Trade Compliance Handbook Corpotate Policy

Transcription

1 Corpotate Policy INDEX HANDBOOK STATEMENT... 2 DUAL-USE CONTROLS POLICY... 5 MILITARY CONTROLS POLICY... 9 END-USE CONTROLS ( CATCH-ALL ) POLICY BROKERING AND TRADE CONTROLS POLICY SANCTIONS POLICY EXTRATERRITORIAL CONTROLS POLICY ANTI-BOYCOTT CONTROLS POLICY

2 HANDBOOK STATEMENT STATEMENT Mexichem is committed to the highest standards of compliance with global trade laws, export controls and sanctions as part of the Compliance Program and requires management, employees and third-parties to adhere to these standards. The consequences for getting it wrong can be severe, including: Reputational damage impacting Mexichem s reputation; Significant monetary fines for individuals and for Mexichem; Prison sentences for individuals; Loss of export privileges; Financial losses due to any of the above risks or combination thereof resulting in a negative financial impact for Mexichem, or as a result of contractual losses. It therefore cannot be overemphasized that it is important that you understand and comply compliance with all applicable export control and sanctions. It is the corporate policy of Mexichem to comply fully with the letter and spirit of export controls and sanctions. PURPOSE Mexichem operates in over 30 countries and its products are sold in over 100 jurisdictions. As such, it is crucial that we ensure full compliance with international trade law, in particular with export controls and sanctions. The following Global Trade Policies are intended to provide you with an overview of the applicable trade law principles and to give you direction in business situations that you may encounter. We recognize the complex nature of trade controls, which increases the risk of noncompliance. It is therefore important for you to understand what your obligations are as Mexichem s employee. Ignorance or misunderstanding of the rules is no excuse for violations. SCOPE Export controls involve government regulation of cross-border trade in certain types of goods, software and technology. Most countries have some form of an export control policy, legislation and enforcement mechanism, but there is quite significant variance in terms of their sophistication. Economic and trade sanctions and embargoes are political trade restrictions put in place by governments in order to impose a range of restrictive and punitive measures against countries, individuals and/or entities, with the aim of maintaining or restoring international peace and security. 2 27

3 Although these Global Trade Policies are based on EU and US export control and sanctions laws, some, if not most, of the principles will be relevant to exports from other jurisdictions as well. Mexichem may need to comply with both EU and US export control and sanctions regimes, as well as other local trade controls. In addition, please keep in mind that the Global Trade Policies should also be used for non-eu/us exports, not least due to Extraterritorial Controls and Brokering and Trade Controls (please see below). Deviations from or changes to these Global Trade Policies require the approval of Mexichem Vice President & General Counsel. AMENDMENTS Deviations or changes to these Policies require the approval of Mexichem Vice President & General Counsel. REPORTING A CONCERN Because we all have a stake in Mexichem s success, it is in all of our interest to help ensure that our business is conducted to the highest ethical standards, and that our reputation remains untarnished. For this reason, we strongly encourage you to report any situation you know or suspect about that may involve illegal, unethical or otherwise improper business activity, as well as all instances of employee violations of this or any other of the Mexichem s policies. Doing so will allow the company to address the issue and take appropriate corrective action. If you have a good-faith belief or concern related to improper or illegal conduct, you should immediately bring it to the attention of Mexichem, via one of the following methods: 1. Calling the toll-free Mexichem Whistleblower Line at the number indicated at the following address: 2. Logging onto from any computer with an Internet connection and clicking on the Mexichem Whistleblower Line link to file a web report. 3. Sending a mail to: mexichem@ethic-line.com. Mexichem will not tolerate retaliation against you due to your report or participation in any internal investigations, as long as you have acted in good faith and believe what you reported to be true. Retaliation may be grounds for discipline up to and including dismissal, subject to applicable local laws. The company will treat any good-faith reports or discussions in confidence consistent with legal requirements and subject to the need to conduct a thorough investigation where appropriate. In certain cases, and consistent with applicable laws, information may be shared with local law enforcement or other authorities. 3 27

4 ACKNOWLEDGEMENT AND ADHERENCE I hereby acknowledge that I have read and understood these Policies and its provisions and commit to the obligations established therein. I understand that violations of these Policies may result in disciplinary action including suspension without pay and/or discharge. I certify that this is a true and correct statement by my signature below: IGNATURE (1): SIGNATURE (2): DATE: 4 27

