Supporting strategic trade controls in Malaysia

In February, Saferworld held an interactive training workshop in Penang for freight-forwarding agents, who are on the front line when it comes to facilitating the international movement of strategic trade goods.

Freight-forwarding agents represent an integral part of international supply chains and also have a key role in helping to ensure that national trade and export control laws are adhered to. As part of our ongoing outreach efforts to build understanding of the importance of export control laws and regulations and to help establish a culture of compliance across relevant industry sectors, Saferworld held a training workshop in Penang, Malaysia, on 25 and 26 February. The event, which brought together more than 40 Malaysian freight-forwarding agents to discuss how strategic trade controls impact their operations, was arranged and facilitated with the help of the Malaysian Ministry of International Trade and Industry.

In 2010, the Malaysian government enacted the Strategic Trade Act. This was a positive and necessary step taken by a country that had previously found itself unwittingly caught up in cases of trafficking involving goods and technologies intended for the production of weapons of mass destruction (WMDs). Since the establishment of the Strategic Trade Act, emphasis has shifted to ensuring that all those concerned in the export, transit, transhipment and brokering of strategic goods are fully aware of the Strategic Trade Act’s requirements. This is essential because when companies in supply chains don’t fully implement strategic trade controls, proscribed people and organisations may have the opportunity to acquire components used in WMDs and their delivery systems, as well as in conventional arms and military equipment. And while Malaysia is strongly committed to preventing sensitive goods and technologies falling into the wrong hands, it is also keen to maintain investor confidence, in line with its mission of facilitating trade in a secure trading environment. Enforcing responsible strategic trade controls is an important way to ensure this confidence is built and maintained.

The Malaysian government and trade industry are not alone in facing many challenges in preventing the diversion of goods and weapons for illicit purposes. One of the main challenges concerns dual-use items including goods (finished goods, parts, components, materials and equipment), technology and software that can be used for WMD programmes or for civil or military purposes. For freight forwarders and others who may not be experts in the field of goods classification, identifying whether items for export are ‘controlled’ or not can occasionally cause confusion. Identifying goods, parts, materials, equipment and technology that are listed on a national control list, and which therefore require an export or other type of licence, can be a difficult task. Despite this, freight-forwarding agents, including small and medium-sized enterprises, are on the front line when dealing with these issues. It is therefore crucial that they are aware of how to identify red flags and effectively work together with relevant stakeholders, including government ministries and customs officials, to resolve these problems in line with existing procedures, laws and regulations.

Yet there is another challenge: reaching companies that might be operating under the radar. Some enterprises, especially smaller companies with limited resources and capacity, may not be aware that what they are handling are dual-use (controlled) goods, and may not have the internal compliance procedures in place to identify them. As a large amount of trading and transhipment occurs every day in Malaysia, these companies can become the target of proliferators on the assumption that they may not know about certain products or rules. This is why it is so important for government and industry to work together to build awareness and ensure compliance. Of course, rules and regulations created by the government must be relevant to industry, and, in turn, companies – including Malaysian freight-forwarding agents – must understand why there are such rules. As a result, government outreach to industry, including freight forwarders, is essential.

For this reason, representatives from the Malaysian Ministry of International Trade and Industry – alongside a Saferworld-led group of international experts in strategic trade control – engaged participants over a period of two days on a variety of topics related to strategic trade controls and industry compliance, taking into account varying levels of awareness and understanding. The workshop served as an important reminder for everyone about how the business of freight forwarding is an essential part of supply chains and a key part of efforts to stop the proliferation of WMDs and conventional weapons. Training sessions included a discussion of the importance of internal compliance programmes, national licensing procedure, basic classification techniques, offences and penalties for misconduct or negligence under Malaysia’s Strategic Trade Act, how to conduct effective screening processes to identify suspicious actors operating within the supply chain, and best practice for strategic trade control training and record-keeping.

The response from participants at the end of the workshop was very positive, with the majority of attendees reporting that they found the two days informative, useful and highly relevant to their work. The sessions were interactive and allowed freight forwarders to put their questions directly to members of the Malaysian Ministry of International Trade and Industry, and the event was a useful step towards further strategic trade control dialogue and capacity-building activities in Malaysia. After the event, Elizabeth Kirkham, Saferworld’s Arms Unit Senior Adviser, said that “We look forward to the continuation of strategic trade control capacity-building activities in Malaysia and other Asian countries.” Saferworld is now planning to take this work forward and to conduct similar workshops with other relevant government and industry representatives and practitioners.