JapanMachinery
MachineryCenter
CenterforforTrade
TradeandandInvestment
Investment
Japan
No.401 Kikai Shinko Building

Tel : 81-3-3431-9800

5-8, Shibakoen 3-chome,

Fax: 81-3-3431-0509

Minato-ku, Tokyo 105-0011
JapanFebruary 7, 2011

Export Control Modernization:
Strategic Trade Authorization License Exception
Bureau of Industry and Security, U.S. Department of CommerceRe:

Docket Number BIS-2010-0038
RIN 0694-AF03
Comment on Proposed rule, Federal Register Vol. 75, No. 236,
December 09, 2010.

The Japan Machinery Center for Trade and Investment (“JMC”) hereby
submits comments in response to the above-referenced notice published in the Federal
Register on December 9, 2010.
JMC is an association of 270 firms that manufacture and export machinery
products worldwide. JMC includes most of the major electronics and machinery
exporters in Japan. JMC understands the significance of export controls in the global
trade, and JMC has assisted its member companies to comply with the export control
regulations. JMC also is sensitive to concerns from member companies about burdens
sometimes associated with such controls including extraterritorial application ofre-export regulations by the U.S. government. Therefore, JMC is concerned very much
how proposed Strategic Trade Authorization License Exception (“STA”) would affectimports from the U.S., re-exports from Japan and in-country transfer within Japan. In
view of foregoing, JMC recommends that BIS address the issues below.
Before proceeding, we would like to thank BIS in advance for taking thefollowing comments into account.
1. The requirement of furnishing the consignee with ECCNOne of the biggest troubles for the Japanese re-exporters (=importers) in practicing
compliance with the U.S. export control regulations is that the Japanese importers can’t
obtain smoothly the ECCN that applies to the item exported from the U.S. in many cases.
Japanese re-exporters have frequently faced with following difficulties in obtaining the1Japan Machinery Center for Trade and Investment

ECCN from the U.S. exporters:· No ECCN is provided;· Wrong ECCN is provided;· It takes long time to obtain a right ECCN.
JMC has ever requested BIS to make it mandatory for the US exporters to furnish theJapanese exporters with the ECCN on this account. The proposed rule stipulated therequirement of furnishing the ECCN with its consignee and this requirement seemed tosatisfy our request. But we are still concerned if the U.S. exporters would be capable offurnishing the ECCN timely in accordance with the requirement, and JMC would likeBIS to clarify followings;① Will re-exporters and transferors be freed from the requirement of providing
subsequent consignees with the ECCN unless the U.S. exporter furnish ECCN inaccordance with the requirement stipulated at §740.20 (d)(1) i?
② In the case that the wrong ECCN is furnished and the re-exporter unintentionally
ships the item to which license exception STA may not be applied, Is it the U.S.
exporter who is primarily responsible for that kind of EAR violation? JMCbelieves the re-exporter should be exempted from the penalty in this case.
③ What measures will BIS take to ensure that the U.S. exporter furnish foreignimporters with the right ECCN timely?
2. The statement requirement(1) Prior Consignee Statement
At § 740.20 (d)(2) of the proposed rule, the requirements of obtaining from aconsignee statement are prescribed. It stipulated that the exporter, re-exporter ortransferor must obtain from the subsequent consignees, prior to the shipment, awritten statement identifying the items and restating the ECCN provided by theexporter, re-exporters or transferors. Furthermore, the statements must acknowledge
that the consignee:· Is aware that items will be shipped pursuant to License Exception STA;
· Has been informed of the description of the items and their ECCN(s) by theexporter, re-exporter or transferor;· Understands that shipment pursuant to License Exception STA precludes
subsequent use of the paragraph (a) of License Exception APR for the items;· Agrees not to export, re-export or transfer these items to any destination, end-use
or end-user prohibited by the EAR;
· Agrees that, for items subject to a civil end-use restriction, the only end-use will
be civil; and· Agrees to provide copies of this document and all other export, re-export ortransfer record(2) Destination Control Statement

