eu dual use export controls update

EU Dual Use Export Controls UpdateThe new EU Dual Use Regulation 428/2009

TechAmerica Export Controls Committee meetingDecember 10, 2009

Jasper Helder, partner Trade & CustomsBird & Bird LLPT + 31 646 17 94 82E [email protected] www.twobirds.com/customs

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Agenda

EU Legislative Framework

Export licensing requirements

Intra-EU licensing requirementsSensitive items

Transit controls

Intra EU transfers for subsequent export

Brokering licensing requirements

Intangible exports

Export licenses

National implementation

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EU legislative framework (1)

Common regime: Regulation (EC) 1334/2000

Lastly amended by Regulation (EC) 1167/2008

Replaced by Regulation (EC) 428/2009, “Recast”Effective as per August 2009

Consolidation of amendments of the 1334/2000 regulation

Implementation of UN Security Council Resolution 1540/2004

Amendments of Annex I Control List:http://trade.ec.europa.eu/doclib/docs/2009/june/

tradoc_143396.en09%20CN07_03.pdf

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EU legislative framework (2)

EU Regulation is not exhaustive

EU sanctions may control additional itemsExample: EU Sanctions vs. Iran

National legislation EU Member StatesControl lists (national “Catch All” additions)

Sanctions and related control lists

Application procedures for export licences (incl. different license types)

Penalties for non-compliance

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Export licensing requirements (1)

Exports of items subject to licensing (1)

Export = sending goods out of the customs territory of the EU, incl. transmission of intangibles to destination outside EU

Export of Annex I to non-EU countriesAnnex I of Regulation (EC) 1334/2000

Categories 1 through 9

Described by ECCN & product/technology description

With General Notes on interpretation & application

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National “Catch All”: export licensing for non-Annex I itemsImposed on National Authorities initiative

Exporters must notify “Catch All” circumstances to National Authorities who can then decide to impose licensing requirements

4 Reasons for “Catch All”

National “Catch All” 1: WMD items “May be” intended for use related to chemical, biological, nuclear

weapons

Notification obligation for exporter

Discretion of National Authorities to impose licensing requirements

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National “Catch All” 2: Military Use items for embargoed (arms) countries

Destination subject to UN, EU or OSCE arms embargoMilitary end-use (incl. manufacturing, maintenance etc. of Military List

items)As per EU export country national Military ListNotification obligation for exporterDiscretion of National Authorities to impose licensing requirement

National “Catch All” 3: Prior Irregular Exports Items for use in military products exported without or contrary to prior

export licenseNotification obligation for exporterDiscretion of National Authorities to impose licensing requirement

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Exports of Goods subject to licensing (4)

National Catch-All 4: Public Security/Human RightsProhibition of export or licensing requirement for non-Annex I

goods/technologies

No notification obligation exporter

Discretion of National Authorities to impose licensing requirement

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Intra-EU licensing requirements (1)

Intra-EU transfers of Goods subject to licensing

Certain “sensitive” goods and technologyAnnex IV of Regulation (EC) 1334/2000

Extract from Annex I

If implemented by national laws: intra EU transfer for subsequent export without additional processing

art. 22 para 2 EU Regulation 428/2009

UK & others

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Transit Controls (1)

New as per August 2009

Transit = transport of non-EU dual-use items entering and passing through the EU with a destination outside the EU

Non-EUother than EU originNot in EU free circulation

National Rules may impose prohibitions or license requirements for Annex I items if:

National “Catch All” 1 could apply (WMD items) National “Catch All” 2 could apply (Military Use items for embargoed countries)

National Rules may impose prohibitions or license requirements for non-Annex I items if:

National “Catch All” 1 could apply (WMD items)

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Who is subject to transit controls?

Under EU customs laws, all transit procedures require a re-export declaration for the items to leave the EU, which is “export” for Export Control purposes

“Exporter” under EU Dual Use Regulation =Person/company on whose behalf re-export declaration is made:

Person/company who holds the contract with consignee and power to determine shipmentIn the absence of a contract: Person/company who holds the power to

determine shipment

This could include forwarding agents/carriers for situations where they submit export declaration in their own name (f.e. in the absence of EU contract parties)

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Example: GermanyCustoms will block transit items which are or could be for WMD end-useCustoms notify German Export Administration (“BAFA”)BAFA will then decide whether to impose licensing requirements or

prohibition

Example: NetherlandsDiscretionary authority to impose licensing requirements for transit items

(Annex I) which are or could be for WMD end-use, and transit items (non-Annex I) which are for military end-use in arms-embargoed country

Example: UKLicense is required for:

all transit of Annex I items Transit of non Annex I items which are or could be for WMD end-use

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Brokering licensing requirements (1)

Brokering Controls (1)

Brokering Buying/selling dual-use items located in non-EU country for transfer to

non-EU countryNegotiating/arrangement of such buying/sellingExcluded are ancillary services: transportation, financial services,

