Economic Drivers for Strategic Trade Management STM. George Tan 24 th ~ 26 th Jun 2015 Myanmar

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1 1 Economic Drivers for Strategic Trade Management STM George Tan 24 th ~ 26 th Jun 2015 Myanmar

2 Agenda Economics Driver of Strategic Trade Controls 1) Economics Drivers 2) Positive Perception of Strategic Trade Management ( STM ) 3) Impact of Strategic Trade Management

3 Economics Drivers

4 ASEAN Economic Community ( AEC ) by end 2015 ASEAN Economic Community A single market and production base Free flow of goods in ALL aspects of trade in goods ASEAN Single Window Simplify Harmonize Trade & Customs (procedures and processes) Standardize Supported by National Single Window Standardized information exchange, procedures and formalities Shared/Retrievable depository database 4

5 Strategic Dual-use Goods Market Global Dual-Use Market Estimated > US$800 billion - US$1 trillion Growing at 5% annually Main market in ASIA Requires Companies to demonstrate capacity for robust compliance with relevant national and international Strategic Trade Management ( STM ) and best practices 5

6 Hi-Tech Industries Aerospace Automotive Advanced Engineering Bioscience Chemicals Defense Electronics & Telecom Hi-Tech Equipment IT Medical Instruments Pharmaceutical R&D 6

7 Definition of STM Laws and regulations established to curb the proliferation of Weapons of Mass Destruction ( WMD ) and their means of delivery Export licenses are required to export controlled products or technology Usually based on international agreements (1) Dual-use items (civil & military) (2) Munitions (conventional military weapons and WMD) (3) Other products under Catch-All provision 7

8 Positive Perception of Strategic Trade Management ( STM )

9 9 Strategic Trade Management - STM STM vs Export Controls Both terms have the same meaning Export Controls: adopted by older regimes STM: relatively newer term favoured by newly established regimes STM: more trade facilitative and less (export) restrictive meaning Most Asian countries use STM instead of Export Controls :- Singapore Malaysia Hong Kong Taiwan Korea Philippines* Thailand* Vietnam* Indonesia* Cambodia (new) (Note: * country in the process of setting up their respective legislation on STM/Export Controls) 9

10 Why is there a Need for STM? International Cooperation Non- Proliferation Secure business network & environment Maintain confidence among business partners Secure access to Hi- Tech product, equipment & technology State Member Compliance Social Responsibility 10

11 Common Misconceptions Strategic Trade Management creates Trade barriers due to: Licensing system Extra documentations However, Strategic Trade Management can facilitate trade through: Proper implementation of well designed system that incentivizes trade Proper documentation system that creates a more transparent environment End effect ; a safer trading environment that inspires confidence among traders Trade Facilitation 11

12 Common Misconceptions Strategic Trade Management entails Hefty Costs to establish and implement However, implementation of a strategic trade management system can be though of as an investment for the future Such benefits may in the long run, outweigh the costs of implementation Investment 12

13 UNSCR 1540 Unanimously adopted on 28 April 2004 Obligations of UN member states under UNSCR 1540: Refrain from providing support to companies that aid in the trade and proliferation of WMD Adopt and enforce laws that prohibits companies from providing such support Domestic controls to prevent proliferation of these weapons, i.e. controls over related materials, measures in areas of accounting/securing, physical protection, border and law enforcement, export and trade-related controls Impetus for each country to establish or review its National Strategic Trade Management Regimes 13

14 Key Elements for UNSC 1540 Implementation Controls for Legal Framework & Enforcement Export Control Legislation Control list Enforcement agencies Border Controls and Security Transaction Controls Licensing Controls Borders Brokering Re-export Transit Trans-shipment Fund provision Transport services Intangible transfers Licensing provision Individual license General license Licensing authorities Catch All provisions 14

15 Impact of Strategic Trade Management STM

16 Benefits for the Country Economic Maintain confidence among trading partners Promotion of secure trading environment Advanced industrialization (access to high technology) Attract high-end investment Greater transparency Sustainable economic growth Political Global recognition International obligation (UNSCR 1540 compliant) Inter-governmental information exchange and collaboration World Peace Security National interest Non-proliferation Supply chain security 16

17 Benefits for Businesses Reputation Protects reputation and working relationship with customers/suppliers and external parties Trustworthy business partners Access Access to high technology products and processes Protected Legitimate business safe business bigger revenue High value products and services increase revenue (big booster) Governance Promotes good corporate governance and social responsibilities Regulatory compliance and minimizing financial penalty payouts Consistency in business operation/practice (Business Standard or Standard Operation Procedure SOP ) 17

18 Industrialization Agricultural Commercial Industrial Knowledge Natural progression of Industrialization As a country grows, its economy will move into high-tech industries, often through investments and technology transfers from MNCs As Philippines moves towards high-tech production, Strategic Trade Management is required to promote a stable trading environment and protect her own national interests 18

19 Industrialization Agricultural Commercial Industrial Knowledge Stages GDP Growth Focus Subsistence Domestic Trade International Trade Innovation Labour Division Rural Urban Rural Urban Rural Urban Rural Urban Wealth Division 19

20 Thank You 20

21 Disclaimer This presentation is intended only as a guide and does not constitute advice provided by GTSC nor necessarily represent the official position(s) of any national / governmental bodies or agencies. The pictures and images used in this presentation are downloaded from and and are subject to their terms and conditions. 21

22 Contact George SC Tan Global Trade Security Consulting Pte Ltd GTSC Mobile:

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