strategic trade act 2010 (act 708) -...

STRATEGIC TRADE

ACT 2010 (ACT 708)

http://www.aelb.gov.my

STATUS OF STA

Cabinet‟s approval – 26 March 2010

Parliament – 5 April 2010

Royal Assent – 2 June 2010

Publication in the Gazette – 10 June 2010

Gazette of Regulations and Orders – 31 Dec 2010

2

http://www.aelb.gov.my/


WHY MALAYSIA REQUIRE THE STA?

(1) PROLIFERATION CONCERNS

Growing threat since 2000 of the use and proliferation of WMD

North Korea and Iran (clandestine nuclear weapons

programme)

Iraq (chemical & biological weapons attacks against the Kurds)

September 11, 2001 attacks: concerns on attempts by terrorists to

acquire WMD

3



CONT…

Resulted in International initiative to maintainvigilance over the transfer of:

goods equipment material and related technologies

for the design, development, production and delivery ofWMD

For this purpose, various arms control/ dual-use goods regimes established. Usuallyinitiated by individual countries over certaingoods/ technology of concern and lateradopted by “like-minded” countries

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(2) INTERNATIONAL CONTROL REGIMES

TO comply to United Nation Security Council Resolution

(UNSCR) in particular UNSCR 1540 (and others UNSCR 1703,

1708, 1803 etc);

To effectively implement and Comply to Non Proliferation

Treaty of Nuclear Non Proliferation Treaty (NPT);

To effectively implement obligation under Chemcial Weapon

Convention (CWC)

To effectively implement obligation under Bilogical Weapon

Convention (BWC)

Committed by Malaysia;




(2) UN SECURITY COUNCIL RESOLUTION

SCR 1540 – OP3(d) requires all States to -

take and enforce effective measures to establish domesticcontrols to prevent the proliferation of nuclear, chemical, orbiological weapons and their means of delivery, including byestablishing appropriate controls over related materials andto this end shall

…establish, develop, review and maintain appropriateeffective national export and trans-shipment controls oversuch items, including appropriate laws and regulations tocontrol export, transit, trans-shipment and re-export…”

NB: As a UN Member State, Malaysia is bound by Articles 25 and 48 of

the Charter of the United Nations to comply with and implement these

obligations.




(3) INTERNATIONAL CONTROL REGIMES

To be consistent with the Internationally Export Control

Regimes supporting the Export Control at the Global Market;

Wassenaar Arrangement (WA)

Missile Technology Control Regime (MTCR)

Nuclear Supplier‟s Group (NSG)

Australia Group (AG)

Zangger Committee (ZC)



REGIME ITEMS CONTROLLED

Wassenaar

Arrangement

Categories 1 – 9: Special Materials and related equipment, Materials Processing,

Electronics, Computers, Telecommunications, Information Security, Sensors and

Lasers, Navigation and Avionics, Marine, Aerospace and Propulsion;

Sensitive List & Very Sensitive List (of the items in Categories 1-9);

Munitions List

MTCR Certain complete rocket systems (includes ballistic missiles, space launch

vehicles (SPVs) and sounding rockets); Unmanned air vehicles (UAV) systems

(includes cruise missiles, drones, UAVs and remotely piloted vehicles (RPVs) );

missile-related technology

NSG Nuclear material; nuclear reactors and equipment therefore; non-nuclear material

for reactors; plant and equipment for the reprocessing, enrichment and

conversion of nuclear material and for fuel fabrication and heavy water

production; technology associated with each of the above items; includes a

Trigger List – which triggers safeguards as a condition of supply of these items;

nuclear-related dual-use equipment, materials, software and related technology

Australia

Group

List of over 63 chemical weapons precursors; dual-use chemical manufacturing

facilities, equipment and related technology;

Biological weapons elements: plant pathogens; animal pathogens; biological

agents; dual-use biological equipment and related technology

Zangger

Committee

Art. III para 2 of the Non-Proliferation Treaty – items “especially designed or

prepared equipment or material for the processing, using or production of special

fissionable material”; maintains a Trigger List which triggers safeguards as a

condition of supply of nuclear-related strategic goods8



MODELLING BY THE EU DUAL USE LIST

Categories and Numbering Scheme

1 C 1 18

Technical Category Product Group Regime Origin Item. No.

