Tax & Accounting Blog

Thailand Introduces Export Control of Dual-Use Goods

Blog, ONESOURCE June 25, 2015

The Thai Cabinet recently approved the draft proposal of a new export control regulation proposed by the Ministry of Commerce for Dual-Use Goods; goods which can be used to produce both commercial products and military weapons.  This legislation is based on the direction of the United Nations Security Council Resolution (UNSCR) 1540 requirement adopted in April 2004 by its member states but it was pending for the proper direction under a few government administrators until this year.

This new regulation will not only keep the country aligned with the current issues addressed by the International Security Affairs Council, but will also maintain its strong connectivity and competitiveness in the Global Trade Communities as well.

This regulation however is the first law in Thailand that allows the grace period for the business sector to prepare and get ready with the system of around 2 years as it is expected to be enacted within the end of July 2015 but be officially enforced by the beginning of 2018 (January 2018).

The Ministry of Commerce was assigned to be the focal point for this policy including both national and international mechanisms.  The obligations of this resolution require a set of effective national export control product lists including related proper laws, licensing procedures, and additional tariff nomenclature.  Implementation requires systematic cooperation among related agencies at the international level.

In addition, the Ministry of Commerce is now setting up the Electronic Export Control System (currently called e-TMD : e-Trade Management of Dual-Use Items) in order to facilitate the self-issuing license and declaration for those exporters of the Dual-Use Goods and as to be aligned with Thailand and ASEAN Single Window in the future.  The trial system is expected to open for the public by the first quarter of 2016.

The national control list of these Dual-Use Items was drafted and reviewed following the Direction of EU Dual-Use Goods list version 2009 [Council Regulation (EC) No 428/2009] [1] and is expected to cover all the items in export, transit, trans-shipment, re-export, financing and under brokerage operations in Thailand.

Proper registration with the Ministry of Commerce, as well as licenses and declarations stipulated under the Act, must be submitted into the Electronic Export Control System prior to the clearance and consignment lodgment processes in order to avoid incurring extra costs, offenses, penalties and unnecessary delays.  Fines can be up to four times of the total value of the goods plus 10 years jail time.  However, in the first stage, the act will not be applied to the:

  • intangible transmission of technology, or
  • the transfer of related dual-use goods in any form of design, development and production carried out by any data transmission, communication device, or any other means of electronic format outside of Thailand[2],
  • software-as-a-service, or
  • any special technical assistance outside of the territory.

Besides the upcoming control from the Ministry of Commerce, Thailand already controls several dual-use goods under existing laws. The Ministry of Defense[3], The Office of Atoms for Peace[4], The Ministry of Industry[5], The Ministry of Public Health/ The National Center for Genetic Engineering and Biotechnology[6]  as well as The Ministry of Finance as the governing body of the Customs Department[7] all have export control requirements.  Nevertheless the Ministry of Commerce will ensure that the list under this regulation does not have overlapping controls over specific items which were previously controlled such as arms and telecommunication related equipment.

At this time, the key current legislation related to the Export Control of Dual-Use Goods at the national level are:

  1. The Customs Act
  2. The Hazardous Substances Control Act
  3. The Export and Import Control Goods Act B.E. 2522 (1979)

(See overviews of Acts at: http://www.wipo.int/wipolex/en/details.jsp?id=6819)

Thailand is hopeful that when this regulation is enforced it will not only facilitate more trade and investment as a production hub in the region, but also support growing market share of Thai exports of these Dual-Use Products of approximately 1,700 items from more than 10,000 companies in the years to come.

The implication for Thai exporters is that they must closely follow the implementation timeline of these laws and prepare sound processes and systems to ensure compliance with the new export controls.

To learn more about import or export, visit our ONESOURCE Global Trade page

 

Main Ref/ Source: http://www.thaigov.go.th/ and http://www.dft.go.th/

[1] For reference please visit http://ec.europa.eu/trade/import-and-export-rules/export-from-eu/dual-use-controls/

[2] Dual-Use Items are goods, software and technology normally used for civilian purposes but which may have military applications, or may contribute to the proliferation of Weapons of Mass Destruction (WMD)

[3] [Control of the Exportation of Arms, Armament and War Implements Act B.E. 2495 (1952)]

[4] [Atomic Energy for Peace Act B.E. 2504 (1961), for reference please visit http://www.oaep.go.th/about_en.php]

[5] [Hazardous Substances Act B.E. 2535 (1992) http://www.doa.go.th/ard/download/prb_27.pdf]

[6] [Pathogens and Animal Toxins Act B.E. 2525 (1982) http://www.vertic.org/media/National%20Legislation/Thailand/TH_Pathogen_and_Animal_Toxins_Act_amended.pdf]

[7] [The Customs Act B.E. 2469 (1926) http://www.customs.go.th/wps/wcm/connect/14026c8a-44db-49a9-9095-7d8eedfd5d13/Customs_Act_2469.pdf?MOD=AJPERES]