5 DUAL-USE CONTROLS POLICY PURPOSE This Global Trade Policy applies to Mexichem and to you when exporting dual-use goods, software, technology and services globally. Some of the principles in this Global Trade Policy are complex, and can be subject to frequent change. Always consult the Legal Department if you are unsure how to proceed. SCOPE This Global Trade Policy applies to any individual working for or on behalf of Mexichem worldwide, regardless of the place where Mexichem operates or maintains business. Ignorance or misunderstanding of the rules is no excuse for violations. Separate policies in place in Mexichem s regional offices must, at a minimum, conform to the basic principles outlined in this Global Trade Policy. Policies designed to address specific local or regional considerations are not within the scope of this Global Trade Policy. In those cases, officers and employees or agents of the region should refer to the relevant regional policies. KEY PRINCIPLES 1. Mexichem, as the exporter, must determine whether their export requires a license, permit, authorization or registration. To make that determination, Mexichem s personnel must consider the following questions: a. What am I exporting? b. Where am I exporting to? c. Who will receive the item or technology? d. What will the item or technology ultimately be used for? e. Are there any red flag indicators (such as: reluctance to provide end-use information; atypical payment/delivery terms; ordering products which seem inappropriate to the customers business, etc.) 2. To ensure compliance with EU and US export controls, all personnel involved in the export order process must work together to ensure that the answers to the above questions are received prior to each export shipment. 3. These questions must be answered: (i) (ii) when an order is received from a prospective customer; and prior to the products being exported. 4. When in doubt, always consult with the Legal Department. 5 27

6 PROVISIONS EU/UK Dual-Use Controls Within the EU, exports are controlled simultaneously at a supra-national level by EU legislation and also at a national Member State level. The main piece of EU export control legislation is the EU Dual-Use Regulation, establishing an EU regime for the control of dual-use items (i.e. those that are deemed to have both commercial and military (or proliferation) applications). This EU Dual-Use Regulation is directly applicable in all EU Member States. A license is required for the export of dual-use products and technology listed in that Regulation s Annex I ( EU Dual-Use List ), where such products are exported from an EU Member State to a non-eu destination. Items listed within Annex IV of the EU Dual- Use Regulation are considered to be the most sensitive dual-use products and are also controlled for export from one EU Member State to another. Under the EU regime, the particular non-eu destination does not affect the requirement for a license, apart from situations where the country of destination is subject to an arms embargo or trade, economic or financial sanctions. Items on the list are also known as controlled (as a license is required to be obtained prior to their export). When exporting from and within the EU you will need to consider both the EU and Member State controls, as Member State controls sometimes go further than those under the EU Dual-Use Regulation. To determine whether a product is controlled for export from an EU Member State, you should: 1. Check the relevant control list of that Member State (such as the UK Strategic Export Control List) to see if the product falls within any of the categories on the list; 2. Once you know the classification of the product in question, check whether an Open General Export License ( OGEL ) is available for your proposed export. An EU001 General Export License can be used for exports to Australia, Canada, Japan, New Zealand, Norway, Switzerland and the US. However (like with all other open general export licenses) the exporter must ensure that they meet all the licensing terms and conditions, including registration with the relevant export authorities for use of the license. 3. If no OGEL is available, you will need to apply for a Standard Individual Export License ( SIEL ). This license gives you permission to export specific items to specific destinations. In order to apply for a SIEL, you will need to provide all the details relating to the proposed export, the ultimate destination and the end-use of the products, and you will need to obtain and provide with your license application an undertaking from your customer in a standard format. 4. Where products are exported under an OGEL, you need to obtain undertakings from the customer and keep these on record for inspection by the ECO in the case of an audit. 5. Always check the terms of the license to make sure it can be used on that specific transaction and that the appropriate form of undertaking is obtained. US dual-use controls 6 27

7 The Bureau of Industry and Security ( BIS ) of the Department of Commerce regulates the export and re-export of goods, software and technology from the US. Export means an actual shipment or transmission of items out of the US, as well as certain releases of US technology to foreign nationals inside or outside of the US ( deemed export ). Re-export means an actual shipment or transmission of items subject to US export controls from one non-us country to another non-us country, as well as certain releases of US technology to foreign nationals outside of the US ( deemed re-export ). Re-exports may include exports from foreign countries of foreignmade products manufactured from US-origin technology or that contain US-origin parts or materials. In order to ensure that Mexichem complies with export controls and other restrictions administered by different US agencies, Mexichem must accurately classify all US-origin products and technology according to the Export Control Classification Number ( ECCN ) categories listed in the Export Administration Regulations ( EAR ) administered by BIS or the Munitions List published in the International Traffic in Arms Regulation ( ITAR ). Determining whether licensing requirements apply to the export of dual-use products or technology: You should identify whether the product or technology is listed in the Commodity Control List (the CCL ) (the section of the EAR in which commodities, software and technology are categorized). If review of the CCL and Country Chart indicates that a license is required for the proposed export, you should then determine whether a License Exception is available. A License Exception permits an exporter to ship immediately without expending time and resources to complete a license application and await Department of Commerce approval. Items that are listed on the CCL but do not require a license to be exported to a particular destination must be identified on shipping documents under the symbol NLR. Mexico s dual-use controls In Mexico, the main legal provisions regulating exports on dual-use matters are the following: i) Federal Law for Controlling Chemical Substances Susceptible of Diversion for Chemical Weapons Manufacture (the MEX Dual-Use Law ); ii) Regulation whereby the export of conventional arms, parts and components thereof, dual-use goods, software and technologies susceptible of diversion for the manufacture and proliferation of conventional and of massive destruction weapons is subject to prior permission of the Mexican Ministry of Economy (the MEX Dual-Use Economy Ministry s Regulation ); and iii) Regulation setting forth the classification and codification of items for which import and export is subject to authorization by the Mexican Ministry of Energy (the MEX Dual-Use Energy Ministry s Regulation ) The Mex Dual-Use Law (as amended) establishes certain controls for the export of chemical substances listed on the Appendix 1 of such Law (the Mex National List ). Any person intending to export items listed in the Mex National List is 7 27