2Japan Machinery Center for Trade and Investment

At §740.20 (d) (3)of the proposed rule, it stipulated that the Destination Control
Statement (DCS) must be entered by the exporter, re-exporter or transferor on theinvoice and on any other “export control document” that accompanies the shipmentfrom its point of origin to the ultimate consignee or end-user for all export, re-exports
and transfers (in-country) made pursuant to License Exception STA.
JMC is afraid that these statement requirements above and precluding subsequent useof the paragraph (a) of license exception APR would make the license exception STA
inconvenient for foreign consignees because the requirements impose cumbersome
practical burden on the foreign re-exporters and transferors though the licenseexception STA might be convenient for the U.S. exporters.
As to the Prior consignee statement, the subsequent consignees must agree with thevarious conditions detailed in the proposed rule in issuing the statements to theexporters, re-exporters or transferors. In order for the consignees, however, to keep
the agreement not to re-export or transfer the item to any destination or end-userprohibited by the EAR for example, they have to learn the complicated EAR toidentify which country or who is prohibited. It is hard task for any foreign consignee.
The same thing can be said for the requirement of destination control statement. Thisrequirement must be applied to all export, re-export or transfer made pursuant tolicense exception STA at end to end basis. But a foreign re-exporter who does notcare about the U.S. export control regulations would be likely to issue thisDestination Control Statement without verifying if the license exception STA could
be really applicable to its shipment.
For those foreign consignees who do not have enough knowledge about EAR, thestatement requirements of the license exception STA would impose heavier burdenon the well-doing foreign consignees.
3. Conclusions
We hereunder sum up our comments on the proposed license exception STA:
(1) The proposed license exception STA would not necessarily be convenient to theforeign consignees if it would be introduced as it is described because of thecumbersome statement requirements imposed on them.
(2) Regarding the Japanese consignees who would re-export pursuant to the License
exception STA, its statement requirements would bring only cumbersome burden
without additional effective safeguard to the U.S. export controls, because Japan hasfulfilled stringent export controls at same level as the U.S. in accordance with theinternational export control regime such as Wassenaar Arrangement, Missile
Technology Control Regime, Australia Group, and Nuclear Suppliers Group.
(3) The extraterritorial application of the US export control regulations has imposed
additional and duplicative costs on Japanese exporters because they must comply

3Japan Machinery Center for Trade and Investment

with both Japan’s national export control regulations and the US regulations. The
additional costs account for a significant share of a company’s total compliancecosts.
(4) JMC would like to reiterate what we suggested in our public comments submitted onMarch 6, 2009 responding to Request for comment on procurement of the U.S.
origin parts and components --- Federal Register Vol.74, No.2 (January 5, 2009).
There, we suggested that BIS should exempt the countries participating in themultilateral export control regimes indicated in (2) of this paragraph from theextraterritorial application of US export control regulations.
(5) If BIS, however, still has to implement extraterritorial application of the U.S. export
control regulations and will introduce the proposed license exception STA, JMC
wishes BIS to make amendment on the proposed rule as follows:① Making it mandatory for the U.S. original exporters to provide all the concrete
information needed to meet the conditions of the statement requirementsof the license exception STA. This mandate makes it easier for the foreignconsignees and transferors to meet the conditions in their re-exports bycirculating the concrete information prepared by the U.S. original exporters tothe subsequent consignees without looking into the complicated EAR.
② If this our request above would not be practical or feasible for the U.S. originalexporters, the requirements of the prior consignee statement and the destination
control statement should be exempted with respect to export and re-export
to/from, and transfer in 37 countries listed at§740.20 (c) (1), or, the paragraph(a) of license exception APR should be available to the foreign consignees in the37 countries.

JMC would greatly appreciate your taking our comments into account for your policy
review.
Regards,
Ad-hoc committee on Export Controls
Japan Machinery Center for Trade and Investment
Contact
Koji Hashimoto
Phone +81-3-3431-9800
Email hashimoto@jmcti.or.jp

4