Military Use of General-Purpose Products: Tighten Controls on Suspicious Exports without Crimping Corporate Business

Editorial

15:31 JST, May 15, 2024

There is growing concern that Russia and other countries are diverting general-purpose products, which have a wide variety of applications, to military purposes. It is hoped that the Japanese government will strengthen export controls while gaining the understanding of companies.

The Industrial Structure Council of the Economy, Trade and Industry Ministry has released a report on measures to strengthen export controls for general-purpose products with a high risk of diversion for military purposes.

It is said that Russia, engaging in aggression against Ukraine, is diverting imported general-purpose products, such as semiconductors, cameras and model engines, for military use, including in drones and satellite communication devices. This is having a major impact on the war situation in which Russia has the upper hand.

Regarding the protection of important information related to economic security held by the Japanese government, new legislation has been enacted, the pillar of which is to establish a security clearance system.

The government also intends to revise government and ministerial ordinances by the end of this year to strengthen measures to deal with important information held by the private sector. Specific measures for export controls must be hastened.

Currently, the ministry compiles a list of materials that have a high risk of being diverted for use in weapons of mass destruction and for other military purposes and strictly regulates them based on the Foreign Exchange and Foreign Trade Law. When the ministry becomes aware of the possibility that general-purpose products could be diverted for use in conventional weapons, it notifies companies of the risk.

Under the envisioned regulations, exporting companies will be required to confirm whether their general-purpose goods could be used to manufacture weapons at export destinations such as Russia and China.

The ministry reportedly will provide examples of suspicious transactions, such as “a small bakery ordering several high-performance lasers,” to encourage companies to do the confirmation work.

However, companies have limited investigative capabilities. If companies were to be caught unintentionally violating the regulations as a result, it could discourage companies and undermine economic activities.

It is important for the government to actively provide necessary information and offer easy-to-understand criteria for judgment.

Under the envisaged regulations, in consideration of corporate transactions, the government reportedly will limit the target of export controls to products with high security risks, such as sensors and motors. It is essential to narrow down appropriately.

In addition, the government intends to require companies to make an advance report if there is concern about the outflow of advanced technology through such activities as joint ventures or production outsourcing in foreign countries. When the ministry receives such a report, it plans to provide the company with information on concerns about the business partner to prevent technology leakage.

The boundary between military and civilian use is becoming more porous, and “dual-use” technologies that can be used for both purposes are becoming more common. It is hoped that companies will further increase their vigilance against military diversion.

(From The Yomiuri Shimbun, May 15, 2024)