8 obliged to previously obtain the relevant permits or authorizations before the competent authorities. The Mex Dual-Use Economy Ministry s Regulation (as amended) sets forth certain control measures, such as requiring and obtaining prior permission by the Ministry of Economy to export conventional weapons, parts and components thereof, dual use goods, software and technologies that may be diverted for the proliferation and manufacture of conventional and massive destruction weapons. Items susceptible of dual-use are described in Annex I of the Mex Dual-Use Economy Ministry s Regulation. Software and technology susceptible of dualuse are described in Annex III. The Mex Dual-Use Energy Ministry s Regulation sets forth control measures requiring prior authorization by the National Nuclear Safety and Safeguard Commission, for importing and exporting nuclear materials and fuels, radioactive materials, equipment generating radiation, ionizing equipment and dual-use nuclear-related equipment and goods that are susceptible of diversion for the proliferation and manufacture of nuclear and massive destruction weapons. The list of such items is established in Annex II of said Regulation. Due to the foregoing, prior to exporting to Mexico chemical substances, or any goods or services that may be diverted for the manufacturing of massive destruction or conventional weapons, you should previously verify whether the relevant substance, good or service may be subject to the abovementioned Mexican legal provisions. Likewise, in order to ensure compliance with Mexican law provisions on dual-use export controls, prior to any export it is necessary to verify if the relevant substances, goods and services are subject to such provisions. When in doubt, consult with the Legal Department. ACKNOWLEDGEMENT AND ADHERENCE I hereby acknowledge that I have read and understood this Policy and the provisions contained herein and commit to the obligations established in the same. I understand that violations of this Policy may result in disciplinary action, including suspension without pay and/or discharge. I certify that this is a true and correct statement by my signature below: SIGNATURE (1): SIGNATURE (2): DATE: 8 27

9 MILITARY CONTROLS POLICY PURPOSE This Global Trade Policy applies to Mexichem and to you when exporting military goods, software, technology and services globally. Some of the principles in this Global Trade Policy are complex, and can be subject to frequent change. Always consult the Legal Department if you are unsure how to proceed. SCOPE This Global Trade Policy applies to any individual working for, on behalf of Mexichem worldwide regardless of the place where Mexichem operates or maintains business. Ignorance or misunderstanding of the rules is no excuse for violations. Separate policies in place in Mexichem s regional offices must, at a minimum, conform to the basic principles outlined in this Global Trade Policy. Policies designed to address specific local or regional considerations are not within the scope of this Global Trade Policy. In those cases, officers and employees or agents of the region should refer to the relevant regional policies. KEY PRINCIPLES 1. Mexichem, as the exporter, must determine whether their export requires a license, permit, authorization or registration. To make that determination, Mexichem s personnel must consider the following questions: a. What am I exporting? b. Where am I exporting to? c. Who will receive the item or technology? d. What will the item or technology ultimately be used for? e. Are there any red flag indicators (such as: reluctance to provide end-use information; atypical payment/delivery terms; ordering products which seem inappropriate to the customers business, etc.) 2. To safeguard compliance with EU and US export controls for all export transactions, all personnel involved in the export order process must work together in ensuring that the answers to the above questions are received prior to each export shipment. 3. These questions must be answered: (i) (ii) when an order is received from a prospective customer; and prior to the products being exported. 4. When in doubt, always consult with the Legal Department. 9 27

