Export Control Basics: What to Check Before Providing Technology Abroad and Deemed Exports

Hello, I'm Noriaki Asato, Representative Attorney at LegalAgent.

Sending design documents to an overseas development company, showing source code to a foreign business partner, sharing experimental data for joint research. In situations like these, beyond confirming the non-disclosure agreement and the ownership of intellectual property rights, export control checks may be required before the materials are handed over. This is because providing technology can be subject to regulation even if no physical goods are shipped abroad.

Suppose, for example, that under an overseas development outsourcing arrangement you plan to grant access to your internal repository after the contract is signed. If you proceed on the basis of "sign the contract first, and check the regulations when sending the materials," the check may come too late. The Foreign Exchange and Foreign Trade Act ("FEFTA") requires a license at the stage when a party intends to carry out a transaction that provides certain technology.

On the other hand, not every sharing of information that involves another country requires a license. The starting point is to make concrete what will be provided, to whom, for what purpose and by what method, and to check both the content of the technology and the counterparty and end use.

Regulation of Technology Provision and When to Start Checking

Article 25, paragraph 1 of FEFTA (Japanese) requires a license from the Minister of Economy, Trade and Industry for transactions involving specified technologies designated by Cabinet Order, such as transactions intended to provide the technology in a specified country or transactions providing it to non-residents from a specified country. This needs to be checked separately from Article 48 of the same Act, which governs the export of goods.

A point to watch in practice is that the methods of providing technology are not limited to taking paper blueprints or storage media out of the country. Email attachments, explanations in online meetings, sharing development environments and remote operating guidance can also be subject to checks, depending on their content and the reality of the provision. However, regulatory applicability is not determined by file names such as "source code" or "manual" alone. Whether the materials contain information that constitutes technology under the regulations, and to what extent, is checked individually.

For contracts that involve technology provision, start the review before the contractual obligations are finalized, and set up a procedure so that transactions requiring a license do not proceed before the license is obtained. It is important not to operate on the basis of "the contract has been signed, so let's grant access" while the technology concerned, the recipient and the scope of provision remain undetermined.

Article 25, paragraph 3 of FEFTA also contains provisions on the export of certain storage media and transmission to foreign countries by telecommunications. The check should not end with whether there is a contract; you need to ask the people in charge about the actual sharing method as well. For cloud services too, do not reach a conclusion based solely on the fact that the servers are overseas, but confirm who can receive and use the information and what service model applies.

Checking List Controls and Catch-All Controls

The first step is "classification," which confirms whether the goods or technology concerned meet the specifications on the control list. For technology, refer to the appended tables of the Foreign Exchange Order and the ministerial order on goods and the like that sets out detailed specifications. The control lists and related materials can be found through METI's explanation of list controls (Japanese).

Here, it may be difficult for legal staff to complete the judgment on their own. For example, for materials on the control of communications equipment, explanations from the technical department are needed on the functions and performance of the equipment concerned, whether it has encryption functions and how they are used, and the level of detail of the information provided. Map the full set of files to be sent to the business partner against the actual control items, and keep a record of the basis for the judgment.

Even where there is a classification certificate from the manufacturer or supplier, check whether it matches the model number and version of the product being provided this time and the scope of the technology. It is important not to rely as is on a classification certificate for a different product from the past, or on documents covering only goods, as the basis for providing technology. If the specifications or the technology provided change, the classification must be reviewed.

Further, even if the item is not on the control list, that alone does not necessarily end the procedure. Under catch-all controls, a license may be required depending on the goods or technology, the destination, the end use, the end user, notifications from the Minister of Economy, Trade and Industry and other factors. Checks on end use and end users cannot be skipped merely because "it is sold for civilian use" or "we confirmed the business partner's location."

A revision of the supplementary export controls took effect on October 9, 2025. If you continue to use an existing internal checklist, compare it with METI's explanation of the amendment and application guidance (Japanese) and confirm whether the target regions and the end-use and end-user check items match the current system. Recording the classification of items and the screening of end use and end users in individual transactions as separate roles makes it easier to avoid gaps in the review.

