- Japan broadens export checks to six sectors, including drones, chips, and machine tools.
- New verification system governs exports to all countries except 27 regulated nations.
- Small and medium enterprises face a heavy burden under new verification requirements.
Japan will broaden the range of products that firms must verify for the risk of export diversion for military purposes, encompassing general-purpose machine tools, chips, and drones intended for China, Southeast Asia, and other regions. The growth signifies an almost 19 times boost in export value to 4.6 trillion yen ($30.6 billion). The modification will take effect on Thursday in accordance with the Foreign Exchange and Foreign Trade Act.
Companies need to determine if general-use products in six sectors identified by the Ministry of Economy, Trade and Industry are possibly intended for military technology and if the importer has any past connection to arms production. Exports to every country and region apart from 27 nations that have existing stringent regulations on such items, including the U.S., Europe, and South Korea will be governed by the new system.
The six areas include machine tools, radar, integrated circuits, drones and related components, navigation devices, and testing instruments. Under the existing system, verification is needed solely for exports to nations facing arms embargoes under United Nations Security Council resolutions, which includes a total of 10 countries such as Afghanistan, North Korea, and Iraq.
Strategic trade data indicates that exports requiring verification rules, including the six new fields, to those 10 countries amounted to slightly less than 250 billion yen in fiscal 2024. With the expanded system, the overall export value will surge to 4.67 trillion yen, representing roughly 4% of Japan's total exports.
Machine tools export reached 442.2 billion yen, with more than 210 billion yen destined for China. ASEAN and India serve as significant markets for exports. General-purpose machine tools produced in Japan are crafted to advanced technological specifications, increasing the likelihood they might be utilized in conventional weapons and apparatus.
Also Read: Electronics Exports Target $145 Billion by End-2025
Products from engineering firm IHI, such as aircraft engines and rockets, will face stricter regulations. It has updated its internal policies, evaluation processes, and documentation, and has also conducted internal meetings. Mitsubishi Heavy Industries intends to implement comparable actions.
Small and medium-sized companies frequently have fewer resources to manage verification and reporting requirements. "The burden on small and medium-sized enterprises in particular is heavy," Hiraki said. "It will be necessary to strengthen the government's intelligence functions, such as identifying companies of concern, and provide feedback to the industrial sector."
Numerous advanced technologies and products possessed by firms carry the possibility for dual application. Although different nations have enforced stringent export controls via international agreements, there are still loopholes.