10 PROVISIONS EU/UK Military Controls The regulation of military items and technology exports is within the exclusive competence of the individual EU Member States with each having its own export licensing regime for export of such items both within and outside of the EU. What amounts to a military item is a matter for individual Member State law and is specified in a list of controlled military items in each Member State (in the UK this is known as the Military List). However, Member States military lists tend to be similar as they are based on the EU Common Military List. Beyond obviously military products, it can be expected to catch any item or part or technology which is designed for, modified or adapted for a military use. In the UK, it is prohibited to export military goods, software or technology listed on the UK Military List without a license. Military controls in the UK are based on a three-tier structure (Categories A, B, and C) set out in the UK Military List, and this structure is particularly relevant to trade controls (please see below). The strictest level of control applies to items in Category A these include cluster munitions, explosive sub-munitions and bomblets. Category B comprises items which are of heightened concern, such as small arms/light weapons and ammunition. Category C, the least tightly controlled, comprises all other military items on the Military List and includes portable devices for the purpose of riot control or self-protection. Additional controls are imposed on items found on the Military List which are being exported to embargoed destinations. US Military Controls The Directorate of Defense Trade Controls ( DDTC ) of the Department of State has jurisdiction over the export of defense articles and defense services. These articles and services are identified on the US Munitions List of the International Traffic in Arms Regulations ( ITAR ). The DDTC controls the export of defense articles and services. Such articles and services are listed on the US Munitions List. Companies that manufacture defense articles or furnish defense services must register with DDTC, and registration is required whether or not such defense articles or services are exported. Registration is a precondition for obtaining an export license from DDTC. Although the ITAR provides for some limited exemptions, most exports of defense articles and services including release of controlled technology to foreign nationals at meetings or plant visits require a license from DDTC. [All transactions relating to Munitions List items and technology must be reviewed and approved by management before shipment or release.] In the event an item or technology might have a military use or be adapted for a military use, such item or technology may require a license under ITAR, even if the normal use of the item is for non-military, commercial purposes. A number of items controlled on the US Munitions List are in the process of being placed under the jurisdiction of the Bureau of Industry and Security ( BIS ) and therefore may 10 27

11 no longer require a license for export or may qualify for a License Exception. Mexichem personnel should consult the Munitions List on a regular basis to understand the extent of the controls thereunder. Mexico s Military Controls In Mexico, the main legal provisions regulating exports on military items and technology matters are the following: i) Federal Law of Firearms and Explosives and its Regulations (the Mex Firearms Law ); and ii) Regulation setting forth the classification and codification of items for which import or export thereof are regulated by the Mexican Ministry of National Defense (the Mex Defense Ministry Regulation ). The Mex Firearms Law sets forth control measures for the export of certain weapons and items indicated in such Law, requiring exporters to obtain prior permission by the Mexican Ministry of National Defense. The Mex Defense Ministry s Regulation establishes the classification and codification of firearms and parts, spare parts, accessories and ammunition thereof, for which export or import is regulated by such Ministry and ocular inspection conducted by the staff of the Ministry at the point of entry to or exit from Mexico of such items. Likewise, in order to ensure compliance with Mexican law provisions on military items export controls, prior to any export it is necessary to verify if the relevant items or technology are subject to such provisions. When in doubt, consult with the Legal Department. ACKNOWLEDGEMENT AND ADHERENCE I hereby acknowledge that I have read and understood this Policy and the provisions contained herein and commit to the obligations established in the same. I understand that violations of this Policy may result in disciplinary action, including suspension without pay and/or discharge. I certify that this is a true and correct statement by my signature below: SIGNATURE (1): SIGNATURE (2): DATE: 11 27

12 END-USE CONTROLS ( CATCH-ALL ) POLICY PURPOSE This Global Trade Policy applies to Mexichem and to you when exporting goods, software, technology and services globally where WMD or military end-use controls may apply. Some of the principles in this Global Trade Policy are complex, and can be subject to frequent change. Always consult the Legal Department if you are unsure how to proceed. SCOPE This Global Trade Policy applies to any individual working for, on behalf of Mexichem worldwide regardless of the place where Mexichem operates or maintains business. Ignorance or misunderstanding of the rules is no excuse for violations. Separate policies in place in Mexichem s regional offices must, at a minimum, conform to the basic principles outlined in this Global Trade Policy. Policies designed to address specific local or regional considerations are not within the scope of this Global Trade Policy. In those cases, officers and employees or agents of the region should refer to the relevant regional policies. KEY PRINCIPLES 1. Mexichem, as the exporter, must determine whether their export requires a license, permit, authorization or registration. To make that determination, Mexichem s personnel must consider the following questions: a. What am I exporting? b. Where am I exporting to? c. Who will receive the item or technology? d. What will the item or technology ultimately be used for? e. Are there any red flag indicators (such as: reluctance to provide end-use information; atypical payment/delivery terms; ordering products which seem inappropriate to the customers business, etc.) 2. To safeguard compliance with EU and US export controls for all export transactions, all personnel involved in the export order process must work together in ensuring that the answers to the above questions are received prior to each export shipment. 3. These questions must be answered: (i) (ii) when an order is received from a prospective customer; and prior to the products being exported