0 Nuclear Materials, Facilities and

Equipment

1 Materials, Chemicals,

“Microorganism” and “Toxins”

2 Material Processing

3 Electronics

4 Computers

5 Telecommunications and

“Information Security”

6 Sensors and Lasers

7 Navigation and Avionics

8 Marine

9 Propulsion Systems, Space

Vehicles and Related Equipment

A Systems,

Equipment,

Components

B Test, Inspection

and Product

Equipment

C Materials

D Software

E Technology

0: Wassenar

or NSG

Trigger

List

1: MTCR

2: NSG

Dual-Use

List

3: AG

4: CWC

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Controlled items are identified by a unique 5-character number

- e.g 1C118



e.g 1C118

Titanium-stabilised duplex stainless steel (Ti-DSS) having all of the following:

a) Having all of the following characteristics:

Containing 17.0 - 23.0 weight percent chromium and 4.5 - 7.0 weight percent

nickel;

Having a titanium content of greater than 0.10 weight percent; and

A ferritic-austenitic microstructure (also referred to as a two-phase

microstructure) of which at least 10 percent is austenite by volume (according to

ASTM E-1181-87 or national equivalents); and

b) Having any of the following forms:

Ingots or bars having a size of 100 mm or more in each dimension;

Sheets having a width of 600 mm or more and a thickness of 3 mm or less; or

Tubes having an outer diameter of 600 mm or more and a wall thickness of 3 mm

or less.

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Existing domestic

lawsinsufficient to cover the

strategic items

currently regulated

by internationa

l control regimes

Sectoralbased

Not designed to

control strategic items that

can be used for WMD purposes


(4) INADEQUACY OF DOMESTIC LEGAL FRAMEWORK



PREVAILING LAW

STA

2010

Plant Quarantine

Act 1976

Animals Act 1953

Prevention and Control of Infectious Diseases Act 1988

Atomic Energy Licensing Act

1984

Chemical Weapons

Convention Act 2005Poison Act

1952

Customs Act 1967

Protection of New Plant

Varieties Act 2004

Pesticide Act 1974

conflict or inconsistency : STA shall prevail

Malaysian Communications and

Multimedia Commission Act (1998)



C O N T R O L

export transshipmenttransitbrokeringother

activities

STRATEGIC ITEMS technologygoods

FACILITATE:

-design -development -production

OBJECTIVES OF STA

WEAPONS OF MASS DESTRUCTION (WMD) &

DELIVERY SYSTEMS13



KEY FEATURES OF STA

6

PARTS

I. Preliminary

II.

Appointment & Powers of

Strategic Trade Controller

III.

Control of Strategic Items, Unlisted

Items and Restricted Activities

IV.

Permit & Registrations

V.

Enforcement

VI.

General

14


http://www.aelb.gov.my15

• Customs and Policeofficers

• Officers of the Maritime Enforcement Agency

• Officers of MCMC

• Other officers specified by the Controller

Authorisedofficer

• Authority designated underthe related laws for theregulation of the strategicitems, unlisted items andrestricted activities, andincludes the Controller.

Relevant Authority

SALIENT POINTS - STA

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Investigation

Arrest without Warrant

Search of Conveyances

Interception of Communications

Examination of a person acquainted

with case

Search and Seizure Without Warrant

Access to Places/

Premises

Access to Computerize

d Data

Use of Force

POWERS OF THE AUTHORISED

OFFICERS

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PARTNER AGENCIES

Enforcement Agencies:

Royal Malaysian

Customs

Royal Malaysian Police

Malaysian Maritime

Enforcement Agency

17

Licensing Ministry /

Agencies:

• Ministry Of International

Trade And Industry

• Malaysian

Communication And

Multimedia Commission

• Atomic Energy Licensing

Board

• Pharmaceutical Division,

Ministry Of Health



• to take or cause to be taken out ofMalaysia any items by land, sea orair, or to place any items in aconveyance for the purpose ofsuch items being taken out ofMalaysia; or

• to transmit technology by anymeans to a destination outsideMalaysia, and includes any oral orvisual transmission by acommunication device(“INTANGIBLE TECHNOLOGYTRANSFER”)

export

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• to bring items from any countryinto Malaysia by land, sea orair, where the items are to betaken out from Malaysia on thesame conveyance

• does not include the passagethrough Malaysia in accordancewith the international law offoreign conveyance carryingany items

bring in transit

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• Remove items from theconveyance on which theywere brought into Malaysiaand to place the items on thesame or another conveyancefor the purpose of takingthem out of Malaysia

• where these acts are carriedout on a through bill oflading, through airway bill orthrough manifest

transhipment

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• Activity of a person who,either on his own behalf oracting as an agent on behalfof another person-

• (a) negotiates, arranges orfacilitate the purchasing,financing, conveying, sale orsupply of items; or

• (b) buys, sells or suppliessuch items

brokering

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PERMIT

SINGLE-USE:

ONE-TIME EXPORT, TRANSHIPMENT OR BRING IN TRANSIT PERMIT for a SINGLE COUNTRY / DESTINATION

Valid for 6 months

SPECIAL:

ONE-TIME EXPORT, TRANSHIPMENT OR BRING IN TRANSIT PERMIT for a SINGLE COUNTRY / DESTINATION WHICH end-user is

RESTRICTED END-USER

Valid for 1 year

MULTIPLE- USE:

