Global Trade Advisory Alert
Update on Thailand’s dual-use items regulation
13 August, 2020
Thailand’s Department of Foreign Trade (“DFT”) recently provided an update on the upcoming enforcement of export control measures under the Trade Controls on Weapons of Mass Destruction Act (“TCWMD Act”). The controls are expected to be simplified to reduce the burden on exporters already suffering due to the Covid19 pandemic.
The TCWMD Act aims to impose controls on the export of dual-use items (“DUI”), which are products with a civilian function, but can potentially also be used for military purposes.
The DFT announced that it expects the supporting Regulations to the Act to be finalized soon, and the enforcement of the controls could start in the beginning of 2021.
The DFT intends not to have license requirements for the export of DUIs in the first phase of the implementation. For now, the DFT would only conduct “catch all” controls, which are controls on the end-use and end-user of the exported products, in case there is suspicion that the products will be used for the proliferation of weapons of mass destruction or by black-listed entities.
Once the enforcement of the controls start, exporters/traders must be prepared to show the DFT sufficient due diligence on the destination, end-use, and end-user of the product (to be exported) to avoid blocked shipments, seizure of the goods and fines.
To verify whether their goods could be at risk of proliferating weapons of mass destruction abroad and thus be subject to catch-all controls, the DFT still recommends exporters to check whether their products fall under specific Harmonized System (HS) codes as listed in the DFT HS code list—previously known as List 2—and ultimately determine whether the products are DUIs.
In anticipation of the new enforcement measures, it is highly recommended that companies consider whether to prepare and implement an Internal Compliance Program (“ICP”) to mitigate the risks of being caught by the catch-all controls. Having an ICP could be beneficial to exporters in two ways:
- Optimize the process to prove the company’s due diligence for catch-all controls. Companies that have a proper ICP in place are expected to be cleared from verification quicker, while companies without it may expect more scrutiny.
- Optimize the process for licensing in the next phase of controls.
At this stage, the DFT expects a company’s ICP to at least contain export control commitments from the company’s management, procedures on trade screening, training for employees, record keeping, auditing and penalties.
What can you do?
Exporting companies should assess whether their products fall within the scope of controls under the TCWMD Act and, if so, take appropriate measures to comply with the export control obligations. Such measures may include:
- Develop an ICP which includes the key elements as stipulated by the DFT;
- Manage product inventory and perform DUI classification;
- Implement Sanctioned Party List Screening solutions; and
- Conduct export control trainings for employees.