13 PROVISIONS EU/UK end-use controls Dual-use goods and technology not listed on the EU Dual-Use List may also be subject to controls under the so-called end-use controls, where an export authorization will be required for items, despite them not being otherwise controlled, if the exporter is aware or has been informed by the competent authorities that the items may be intended, in part or in whole, for: Military end-use in an embargoed country - a military end-use in this context means: (i) incorporation into military items listed in the military lists of Member States; (ii) use of production, test or analytical equipment and components therefore, for the development, production or maintenance of military items listed in the military lists; (iii) use of any unfinished products in a plant for the production of military items listed in the military lists; Unlawful military repairs this means use as parts or components of military items exported from a Member State without authorization or in breach of the national export controls of that Member State; or Weapons of mass destruction ( WMD ) end-use this means use in connection with the development, production, handling, operation, maintenance, storage, detection, identification or dissemination of chemical, biological or nuclear explosive devices or the development, production, maintenance or storage of missiles capable of delivering such weapons. In relation to WMD end-use, many of the EU Member States (such as the UK) have gone further and adopted national legislation imposing an authorization requirement where the exporter has any grounds for suspecting the items may be intended for WMD end-use. US end-use controls The Department of Commerce regulates the export of products and technology to endusers or for end-uses relating to the design, development, production or use of chemical or biological weapons and missiles. Each export or other foreign transaction should be screened for Chemical or Biological Weapons end-uses or end-users, Missile Technology, and Nuclear end-uses or end-users. 1. Controls on Chemical and Biological Weapons: a. A license must be obtained when a US person knows that any item, software, or technology which is being exported or re-exported will be used in chemical and/or biological weapons ( CBW ) design, development, production, stockpiling, or use in or by certain countries identified in the EAR. b. US persons engaged in support activities, such as financing, freight forwarding, or transportation, are also prohibited from providing knowing support to CBW activities

14 2. Controls on Missile Technology: a. A licensing requirement is imposed on a US person whenever such person knows that an item, software, or technical data will be used in the design, development, production, or use of certain rocket systems, UAVs or missile technology in certain specified countries. b. These restrictions apply to the export, re-export or transfer of any item including foreign-origin items by the US person if he or she knows the items will spread the use of missile technology. 3. Controls on Nuclear End-Use/End-Users: a. An exporter is required to obtain a license before shipping a product that is not controlled, if the exporter knows that the item will be used in connection with a nuclear weapons program, or if the competent authorities inform the exporter that there is a risk of diversion of an item and therefore a license is required. Mexico s End-Use Controls 1. In principle, Mexican legal provisions on dual-use matters regulate end-use issues on export controls. However, Mexichem s officers, employees or collaborators should be aware that the Mexican Government may establish certain non-tariff measures, restrictions or controls on certain goods or services, based on the nature thereof and deriving from economic, health, environmental or national security reasons. 2. Likewise, Mexichem s officers, employees or collaborators should be aware that end-use controls and regulations in Mexico may depend on the tariff classification of the relevant goods or services to be exported. Therefore, prior to any export it is necessary to verify if the relevant goods or services are subject to such provisions. When in doubt, consult with the Legal Department. ACKNOWLEDGEMENT AND ADHERENCE I hereby acknowledge that I have read and understood this Policy and the provisions contained herein and commit to the obligations established in the same. I understand that violations of this Policy may result in disciplinary action, including suspension without pay and/or discharge. I certify that this is a true and correct statement by my signature below: SIGNATURE (1): SIGNATURE (2): DATE: 14 27

15 BROKERING AND TRADE CONTROLS POLICY PURPOSE This Global Trade Policy applies to Mexichem and to you when providing brokering services relating to military or dual-use goods, software, technology and services. Some of the principles in this Global Trade Policy are complex, and can be subject to frequent change. Always consult the Legal Department if you are unsure how to proceed. SCOPE This Global Trade Policy applies to any individual working for, on behalf of Mexichem worldwide regardless of the place where Mexichem operates or maintain business. Ignorance or misunderstanding of the rules is no excuse for violations. Separate policies in place in Mexichem s regional offices must, at a minimum, conform to the basic principles outlined in this Global Trade Policy. Policies designed to address specific local or regional considerations are not within the scope of this Global Trade Policy. In those cases, officers and employees or agents of the region should refer to the relevant regional policies. PROVISIONS EU/UK brokering and trade controls EU brokering rules Under the EU Dual-Use Regulation authorization is required for brokering services of dual-use items listed on the EU Dual-Use List if the items in question are or may be intended, in their entirety or in part, for a weapons of mass destruction ( WMD ) end-use. The EU Dual-Use Regulation defines brokering services as: the negotiation or arrangement of transactions for the purchase, sale or supply of items (whether dual-use or not, depending on the relevant jurisdiction) from one country to another; or the selling or buying of dual-use items that are located in third countries for their transfer to another third country. For example, if a Mexichem employee based in France is negotiating a transaction involving the export of an item from the US to Brazil, the licensing requirement mentioned above would apply to the French company where the item is intended for WMD end-use. The EU brokering rules do not prohibit the provision of ancillary services (as they relate to goods on the Dual-Use List), such as transportation, financial services, insurance or re-insurance, or general advertising or promotion of dual-use goods