MULTIPLE EXPORTS OR TRANSHIPMENT of

the items for DIFFERENT

COUNTRIES / DESTINATIONS

Valid for 2 years

BULK:

MULTIPLE EXPORTS OR TRANSHIPMENT of items for a SINGLE COUNTRY /

DESTINATION

Valid for 2 years

TYPES OF PERMITS



PERMIT APPLICATION

TO THE RELEVANT AUTHORITY

ACCOMPANIED WITH END-USE STATEMENT AND ANY

ADDITIONAL DOCUMENTS IF REQUIRED

PERMIT CAN BE SUSPENDED OR REVOKED AT ANY TIME

THE RELEVANT AUTHORITY MAY GRANT OR REFUSE TO GRANT THE PERMIT AND IMPOSE ANY CONDITIONS IN GRANTING THE

PERMIT

APPLICATION FOR PERMIT

(Details are prescribed in the Regulations)



WHO SHALL APPLY FOR

TRANSIT/ TRANSHIPMENT

PERMIT?

• A person who wishes to carry out the act

concerned; or

• An authorised person acting on his behalf; or

• Where there is more than one person involved, the

person who issues the bill of lading, airway bill or

authorised person acting on his behalf

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EXCEPTION FOR PERMITS

•The Government and Visiting Force

•Aircraft

– scheduled journeys

– temporary importation into Malaysia

– departing from Malaysia temporarily, on trials

– no military item incorporated

•Vessel

– registered/ constructed outside Malaysia and

temporary importated into Malaysia

– departing from Malaysia temporarily, on trials

– no military item incorporated

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• Transit and Transshipment

– arrive in a free commercial zone (FCZ)

– remain in the FCZ

– no more than 30 days

26

CONT…



HOWEVER…

No exception for Transit – North Korea and

Iran

No exception for Transit for Military Items to:

- Congo - Ivory Coast

- Lebanon - Sudan

- Afghanistan - Iraq

- Liberia - Rwanda

- Somalia - Eritrea

27



NO EXCEPTION FOR PERMIT

No exception for Transshipment Permit for Schedule Three items of

the STA Regulations 2010. Items, e.g:

- Military items – rifles, revolvers, pistols,

ammunitions, bombs, torpedoes, rockets,

missiles, war vessels, war aircrafts

- Nuclear reactors, gas centrifuge plant

- Uranium, maraging steel, tungsten,

molybdenum

- Toxic chemicals, human pathogens

- Information security – cryptography, test

equipment



PENALTIES

• Severity of penalty depends on intent and knowledge

For arms and related materials

• With the intent and knowledge to unlawfully export, tranship

or bring into transit without a permit:

• Where death is the result – a death sentence or

imprisonment for natural life

• In the case of a body corporate a minimum fine of RM 30

million

• In any other case, imprisonment for not less than 10 years

or with a fine of not less than RM10 million or both (body

corporate – RM20 million)

• Without the intent and knowledge to unlawfully export,

transship or bring into transit without a permit:

• Imprisonment of not less than 5 years or fine of not less

than RM5 million or both (body corporate - RM10 million)

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For strategic items and unlisted items

• With the intent and knowledge to unlawfully export, transship

or bring into transit without a permit:

• imprisonment for a term of not less than 10 years or a fine

of not less than RM10 million or both (body corporate –

RM20 million)

• Without the intent and knowledge to unlawfully export,

transship or bring into transit without a permit:

• imprisonment of not less than 5 years or fine of not less

than RM5 million or both (body corporate - RM10 million)

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CONT…



SUBSIDIARY

LEGISLATION

UNDER STA 2010

31



STA 2010

REGULATIONS AND ORDERS

(published in government gazette on

31 December 2010)

Strategic Trade

Regulations 2010

Strategic Trade

(Restricted End-Users

and Prohibited End-

Users) Order 2010

Strategic Trade

(Strategic Items)

Order 2010

First Schedule:

Forms

Third Schedule: Strategic

items –transshipment

permit required

Second

Schedule: Fees

Fourth Schedule: Record keeping

Prescribing:

Strategic Trade

(Amendment of

Schedule) Order 2010

Strategic Trade

(United Nations

Security Council

Resolutions)

Regulations 2010



REGULATIONS

6

PARTS

Part I. Preliminary

Part II.

General Requirements

Part III.

Permits

Part IV.

Registration of Brokers

Part V.

Record Keeping

Part VI.

