STRATEGIC GOODS (CONTROL) (AMENDMENT) BILL

STRATEGIC GOODS (CONTROL) (AMENDMENT) BILL: Order for Second Reading read.

5.40 pm

The Minister of State for Trade and Industry (Mr S Iswaran): Mr Deputy Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

Overview of the Strategic Goods (Control) Act

Sir, in 2002, in response to the international efforts to fight terrorism and curb the illicit trafficking of weapons of mass destruction, my Ministry announced that an export control system would be implemented to regulate the trade in strategic goods and their related technology.

At that time, we were mindful that an overly stringent system might cause our traders to incur additional cost and time, and could potentially have the adverse effect of diverting legitimate trade. As a trade-dependent nation, it was, therefore, important to put in place an export control system that would enable Singapore to fulfil her obligations in preventing the proliferation of WMD-related items, without impeding normal legitimate trade. The Strategic Goods (Control) Act was subsequently passed and implemented in 2003. It has served us well over the past few years and traders have generally become more familiar with our export control system.

Reason for amendments

Why then is there a need to review our export control system?

Sir, the possibility of terrorists using WMDs remains a real threat. The United Nations Security Council (UNSC)'s recent sanctions on Iran and North Korea

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underscore international concerns over nuclear proliferation and efforts to counter the proliferation of WMDs. The key to maintaining peace and winning this fight against terrorism is in part to ensure that sensitive, strategic goods are sent to legitimate users and do not fall into the wrong hands. As a responsible transhipment hub, we should do our part for global security by implementing safeguards to curb the illicit movement of such goods. It is in Singapore's interest to tighten our present regime and adopt the control list covered under the four multilateral export control regimes - namely, the Wassenaar Arrangement, Missile Technology Control Regime, Australia Group and Nuclear Suppliers Group. Sir, my Ministry is, therefore, proposing to amend the Strategic Goods (Control) Act to keep our export control system updated and aligned with the international non-proliferation regimes.

Since 2006, as part of this review of our export control system, Singapore Customs and other agencies have conducted extensive consultations with various industry groups that may be potentially affected. An Inter-Ministry Committee, comprising MFA, MTI, Singapore Customs and other agencies, has studied these concerns very carefully before coming up with a set of measures that would tighten our export control regime, yet minimising the impact on trade.

Expanding export control list

Let me now outline the key features of the Bill. First, the Bill will expand the list of controlled items, as listed under the Strategic Goods (Control) Act. Currently, the control list comprises about one-third of the items under the four international export control regimes. The newly prescribed list will cover all goods under these four export control regimes. These control regimes are reviewed annually, and changes to their lists are expected.

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Clause 3 empowers the Minister to prescribe military or dual-use goods as strategic goods, and military or dual-use technology as strategic goods technology, for the purposes of the Act. For greater efficiency and responsiveness in the updating of our list, we propose to move the export control list from the Act to a subsidiary legislation.

Application of the control list to all transactions

Second, for strategic goods that are newly added to the expanded control list, the Bill requires traders to apply for a permit before they are allowed to export, tranship or bring into transit these goods. Clause 4 applies the control list to all exports, transhipments, transits and intangible transfers of strategic goods and their related technology. At present, we require traders to apply for a permit if they tranship a subset of products under the control list, such as military goods, nuclear-related goods, chemical and biological agents. Also, currently, in the case of goods in transit, a permit is required only if the goods are intended for a WMD-related activity.

Listing of goods subject to brokering controls

Third, we will move the list of goods subject to brokering controls from the Act to a subsidiary legislation, so that this list can be amended with greater flexibility, to be consistent with the export control list.

Implementation measures

These are the key features of the Bill. Mr Deputy Speaker, Sir, in drafting the Bill, we have paid special attention to minimising the potential impact on trade, as it might affect Singapore's competitiveness vis-a-vis other ports in the region. Hence, over the last year, we have

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conducted extensive consultations with many companies and key industries that might be affected by this expanded control list. Companies and industries in Singapore generally understand and support the need to expand our export control regime to enhance trade security. They are also cognisant of the likely impact and have asked for the expanded control to be implemented in a cost efficient and sensible way so as not to erode their competitiveness.

Let me assure the House that these concerns have been studied carefully and we will ensure that additional measures taken do not unduly encumber or impede trade.

Enhanced permit regime

First, to mitigate the possible impact on legitimate trade in strategic goods, Singapore Customs has introduced an enhanced permit regime scheme known as the Strategic Trade Scheme (STS) since January 2007. The scheme seeks to promote effective internal export control compliance, and help traders in their declaration procedures involving transactions of strategic goods for legitimate end-use. Generally, companies with good internal export control compliance programme can enjoy more facilitative declaration procedures involving transactions of strategic goods for non-WMD-related end-use. For instance, such companies would be able to make use of a one-time permit approval for multiple shipments of particular products.

Transhipment and transit in/through the Free Trade Zones

Second, to mitigate the impact on the large volume of transhipment with short turnaround time, permit requirements for the new list will apply only to the air transhipment and transit cargoes that remain in the Free Trade Zones for more than 21 days and, for sea transhipment

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and transit cargoes, for more than 45 days. For such goods, traders would only need to submit shipment documentation as and when requested by the authorities. However, to maintain the effectiveness of our export control system, this arrangement will not apply to certain goods that are currently controlled for transhipment, such as military goods, nuclear-related goods, chemical and biological agents and also goods that are known or suspected to be used for WMD purposes.

Outreach programme

Third, to ensure that the industries are familiar with the expanded export control regime, MTI and its agencies have conducted many outreach sessions since the beginning of this year. We have to make use of these sessions to enhance the industry's familiarity with the system and changes, and to allay any concerns that they might have regarding the expanded export control list. A series of courses on the new controls has also been launched by the Singapore Customs to educate the affected industries.

Mr Deputy Speaker, Sir, we should do our part to curb the proliferation of dangerous weapons to safeguard regional and local security. The proposed Bill profiles Singapore as a secure link in the global chain of anti-terrorism measures, and upholds our reputation as a

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responsible and secure trading and transhipment hub. The enhanced controls are in our national, economic and security interests.

Sir, I beg to move.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. - [Mr S. Iswaran].

Bill considered in Committee; reported without amendment; read a Third time and passed.

The Leader of the House (Mr Mah Bow Tan): Mr Deputy Speaker, Sir, there are three more Bills listed in the Order Paper for Second Reading. As these are major Bills, I propose that we debate them tomorrow.