16 UK trade controls Member States may impose additional brokering rules. For example, the UK has additional rules in place regarding brokering services for military items (otherwise known as trade controls ). The UK trade controls apply slightly differently to military goods, depending on whether such goods fall within Category A, B or C: Category A: cluster munitions, explosives, bomblets, security and para-military police equipment; Category B: small arms, accessories and ammunition for light weapons; Category C: other controlled military goods. The UK trade controls apply as follows: 1. Category A and B military goods: it is prohibited to, directly or indirectly: a. supply or deliver; b. agree to supply or deliver; or c. do any act calculated to promote the supply or delivery of, any Category A or B goods, where the person knows or has reason to believe that such action or actions will, or may, result in the removal of those goods from one third country to another third country. 2. Category C military goods: it is prohibited to, directly or indirectly: a. agree to supply or deliver; or b. do any act calculated to promote the supply or delivery of, any Category C goods, where the person knows or has reason to believe that such action or actions will, or may, result in the removal of those goods from one third country to another third country. There are certain activities in relation to Category B and C goods which can be carried out without a license: Category B goods: financing or financial services; insurance or reinsurance services; and general advertising or promotion services; Category C goods: financing or financial services; insurance or reinsurance services; general advertising or promotion services; and transportation services

17 US brokering and trade controls The US brokering rules apply to defense articles or services, including hardware, technical data, or services covered by the US Munitions List. A broker is defined as anyone who acts as an agent for others in negotiating or arranging contracts, purchases, sales or transfers of defense articles or services in return for a fee, commission or other consideration. 1. This includes: financing, transportation, freight forwarding or taking of any other action that facilitates the manufacture, export, import or transfer of a defense article or service, irrespective of its origin. 2. This does not include: a. activities by persons that are limited exclusively to domestic sales or transfers; and b. activities by persons exclusively in the business of financing, transporting or freight forwarding, whose business activities do not also include brokering defense articles or services. Brokers must register with US Department of State and also provide an annual report to the US government enumerating and describing its brokering activities and any exemptions used for other covered activities. ACKNOWLEDGEMENT AND ADHERENCE I hereby acknowledge that I have read and understood this Policy and the provisions contained herein and commit to the obligations established in the same. I understand that violations of this Policy may result in disciplinary action, including suspension without pay and/or discharge. I certify that this is a true and correct statement by my signature below: SIGNATURE (1): SIGNATURE (2): DATE: 17 27

18 SANCTIONS POLICY PURPOSE This Global Trade Policy applies to Mexichem and to you when dealing with customers globally. Some of the principles in this Global Trade Policy are complex, and can be subject to frequent change. Always consult the Legal Department if you are unsure how to proceed. SCOPE This Global Trade Policy applies to any individual working for, on behalf of Mexichem worldwide regardless of the place where Mexichem operates or maintain business. Ignorance or misunderstanding of the rules is no excuse for violations. Separate policies in place in Mexichem s regional offices must, at a minimum, conform to the basic principles outlined in this Global Trade Policy. Policies designed to address specific local or regional considerations are not within the scope of this Global Trade Policy. In those cases, officers and employees or agents of the region should refer to the relevant regional policies. POLICY Sanctions considerations are often intertwined with export controls, because such measures may prohibit the export of controlled goods to a sanctioned destination or the export of goods in general (by prohibiting making available of economic resources see below) to a sanctioned (also known as designated ) person. As such, you will always need to rule out issues under both sets of rules export controls and sanctions. PROVISIONS EU/UK Sanctions Economic and financial sanctions EU economic sanctions impose: (i) an obligation to freeze all funds and economic resources of the targeted parties (natural and legal persons) and (ii) a prohibition on making funds or economic resources available directly or indirectly to or for the benefit of these parties. The prohibition on making economic resources available in practice means that all commercial dealings with the designated parties are prohibited, unless those dealings fall within a very limited number of exemptions and are authorised by the competent authority in the relevant EU Member State

