Indirect Tax, Trade & Diagnostics Singapore Client Alert September 2015 For more information, please contact: Eugene Lim Eugene.Lim@bakermckenzie.com +65 6434 2633 Ken Chia Ken.Chia@bakermckenzie.com +65 6434 2558 Shih Hui Lee Shih.Hui.Lee@bakermckenzie.com +65 6434 2532 Zhixiang Ke Zhixiang.Ke@bakermckenzie.com +65 6434 2624 Thuy Nguyen Thuy.Nguyen@bakermckenzie.com +65 6434 2681 Randeep Singh Randeep.Singh@bakermckenzie.com +60 32299 6476 Baker & McKenzie.Wong & Leow 8 Marina Boulevard #05-01 Marina Bay Financial Centre Tower 1, Singapore 018981 www.bakermckenzie.com Singapore Export Controls Updates: Strategic Goods (Control) Order 2015 Introduction A new Strategic Goods (Control) Order (“SGCO”) 2015 (“SGCO 2015”) will replace the current SGCO 2013 with effect from 2 November 2015. According to Singapore Customs, the SGCO 2015 brings Singapore’s strategic goods control list up to date with the 2014 Wassenaar Arrangement Munitions List and the 2014 European Union’s List of Dual-Use Items ("EUDL 2014"). We also understand from our informal discussion with Singapore Customs that the SGCO 2015 Dual-Use List also contains certain deviations from EUDL 2014 to incorporate more recent changes to the Wassenaar List of Dual-Use Goods. This refinement should be carefully noted. Highlights Key changes are made to all Categories of the Dual-Use List, except for Category 8 (Marine). Changes have also been made to many categories of the Munitions List. The SGCO 2015 removes certain systems, equipment, components, materials, software, and technology ("Items") from the SGCO 2013 ("De-controls") and includes certain Items which were previously not included in the SGCO 2013 ("New Controls"). The SGCO 2015 also introduces new definitions and changes to some technical parameters, further clarifying the extent to which an Item will be subject to a strategic goods permit requirement ("New Clarifications"). Key features include: Major De-controls under Information Security category (Category 5, Part 2); New Controls on Items with intrusion and interception capability (Category 4 and Category 5, Part 1); Multiple De-controls and New Controls under categories 2 (Materials Processing) and 3 (Electronics); and Consequential changes to the legislations on brokering, transhipping, and bringing in transit of strategic goods. Please find below our proposed list of actions for businesses and further details of the above changes. Proposed List of Actions for Businesses Review the SGCO 2015 and update your screening system accordingly to reflect De-controls and incorporate New Controls, and New Clarifications. Update existing classifications of Items that are subject to New Clarifications, and seek updated classification determination from Singapore Customs if necessary. Prepare to apply for the strategic goods permits for products that are subject to New Controls. 2 Client Alert September 2015 For existing bulk permit holders, apply for a 'Product Inclusion' to the existing bulk permits for any relevant Items to be included. Note the changes to the legislations on brokering, transhipping, and bringing in transit of strategic goods and ensure compliance accordingly. Details of Key changes 1. Major De-controls under Information Security Category (Category 5, Part 2) The De-controls under Category 5, Part 2 include the following: certain mobile telecommunications Radio Access Network (RAN) equipment designed for civil use, which have limited RF output power and support limited amount of concurrent users (DL5A002, Note k); routers, switches or relays, where the “information security” functionality is limited to the tasks of “Operations, Administration or Maintenance” (“OAM”), implementing only published or commercial cryptographic standards (DL5A002, Note l); general purpose computing equipment or servers where the "information security" functionality meets certain conditions, e.g., it uses only published or commercial cryptographic standards and it is limited to 'OAM' of the equipment (DL5A002, Note m); software limited to the tasks of OAM implementing only published or commercial cryptographic standards (Note to DL5D002.c.); certain hardware components or "executable software", of existing items that meet the mass market criteria in paragraph a. of the Cryptography Note, that have been designed for such existing items (paragraph b. of Note 3 to Category 5, Part 2); and certain wireless "personal area network" equipment that implement only published or commercial cryptographic standards and have limited cryptographic capability (DL5A002, Note i). 