentenced four former Mitutoyo executives to multi-year jail sentences and fined the company ¥45 million (approximately US$350,000). Japan's Ministry of Economy, Trade and Industry (METI) subsequently imposed a two-phased, three-year export penalty on Mitutoyo. The first phase of the penalty prohibited Mitutoyo from exporting any products for six months (until January 3, 2008). In addition to the six-month ban on all exports, Mitutoyo remains prohibited from exporting Computer Numerical Control (CNC) coordinate measuring machines and their components for a further period of two years and six months (except for direct exports to specified end users).

Labels: Export Controls, Japan

The Japan Times reports that four former executives of Mitutoyo Corporation, a Japanese producer of sophisticated measuring devices, were sentenced on Monday to suspended prison for their role in exporting measuring devices to Malaysia and Singapore without obtaining export licenses from Japan's Ministry of Economy, Trade and Industry. Mitutoyo Corporation was fined 45 million Yen (approximately US$363,000). The article states that:

The presiding judge, Masahiro Hiraki, said in the ruling that the executives made profit their top priority at the Kanagawa Prefecture-based company, even though they were aware its products might be used by foreign governments to develop weapons of mass destruction.

According to prosecutors, an inspection team from the International Atomic Energy Agency came across a Mitutoyo device at a nuclear-related facility in Libya in 2003. Japanese investigators earlier said this was proof that some of the firm's exported devices were sold on the black market, adding that there was a possibility the devices may have been obtained by countries like Iran and North Korea for their nuclear programs.

Labels: Export Controls, Japan

The United States is not the only country considering raising the penalties for export control violations. Japan's Asahi Shimbun newspaper reported today that the Industrial Structure Council of the Ministry of Economy, Trade and Industry (METI) has proposed revising Japan's Foreign Exchange and Foreign Trade Control Law to increase penalties for export control violations by "at least 10-fold".

The article notes that "Under the current law, a company which exports such products or technology without permission faces a maximum fine of 2 million yen [approximately US$16,000]." The article also cites a source that indicates that "new penalties against falsified export applications will also be established". If the new penalties are implemented, it will be the "first time in 20 years for penalties on such illegal exports to be toughened."

Labels: Export Controls, Japan