The Philippine Strategic Trade Management Office (STMO) has released guidelines for classifying strategic goods, whose import, export, transit, and transshipment now require authorization under the Strategic Trade Management Act (STMA).
The commodity classification guideline provides advice and explains the methodology for classifying strategic goods in accordance with the National Strategic Goods List (NSGL) under Republic Act (R.A.) No. 10697, or “An Act Preventing the Proliferation of Weapons of Mass Destruction (WMD) by Managing the Trade in Strategic Goods, the Provision of Related Service, and for Other Purposes.”
Also called STMA, the law was signed in 2016 to comply with United Nations Security Council Resolution 1540, which “imposes binding obligations on all states to adopt legislation to prevent the proliferation of nuclear, chemical and biological weapons, and their means of delivery, and establish appropriate domestic controls over related materials to prevent their illicit trafficking.”
The law aims to regulate the export, import, transit and transshipment, re-export and reassignment of strategic goods, software and technology, as well as the provision of related services, in order to prevent WMD from proliferating.
Under the law’s implementing rules and regulations (IRR), any person who engages or intends to engage in the export, import, and re-export of strategic goods, or who provides related services must register directly with the STMO before applying for an authorization or a governmental end-use assurance.
STMO earlier said it would start regulating registrations by the first quarter of 2019.
When authorization is needed
Strategic goods that need authorization are identified under the NSGL, which has three annexes: military goods, dual-use goods, and nationally controlled goods. The classification guidelines cover the military use list (Annex I of the NSGL) and dual-use list (Annex II), which are based on the European Union (EU) common military list and EU consolidated dual-use list, respectively.
STMO, an office under the Department of Trade and Industry that serves as the executive and technical agency of the government in establishing the management systems for the trade of strategic goods pursuant to STMA, defines commodity classification as the process of categorizing goods to determine if they are included in the NSGL.
It pointed out that commodity classification is strictly a technical decision about a product or service. A strategic item’s end-use or destination plays no part in determining whether the item is on the NSGL or not, STMO said.
Commodity classification is the primary responsibility of the applicant seeking registration, who is any person who engages or intends to engage in the export, import, and re-export of strategic goods, or provides related services such as brokering, financing, transporting, or technical assistance.
The applicant needs to classify the commodities in accordance with the NSGL.
To assist industry stakeholders to classify their items, the STMO has published the NSGL in the Official Gazette (www.officialgazette.gov.ph) and its commodity classification guideline. Further, STMO will include a curriculum on proper commodity classification in the industry outreaches it will conduct. Lastly, a specialized classification help tool will be included in the STMO website.
Military use or dual use?
The applicant primarily needs to determine whether the item is for military or dual use.
Military goods refer to goods, software, and technology that are specifically designed, developed, configured, adapted, or modified for military end-use.
Dual-use goods refer to items, software, and technology which are intended for both civil and military end-use, or are used to develop, produce, handle, operate, maintain, store, detect, identify, or disseminate WMD or their means of delivery.
The distinction of whether an item is military or dual-use determines whether an item requires authorization from the STMO. Almost all military goods will require authorization while dual-use goods generally need a license only if they exceed the parameters specified in the NSGL. Nevertheless, even if an item is not listed in the NSGL, an authorization/license may still be required if the item falls under the catch-all provision in Section 11 (End-use Controls) of the STMA.
If the applicant determines that the item is a military product, the person may identify the appropriate category in accordance with the military goods list. Military goods list is a negative list, i.e. a military item is generally controlled unless there is an exemption.
If the applicant determines that the item is dual-use, then the applicant must identify the correct technical category and product group in accordance with the dual-use goods list.
Once the applicant has decided if an item falls within a certain product group, the next step is to determine which entry within the product group the item goes under. If the applicant still has difficulty determining the proper NSGL code, the applicant can work from information in the product literature and perform calculations, if necessary, to generate the technical specifications needed; speak to an experienced subject matter expert who has technical knowledge on the item’s technical parameters; call the manufacturer to get additional technical specifications; or request assistance from STMO.
An applicant should note that the dual-use goods list is a positive list, i.e. a dual-use item is controlled if its technical parameters match or exceed the parameters prescribed in the relevant control list entry.
Moreover, an item may appear in more than one entry in the NSGL, or even in entries belonging to different technical categories. STMO said the strategy is to review all entries that describe an item, regardless of where on the list they appear. Then, to make a final decision, the applicant must select one entry that is the most appropriate.
Nationally controlled goods, on the other hand, refer to strategic goods placed under unilateral controls for reasons of national security, foreign policy, antiterrorism, crime control, and public safety. – Roumina Pablo