19 Mexichem should regularly check any current and potential business partners in third countries covered by the EU sanctions against the lists of designated parties. The lists of designated parties are often amended and Mexichem should always consult the latest version. EU financial sanctions prohibit transferring funds into or out of certain countries. For example, the EU currently has sanctions in place against North Korea which broadly means that transactions regarding certain products which are exempted from the trade embargo and which involve transfers of funds to and from North Korea over a certain threshold require prior authorization from the competent authority in an EU Member State. Under the EU sanctions regime, it is prohibited to make economic resources indirectly available to sanctioned entities or persons. This often includes making resources available through persons or entities owned or controlled by the sanctioned entities or persons. Ownership means possession of more than 50% of the proprietary rights of an entity. Control is established by meeting certain criteria, including: having the right to appoint or remove a majority of the management; having the right to use all or part of the assets of the entity; managing the business on a unified basis; controlling the entity pursuant to an agreement with shareholders; having the right to exercise a dominant influence; sharing jointly and severally the financial liabilities of the entity, or guaranteeing them. Trade sanctions In addition to arms embargoes, EU sanctions regimes may also include other trade restrictions. Depending on the objective of the restrictions, they may target particular sectors and usually comprise restrictions on exports or imports of goods or technology and the provision of services/technical assistance in relation to the same. For example, the sanctions against Russia comprise of wide-ranging trade restrictions, including a prohibition on the export of controlled goods to Russia for military end-use, as well as certain goods and services relating to the energy sector. Member States can, and some do, especially the UK, place further embargos and restrictions where they do not feel that they have been able to negotiate sufficiently tough rules at the multi-national level. In practice, these will relate to high risk items and technology and/or high risk jurisdictions. US Sanctions Economic and financial sanctions The transfer directly or indirectly of US-origin products or technology to any individual or organization identified on any of the various denial lists constitutes a violation of US export control law. Mexichem must ensure that new and existing customers are screened against the denial lists maintained by various US agencies

20 Under OFAC s 50% rule, US sanctions also apply to entities owned 50% or more by an entity designated as sanctioned by OFAC. Under OFAC s 50% Rule, an entity that is owned 50% or more in the aggregate by more than one sanctioned entity will be treated as though it was also listed by OFAC. OFAC's 50% rule is generally about ownership, not control. However, please note that OFAC sanctions also broadly prohibit transactions involving, directly or indirectly, a blocked individual, even if the blocked individual is acting on behalf of a non-blocked entity. Therefore, US persons should be careful when conducting business with nonblocked entities in which blocked individuals are involved; US persons may not, for example, enter into contracts that are signed by a blocked individual. Trade sanctions and embargoes The Treasury Department enforces embargoes and trade sanctions with respect to specific end-uses/end-users and specific country destinations. In particular, Iran, Syria, North Korea, and Cuba are embargoed destinations, and opportunities to transact business with those countries (or organizations and individuals located therein or with ties to their governments) are severely restricted. The US also has imposed targeted sanctions on certain individuals and specific business sectors in other destinations, such as Russia. It is therefore critical for employees of Mexichem worldwide to be familiar with US sanctions programs. Transactions involving Cuba, Iran, North Korea, or Syria (or nationals thereof) should be approved by management and such approval should be documented and retained. Where management is uncertain as to the legality or particular risk associated with a transaction, Mexichem plc s Deputy Company Secretary should be contacted. Mexico s Sanctions Economic and financial sanctions Mexican Economic Sanctions deriving from violations by any person to Mexican legal provisions on export controls may vary from fines, embargoes and prison for individuals conducting illegal activities deemed as crimes, and for legal entities the sanctions may be suspension of commercial activities, temporary closing of certain establishments, judicial intervention, temporary debarment to conduct business activities and even winding-up of companies. Trade Sanctions and Embargoes In Mexico, the Regulations prohibiting the export or import of several items to those countries, entities and persons indicated therein (the Embargoed Destinations Regulations ) and its amendments, enforces embargoes and trade sanctions with respect to specific country destinations. Particularly, countries like North Korea, Lebanon, Central African Republic, Somalia, Afghanistan, Iraq, Liberia, Congo, Ivory 20 27

21 Coast, Sudan, Iran and Libya are embargoed destinations. Conducting certain transactions with such countries (or organizations and individuals located therein or with ties with their governments) is severely restricted and sanctioned. Likewise, Mexichem s officers, employees or collaborators should be aware that Mexico, as a member of the United Nations Organization, enacted a Resolution indicating those persons and entities that are described in the lists deriving from resolutions 1267 (as amended) and 1373 (as amended) and other applicable issued by the Security Council of the United Nations Organization. According to such Resolution, no person may conduct any transaction or render any service (including export) to those persons or entities indicated in such lists. Therefore, any act, transaction or service performed in violation of the foregoing shall be deemed as void, in addition to possible criminal sanctions that may derive therefrom. ACKNOWLEDGEMENT AND ADHERENCE I hereby acknowledge that I have read and understood this Policy and the provisions contained herein and commit to the obligations established in the same. I understand that violations of this Policy may result in disciplinary action, including suspension without pay and/or discharge. I certify that this is a true and correct statement by my signature below: SIGNATURE (1): SIGNATURE (2): DATE: 21 27

