By Special to The Nation
The Act will become effective on January 1, 2020 as Thailand implements its international obligations under the United Nations Security Council Resolution 1540 to counter the global proliferation of weapons of mass destruction.
The TCWMD Act places upon Thai Customs the task of controlling the export of goods that can be used for military ends or to produce weapons. The Act aims to prevent the goods from being acquired by sanctioned entities and/or used for the production of weapons of mass destruction abroad.
The specific goods that will be subject to the control measures depend on the goods lists, which are still under consideration by the Department of Foreign Trade (DFT). Three lists have been announced so far: a list with dual-use items (items with both a civil and military purpose), a list with military goods and a self-certification list. It is expected these lists will soon be published, prior to the Act coming into force.
In the first two lists, goods are classified with export control classification numbers (ECCN) in line with international agreements and the US and EU export control regimes. Exporters of these goods will have to request a licence from specified government authorities prior to shipping out and provide the reasons for export. Attempts to export in-scope goods without a licence will lead to blocked shipments at the border and penalties.
The self-certification list contains HS codes (customs tariff codes) that are also used in the traditional customs declaration process of goods during import and export. Exporters of goods with HS codes that match the HS codes on the list will have to self-certify the non-violent end-use of their products abroad. While self-certification can be considered as less burdensome, exporters must be able to support their assessment with evidence in case of Customs audits or queries.
Exporters will be able to know whether their products fall under any of the designated lists by making use of an online government assessment tool (e-TCWMD). The tool can already be tested, but is still subject to changes. Through the application of a detailed questionnaire and based on the exporter’s answers, the tool determines whether a product is subject to control measures (a dual-use item or military good). In addition, exporters can also fill out the HS code of their product and the tool will confirm whether this HS code is included in the self-certification list. In its final form, the tool will contain a platform for online licence application or self-certification.
Even though the final lists have not yet been announced, the DFT has already published some indicative lists with dual-use items and HS codes. The scope of products in the dual-use items list is very similar to the EU Dual-Use Regulation goods list.
In anticipation of the release of the definitive goods lists, exporting companies should start assessing their goods to determine risk categories and develop standard operating procedures for the goods identification and licence application process to prevent any disruption of their supply chain. Employees that handle in-scope products or those that are involved in the export process must receive training to become acquainted with this new aspect of their job.
There will be two types of licences – transactional licences and bulk licences (which are licences that apply for a longer period). Only companies with a qualified internal compliance programme (ICP) that adequately self-screens and monitors trade transactions will be able to apply for the bulk licence.
Apart from self-certification and export licence requirements, the TCWMD Act also contains a catch-all provision which allows Customs to block the export of any shipments it considers suspect. Exporters are therefore expected to screen their foreign business partners against sanctioned-party lists and must produce trustworthy information about the activities of the foreign buyers and the end-use of the product, especially in destination markets that are considered high-risk zones. Such comprehensive due diligence measures will allow the exporter to convince the authorities that their exports pose no danger or harm.
The Act will be enforced by means of civil, criminal and administrative penalties, against exporters who fail to comply with its provisions.
Contributed by Stuart Simons and Sujitra Sukpanich, Global Trade Advisory team at Deloitte Thailand. They can be contacted at email@example.com and firstname.lastname@example.org.