Enforcement

33



FIRST SCHEDULE - FORMS

• Form 1: Application for permit/ renewal of permit

• Form 2: Export/ transit/ transshipment permit

• Form 3: Application for special permit

• Form 4: Special permit

• Form 5: End-use statement

• Form 6: Delivery verification statement

• Form 7: Application for registration/ renewal of registration for

brokers

• Form 8: Certificate of registration of brokers

• Form 9: Register for export/ transit/ transshipment/ brokering

• Form 9: Notice of disclosure for information

34



END-USE STATEMENT SHOULD

CONTAIN THE FOLLOWING

INFORMATION

Supplier name

Items description

Value and quantity

End use of strategic items

End use location of strategic items

Certification



Definitions:

●dual-use items

●military items

●strategic items

2 Parts:

● Part I: Military Items

●Part II: Dual-Use Items

List of Dual-Use Items:

Implements internationally agreed dual-use controls

including WA, MTCR, NSG, Australia Group and CWC

10 Categories of Items under the List of Dual-Use Items

STRATEGIC TRADE

(STRATEGIC ITEMS) ORDER 2010



Definitions

●military items

●prohibited end-user

●restricted end-user

●restricted military items

3 Schedules

First

Restricted End-Users

Second

Prohibited End- Users

Third

Restricted Military Items

STRATEGIC TRADE

(RESTRICTED END-USERS AND

PROHIBITED END-USERS) ORDER 2010



(con’t)

1.RESTRICTED END-USER – NEED SPECIAL

PERMIT

• NORTH KOREA & IRAN – ALL STRATEGIC ITEMS

• CONGO, IVORY COAST, LEBANON, SUDAN,

AFGHANISTAN, IRAQ, LIBERIA, RWANDA, SOMALIA –

MILITARY ITEMS

• ERITREA – RESTRICTED MILITARY ITEMS

2.PROHIBITED END-USER – PROHIBITED TO DO

TRANSACTIONS WITH



Implementing the STA is complex

Seen as trade disruptive

New classifications (ECCN vs HS

Codes)

„Catch all‟ provisions

Very severe penalties

Multi-agency effort

Low awareness of stakeholders

THE CHALLENGE (1)

40



THE CHALLENGE (2)

It is a balancing act

Trade facilitation vs Security

Domestic realities - local SMEs

Political pressure vs Domestic apathy

Transit/Transshipment/Brokering –

manufacturers/exporters

Unrealistic expectations of stakeholders



It is not business as usual

Onerous responsibility on

business

Compliance costs

Fear – impact on business

Problems experienced in

Outreach

THE CHALLENGE

(3)



The implementation plan

Should provide certainty

Should allow for planning (compliance

costs, process, customer engagement)

Should be well supported with capacity

building programs

Sufficient time to create awareness and

implement Act

THE CHALLENGE

(4)

43



IMPLEMENTATION TIMELINE

2 months 3 months 3 months 3 months(trial)

Coordination

meeting

Establishment

of online system

Manpower from

JPA

Outreach /

Publicity

Outreach /

Awareness

Online Registration

System

development

Capacity building

Testing of system

Gazette

Regulations /

Strategic Items /

End User

Recruitment of

manpower

Outreach /

Awareness

Testing of system

Identify and

address

Bottlenecks

System integration

Outreach /

Awareness

Testing of

system

Identify and

address

Bottlenecks

1 Oct 2010 1 April 2011 1 July 20111 Aug 2010

Pre registration –

Launch by YBM on

12 Oct 2010

Issue of Export

Permits

by all Government

agencies

1 Jan 2011

Issue of

Export

Permits

by AELB

STA

enforce

d

Enforcement

by AELB



REGISTRATION / PERMIT APPLICATION

SINGLE / MULTIPLE-

USE / BULK PERMIT

CUSTOMS

ONE SINGLE SYSTEM

PRE-REGISTRATION

PERMIT APPLICATION

APPLICANT

SINGLE / MULTIPLE-USE /

BULK / SPECIAL PERMIT

APPROVED

REJECTED



REGISTRATION PROCESS FLOW

DNT Registration for User ID and Password

www.dagangnet.com

Get User ID and Password

STA Registration

http://www.mytradelink.gov.my/web/guest/4

Approved by MITI

Key-in information

Submit Application

Get Digital Signature Token from DNT

Permit Application

Activation of Digital Signature



• facilitate trade

• build investors‟ confidence

• enhance national image

• international obligations (UNSCR 1540)

• protect exporters from being exploited

• contribute towards international peace and security

BENEFITS



CONCLUSION

STA is intended to protect Malaysia andMalaysian exporters from being exploited byproliferators and those that profit from theiractivities without compromising legitimatetrade in the strategic items concerned.

STA will put in place a centralized andcomprehensive regime to enable Malaysia tocontribute to the maintenance ofinternational peace and security bycombating the proliferation of WMD.



THANK YOU

Prepared by ;

Atomic Energy Licensing Board

Sources:

Strategic Trade Secretariat, MITI

Strategic Trade Act 2010


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