22 EXTRATERRITORIAL CONTROLS POLICY PURPOSE This Global Trade Policy applies to Mexichem and to you when exporting controlled goods, software, technology and services globally. Some of the principles in this Global Trade Policy are complex, and can be subject to frequent change. Always consult the Legal Department if you are unsure how to proceed SCOPE This Global Trade Policy applies to any individual working for, on behalf of Mexichem worldwide regardless of the place where Mexichem operates or maintain business. Ignorance or misunderstanding of the rules is no excuse for violations. Separate policies in place in Mexichem s regional offices must, at a minimum, conform to the basic principles outlined in this Global Trade Policy. Policies designed to address specific local or regional considerations are not within the scope of this Global Trade Policy. In those cases, officers and employees or agents of the region should refer to the relevant regional policies. POLICY In some circumstances, it may be necessary to comply with export control laws of more than one jurisdiction. A good number of countries have implemented export control regimes that have extra-territorial effect. As already mentioned above, the US regime is an example of a regime that is distinctly extra-territorial. In addition to the controls on exports from the US of goods, software and technology, the US regime may also control the re-exports of such goods from the country to which they were originally exported. Transactions conducted by non-us companies outside the US may also trigger the US controls if they involve US persons or items subject to US jurisdiction. PROVISIONS o Re-exports Re-export means an actual shipment or transmission of items subject to US export controls from one non-us country to another non-us country, as well as certain releases of US technology to foreign nationals outside of the US. Re-exports may include exports from foreign countries of foreign-made products manufactured from US-origin technology or that contain US-origin parts or materials. An example of a re-export would be where US technology is incorporated into Mexichem s products in the UK and the products are then exported out of the UK. In this case, the products may require both US and UK licenses

23 Re-export controls which apply to US-origin products are subject to the De Minimis rule: An export from a foreign country of a foreign-made commodity or technology that incorporates or is commingled with US-origin components controlled by the EAR that are valued at 25% or less (10% or less to embargoed destinations) of the total value of the foreign-made commodity does not require re-export authorization from US authorities. Deemed Exports and Deemed Re-exports Deemed exports and re-exports involve the release of controlled technology, know-how and software/source code to a foreign person (including dual-nationals) in the US or in a foreign country. Such a release is treated as an export (or re-export) to the home country or countries of the foreign person. This occurs if any release of technology or software/source code to a foreign person is made through: (i) (ii) (iii) visual inspection by foreign nationals of US-origin equipment and facilities; oral exchanges of information in the US or abroad; or the application to situations abroad of personal knowledge or technical experience acquired in the US. The deemed export rule does not apply to permanent resident aliens, US citizens and protected individuals. Technology may be released to a foreign national if a License Exception would authorize export to the home country of the foreign national. Access to technology through plant tours is authorized if the tours are open to everyone, including competitors, and the technology is therefore publicly available. Foreign nationals of certain countries may be granted access to controlled technology under License Exception TSR if they sign written assurances about the use of information they obtain. Sanctions Please note that, to varying degrees, sanctions programs impose restrictions on dealing with the governments, government-owned businesses, nationals and the products of sanctioned countries. Sanctions programs typically prohibit US persons from becoming involved in or facilitating any financial or commercial transactions involving the target countries. US person is broadly defined under the US sanctions laws. Generally, the term includes US citizens and permanent residents, wherever in the world they may be located. It also includes companies incorporated in the US and their foreign branches. Foreign corporations and foreign nationals physically located within the US are also covered. With respect to Cuba, the term US persons includes foreign subsidiaries of US corporations. Given the broad scope of US sanctions programs, relationships between Mexichem s US entities and their foreign affiliates should be analyzed on a case-by-case basis with respect to the jurisdictional reach of US Government requirements

24 Brokering In addition, as more fully described in the Brokering and Trade Controls Policy, the EU also has brokering controls which prohibit EU nationals from brokering (defined widely to include any act calculated to promote the supply or delivery of) dual use items between two or more countries which are outside of the EU. The UK has similar rules in respect of military goods. Brokering rules also apply to US persons where an agent is negotiating or arranging contracts or sales of defense articles or services. US brokering rules require brokers to be registered with the US Department of State and report on their brokering activity. ACKNOWLEDGEMENT AND ADHERENCE I hereby acknowledge that I have read and understood this Policy and the provisions contained herein and commit to the obligations established in the same. I understand that violations of this Policy may result in disciplinary action, including suspension without pay and/or discharge. I certify that this is a true and correct statement by my signature below: SIGNATURE (1): SIGNATURE (2): DATE: 24 27