Carbon fiber products transferred to unauthorized third parties

Japan Trade Information

December 22, 2020

The Ministry of Economy Trade and Industry (METI) has received report from TORAY INTERNATIONAL, Inc. (TI) that a portion of carbon fiber products that were exported to China with an export license under the Foreign Exchange and Foreign Trade Act have been transferred to third parties to which TI had no license to export the products. Having received this report, METI has issued a warning under the name of the Director General, Trade and Economic Cooperation Bureau to TI, on December 22, to request the company to implement recurrence prevention measures and strict security export control.

Outline

TI has been exporting carbon fiber products of Toray Industries, Inc. to China with an export license under the Foreign Exchange and Foreign Trade Act. However, TI reported to METI that a portion of the products were transferred to third parties to which TI had no license to export the products.

METI’s response

  1. Through on-site inspection and collection of reports from TI, METI has confirmed that a portion of carbon fiber products were transferred to third parties to which TI had no license to export the products.
  2. METI also concluded that this incident is due to TI’s inadequate internal control system including the following factors:
    • As the contracting party, TI was in the position to strictly review transaction of products which required export licenses, including checking the end-use and end-user. However, TI left the review of transactions solely to TI’s Chinese subsidiary (Toray International (China) Co., Ltd.) and its local employee.
    • TI did not appropriately undertake transaction review with regards to its customers.
    Therefore, METI requested TI to submit recurrence prevention measures to deal with these issues.
  3. On December 22, TI submitted the recurrence prevention measures to METI. Director-General, Trade and Economic Cooperation Bureau, issued a warning to TI for the transfer, and requested the company to implement the recurrence prevention measures and to strictly comply with export control.
  4. METI has made this press release to provide caution to other exporters who export goods and technologies controlled by the Foreign Exchange and Foreign Trade Act regarding the need to implement strict export control.