2. New Controls on Items with Intrusion and Interception Capability (Category 4 and Category 5, Part 1) Key New Controls added to Category 4 (Computers) include certain systems, equipment and components for "intrusion software" (DL4A005), software specially designed or modified for the generation, operation or delivery of, or communications with, "intrusion software" (DL4D004), and technology for the development of "intrusion software" (DL4E001.c.). SGCO 2015 also introduces a definition of "intrusion software", which exclusions on certain software types such as DRM software, hypervisors, debuggers, software designed to be installed by manufacturers, administrators or users, for the purposes of asset tracking or recovery. Key New Controls added to Category 5, Part 1 (Telecommunications) include certain interception and monitoring equipment (DL5A001.f.), certain counter Improvised Explosive Device equipment (DL5A001.h.), certain IP network communications surveillance systems or equipment (DL5A001.j.), and certain technology for Microwave Monolithic Integrated Circuit power amplifiers specially designed for telecommunications (DL5E001.d.). 3. New Controls under Category 2 (Materials Processing) Examples of Items subject to New Controls under Category 2 include: certain pressure transducers (DL2B230), certain high-velocity gun systems (DL2B232), certain bellows-sealed compressors and vacuum pumps (DL2B233), certain valves and components (DL2B350.g), certain components designed for fermenters (DL2B352.b.2); and 3 Client Alert September 2015 software designed or modified for the operation of certain numerically controlled optical finishing machine tools (DL2D003), certain technology for the use of certain bellows-sealed scroll-type compressors and below-sealed scroll type vacuum pumps (DL2E201). 4. Changes to Category 3 (Electronics) Examples of Items subject to De-controls under Category 3 include: certain Analogue-to-Digital Converters, certain field programmable logic devices and certain "frequency synthesiser" "electronic assemblies" (DL3A001.a.5. and 7., and DL3A001.b.11); and certain magnetic tape recorders (DL3A002.a.1. to 4.), certain waveform digitisers and transient recorders (DL3A002.a.5.), certain frequency synthesised signal generators (DL3A002.d.3.a., b. and f.), and certain microwave test receivers (DL3A002.f.1.). Examples of Items subject to New Controls include certain Direct Digital Synthesizer integrated circuits (DL3A001.a.13), certain Microwave Monolithic Integrated Circuits power amplifiers (DL3A001.b.2.), certain discrete microwave transistors (DL3A001.b.3), and certain microwave solid state amplifiers and microwave assemblies/modules (DL3A001.b.4). 5. Changes to Other Categories of the Dual-Use List There are also key changes to Categories 0 (Nuclear Materials, Facilities and Equipment), 1 (Special Materials and Related Equipment), 6 (Sensors and Lasers), 7 (Navigation and Avionics), and 9 (Aerospace and Propulsion) of the Dual-Use List. Notably, De-controls apply to uranium liquid metal handling systems (0B001.i.4), thermoplastic liquid crystal copolymers (DL1C008.b.), materials for laser marking or welding of polymers (DL1C001.b.Note), and technology for production of aromatic polyamide fibres (DL1E002.d.), etc. New Controls include unmanned airships and related systems, equipment and components (DL9A012). This New Control also involves a new definition of "airship" (a power-driven airborne vehicle that is kept buoyant by a body of gas (usually helium, formerly hydrogen) which is lighter than air), which likely covers drones. 6. Consequential Changes to Legislations on Brokering, Transhipping, and Bringing in Transit of Strategic Goods Major changes have been made to the Munitions List under SGCO 2015, in particular ML8 category (Energetic materials and related substances) and other categories such as ML1, ML2 and ML3. Since the brokering of ML1 to ML4 Items and certain ML8 Items are subject to brokering controls under the Strategic Goods (Control) (Brokering) Order ("SGCBO"), an amendment to the SGCBO has also been introduced with effect from 2 November 2015. Please note that notwithstanding the changes under SGCBO 2015, the current scope of Items subject to brokering control remains the same. SGCO 2015 will also require consequential changes to the 4th and 5th Schedules of the Strategic Goods (Control) Regulations ("SGCR") regarding the list of strategic goods subject to transshipment and transit control. The SGCR will be amended through the Strategic Goods (Control) (Amendment) Regulations 2015, with effect from 2 November 2015. If you have any questions regarding the above, please do not hesitate to contact us. ©2015. All rights reserved. Baker & McKenzie.Wong & Leow is a member of Baker & McKenzie International, a Swiss Verein with member law firms around the world. In accordance with the common terminology used in professional service organizations, reference to a “partner” means a person who is a partner, or equivalent, in such a law firm. Similarly, reference to an “office” means an office of any such law firm. This may qualify as “Attorney Advertising” requiring notice in some jurisdictions. Prior results do not guarantee a similar outcome.