(re)insurance, general advertising, promotion

License is required For Annex I itemsWhich are or could be for WMD useNotification obligation for broker if he is aware of WMD useAuthorities then have discretionary power to impose licensing requirement

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Who is subject to Brokering Controls?Any legal/natural persion resident or established in the EU engaging in brokering activities

Brokering licenseFor a set quantity of specified items moving between two or more non-EU countries

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Example: GermanyImposes license requirement for all brokering of Annex I items

Imposes notification obligation for broker if aware of WMD end-use, after which BAFA will decide whether to impose license requirement or not, pending which the brokering can not proceed

Example: the NetherlandsSame as EU Regulation 428/2009

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Intangible exports

Intangible Exports

Transmission of software or technology by electronic media, fax, telephone to a destination outside the EU, including making available in an electronic form such software and technology

Clarification EU Commission 26 January 2009: Transit of software, technology or technical assistance on carrier medium

can be subject to transit controls

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EU Export licences (1)

Community General Export Authorisation

For exports to: Australia, Canada, Japan, New Zealand, Norway, Switzerland, USA

Certain specific ECCN’s are excluded (certain nuclear items/software, pathogenes and GMO, missile related parts & technology)

Exporter must register with national authorities to use CGEA May also be done retroactively, but no later than 30 days after exportLicense automatically granted

CGEA can not be applied when:Exporter is notified of or aware of possible:

military end use in arms embargoed country WMD end use

Goods are destined for free zone or free warehouse in of the 7 CGEA destination countries

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Individual export LicenseOne exporter, one end-user/consignee, one or more dual use items

Global export licenseOne exporter, more end-users/consignees in more non-EU countries, for type/category of dual use items

National general export licenseUnder national legislation

One exporter, one end-user/consignee, one or more dual use items

Certain ECCN are excluded (same as GCEA)

Can not be applied in case of national “Catch Alls” 1 through 3

Exporter is notified/aware of potential WMD, military end use)

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Project Licence

Cross border projects involving exports from multiple EU countriesLicense application in EU country where contractual exporter is establishedOnly for individual export license (one exporter, one consignee, may include multiple dual use items)For all destinations other than GCEA countries (Annex I items), and all destinations (Annex IV items)Exporter must indicate location of other goods/technologies in applicationConsultation between EU country that receives application and other EU countries

Objections must be raised within 10 working daysMay be extended in ‘exceptional cases’ up to 30 daysObjections are binding: one EU country refuses no license granted!No response: no objections

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EU Export Licences (4)

Licensing criteria:

Previously: obligations of EU countries under non-proliferation regimes, EU CFSP and/or other sanctions & embargoes (UN etc.)

Now also: Exporters Internal Compliance Program = relevant factor

Global license applicationsBrokering license applicationsEU countries favour no connection between licensing & ICP

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Recordkeeping

Previously: in accordance with the practice in force in the respective EU country Commercial documents such as invoices, manifests and transport documents containing sufficient information to identify:

the description of the dual-use itemsthe quantity of the dual-use itemsthe name and address of the exporter and of the consigneewhere known, the end-use and end-user of the dual-use items

Current: extended recordkeeping obligation for:Brokering

nature of the items, technology or software the period during which the items were transferred/subject of provision of intermediation services destination of the transfers.

3 years after export

During 26 January 2009 conference, EU Commission re-emphasised current obligations to state ECCN and Controls on commercial documents (sales contract, order confirmation, invoice, dispatch note)

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Implementation (1)

Common feature: Export of listed goods/technologies is prohibited

Listed: EU Dual Use Reg Annex IMay be supplemented on national level

May be supplemented by EU Sanctions regulations

“Catch All” decisions on national level

Unless licensed by national administrationCategories of licenses are specified in EU Dual Use Reg

Additional (reporting and other) requirements may be imposed in licenses

Unlicensed export/non-compliance with license conditions commonly defined as criminal offence

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Implementation (2)

Transparency of administration varies substantially

Some EU countries provide published guidance (e.g. UK, Germany, France), some do not (e.g. Belgium, Italy)

Concrete licensing criteria

Controlled or “of concern” entities/individual lists

Published standardised license conditions (e.g. UK)

“Catch all” additions to EU Dual Use control list may or may not be published

Some EU countries provide for institutionalised “control status” verification procedures (e.g. UK “rating enquiry”)

License application processing time varies between EU countries

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Implementation (3)

Licensing approach varies

Some EU countries: emphasis on global licenses & ICP

Some EU countries: emphasis on individual specific licenses

8 Member States have created "National General export authorisations“

Austria, France, Italy, Germany, Greece, Sweden, Netherlands, UK (OGEL, standardized conditions)

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Thank you for your attention

Jasper Helder

Bird & Bird LLP

T + 31 6 46 17 94 82

E [email protected]

W www.twobirds.com/customs

eu dual use export controls update

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