"Deemed Exports," Which Also Affect Sharing in Japan

Even without any transmission abroad, providing controlled technology to a non-resident within Japan requires a check for so-called "deemed exports." Resident and non-resident here are classifications under FEFTA and are not determined by nationality alone. It is necessary to avoid treating someone as automatically a non-resident because of foreign nationality, or as necessarily a resident because of Japanese nationality.

In addition, since May 1, 2022, the practice has been clarified of checking provision to residents in Japan as well, where certain categories apply in which the resident is recognized as being under the strong influence of a non-resident. METI's guidance on deemed export controls (Japanese) brings together an explanation of the system, circulars and a Q&A.

Specifically, you examine whether circumstances such as an employment relationship with a foreign entity, certain economic benefits received from a foreign government or similar body, or instructions or requests from a foreign government or similar body meet the prescribed requirements. Rather than uniformly treating someone as covered merely because they have contact with another country or receive funds from abroad, it is necessary to check the conditions and exceptions for each category.

When assigning staff to the research and development department, accepting outside researchers or having personnel of contractors participate, build this check into the stage at which the scope of access to technical information is decided. Where the human resources department holds attribute information and the technical department manages the materials to be disclosed, a check by only one of them may be insufficient. The practical challenge is to share information to the extent necessary and to decide which department makes the judgment and where the records are kept.

The Relationship Between Non-Disclosure Agreements and Licenses or Exceptions

Even if a non-disclosure agreement provides that the recipient "will not use the information for other purposes" or "will not disclose it to third parties," that does not make a license under FEFTA unnecessary. Contractual obligations and compliance with statutory regulations are checked separately. It is necessary not to confuse the question of whether you can make a claim if the counterparty breaches the contract with the question of whether you may provide the technology in the first place.

On the other hand, for technology provision, certain license exceptions are set out for transactions such as providing publicly available technology or providing technology in research activities in the field of basic science. The legal basis in the Foreign Exchange Order and the ministerial order on trade-related invisible transactions, and the conditions for application, can be checked in METI's guidance on transactions that do not require a license (Japanese).

However, avoid concluding that the materials provided as a whole fall under an exception because "part of it is introduced on the web" or "we are conducting joint research with a university." Where unpublished manufacturing conditions or engineering materials are attached to a published paper, check the material including the added parts. Even if it is called research, work aimed at developing a specific product is not automatically research in the field of basic science.

When relying on an exception, keep a record of which parts of the materials were judged not to require a license and under which provision. Distinguishing between a finding of non-applicability through classification and a finding that the item is controlled but meets the conditions of an exception makes it easier to recheck if the content provided changes later.

Contracts for Development Outsourcing and Joint Research, and Internal Procedures

When outsourcing work to an overseas development company, in addition to including an export control clause in the contract, confirm the information to be provided and the people and sites to which the counterparty will actually give access. Checking only the location of the counterparty's head office may miss the possibility that subcontractors or group companies in another country will do the work.

In the contract, consider, for example, the timing of providing information that requires a license or the like, the conditions for onward provision and subcontracting, notice of changes in end use or users, cooperation in submitting verification materials, and changes to the scope of work or schedule if a license cannot be obtained. It is important not to stop at a general compliance clause, but to make concrete who holds which information and at what point sharing can be stopped.

Internally, keeping the following items as a single series of records makes it easier to track changes even after the transaction begins.

• The materials, data and technology to be provided, and their versions and scope
• The laws, specifications and classification certificates used for classification, and the date checked
• The recipient, the actual users, the countries and sites of use, the end use and any planned onward provision
• Whether a license or exception is required, its basis, and the status of internal approval and license acquisition
• The date and method of sharing, access rights, and records of subsequent changes or suspensions

Providing technology without a license may be subject to criminal penalties under Article 69-7 and other provisions of FEFTA, and to transaction bans and other measures under Article 25-2 of the same Act. The scope of liability varies with the nature of the violation, and penalties are provided not only for individual employees but also for corporations. A response of "if there is a problem, we will cut off access later" cannot resolve problems with provision that has already taken place.

In my view, checks on technology provision are unlikely to work if they merely add one item near the end of contract review. The starting point for avoiding both transaction delays and regulatory violations is a procedure in which, from the moment developers decide which materials to share, the technical department, the legal department and the export control staff check the necessary information, and sharing does not go ahead until the license or internal judgment has been completed.