Export Compliance Management Seminar 29 May 2012: EU Export Controls and Sanctions update: Further Compliance Challenges


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Laurent Reussmann - Crowel & Moring LLP


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Export Compliance Management Seminar 29 May 2012: EU Export Controls and Sanctions update: Further Compliance Challenges

  1. 1. EU export controlsand sanctionsupdate : furthercompliancechallengesLaurent RuessmannCrowell & Moring LLP29 May 2012
  2. 2. Compliance challenges of export controls» Export controls have always posed challenges to companies and their desire to expand export sales – Need to classify company products , to identify customers and end uses – Need to obtain authorisations and follow up – Need to get management buy-in!» Top management buy-in, internal procedures and manuals, personnel training, etc, are critical to achieving compliance» This presentation will take a look at recent developments and how they affect compliance challenges – EU dual use controls – EU economic sanctions 2
  3. 3. EU dual-use export controls update» New Annex I to the EU Dual Use Regulation (Regulation 428/2009)» New EU General Export Authorisations (« EU GEAs »)» Legislative proposal based on Green Paper and public consultation 3
  4. 4. New Annex I of EU Dual Use Regulation Regulation 388/2012 amended Annex I of EU Dual Use Regulation- Reflects decisions taken in 2009 and 2010 by international export control regimes (the Australia group, the Nuclear Suppliers Group, the Missile Technology Control Regime and the Wassenaar Arrangement)- Entry into force : 15 June 2012 (including EU candidate countries – Turkey, Croatia and FYROM – and eventually other countries that use the EU list as a reference)- 2011 (and later) changes? (e.g., Wassenaar 2011 : http://www.wassenaar.org/controllists/2011/Summary%20of%20Changes%20to%20 Control%20Lists%202011.pdf) Best Practice Guidelines on ICPs : adopted by 2011 Wassenaar plenary (available at http://www.wassenaar.org/guidelines/docs/2%20- %20Internal%20Compliance%20Programmes.pdf) Link to Regulation 388/2012 http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2012:129:0012:0280:EN:PDF Link to the Proposal for amending Annex I to EU Dual Use Regulation, COM (2010) 509, containing a list of modifications http://trade.ec.europa.eu/doclib/docs/2010/november/tradoc_146861.pdf 4
  5. 5. New EU GEAsRegulation 1232/2011 revised rules on exports of dual use items and introduced five new EU General Export Authorisations (EU GEAs)Since January 2012, there are now six EU GEAs in place: EU001 – exports to Australia, Canada, Japan, New Zealand, Norway, Switzerland (including Liechtenstein) and United States of America EU002 – export of certain dual-use items to six additional destinations EU003 – export after repair/replacement EU004 – temporary export for exhibition or fair EU005 – certain telecommunications EU006 – certain chemicals 5
  6. 6. New EU GEAs - continued Key features of the GEAs - available to any exporter established in the EU - precise geographic scope, precise items scope - subject to a specific set of conditions of use -competent authorities may now prohibit an EU exporter from using an EU GEA under certain conditions. Link to Regulation 1232/2011: http://eur- lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2011:326:0026:0044:EN:PDF 6
  7. 7. Proposal for further changes- Commission Green Paper in June 2011 launched broad public consultation concerning the functioning of the EU dual-use export control system with view to legislative proposal- Concerns : security vs international competitiveness, and internal EU harmonisation- Divided into three parts - Overall context of export controls - Specific issues under the current Dual Use Regulation - Mid-to long-term vision of export controls in the EU- Further changes require greater Member State transparency (to know what is happening) : first publication of additional Member State measures, implementing new requirements of Regulation 428/2009, occurred in March 2012, and is available at http://eur- lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2012:067:0001:0063:EN:PDF 7
  8. 8. Proposal for further changes - continued- Main proposals for changes to EU dual use export control regime suggested in Green Paper - Common risk assessment (cf Council Common Position 2008/944/CFSP) - Better exchange of information - New EU GEAs (esp. low value shipments, export for repair, export after fair), catch-all controls (EU catch-all?) - Abolition of intra-EU controls - Improved enforcement Example of Member State comments on Green Paper : http://www.bis.gov.uk/assets/biscore/eco/docs/12-509-eco-response-eu- green-paper-dual-use.pdf 8
  9. 9. Proposal for further changes - continued- Re Abolition of intra-EU controls – Directive 2009/43/EC re intra-EU transfers of defence related products aimed to ease trade barriers within the EU, stimulate common production projects and make EU companies more competitive http://eur- lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2009:146:0001:0036 :EN:PDF – Similar regime was proposed as part of recast of Dual Use Regulation but not adopted in 2009 – Green Paper suggests using notification, post-shipment verification and lists of certified end-users instead of license requirement on intra-EU exports of dual-use goods 9
  10. 10. Evolution of EU economic sanctions- Iran- Syria- Burma/Myanmar- Belarus 10
  11. 11. EU Iran sanctions regulationsCouncil Regulation 267/2012 (March 2012) replaced Regulation 961/2010 New regulation maintains restrictions of Regulation 961/2010, implements additional restrictions agreed in January 2012, and clarifies certain implementing provisions Additional items introduced by Regulation 267/2012 - provisions targeting the transportation, insurance and reinsurance of Iranian crude oil, petroleum products and petrochemicals - restrictions and notification requirements for the transfers of funds and financial services - ban of the supply of specialized financial messaging services to listed persons - restrictions on gold, precious metals and diamonds - restrictions with respect to Iranian banknotes and coinage - provisions expanding assets freeze list and extending prohibited dual-use items list - provisions introducing derogations from freezing of funds and economic resources - amendments to the provisions regarding the diligence of EU financial and credit institutions Link to Regulation 267/2012 http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2012:088:0001:0112:EN:PDF 11
  12. 12. EU Iran sanctions regulations - continuedCouncil Regulation 264/2012 (March 2012) revised Regulation 359/2011 Distinguish measures reflecting concern over 1) Iran’s nuclear programme (Regulation 267/2012) versus 2) deterioration of human rights situation in Iran (Regulation 359/2011) Regulation 359/2011 imposed an asset freeze against persons complicit in or responsible for directing or implementing grave human rights violations Regulation 264/2012 adds to Regulation 359/2011 by - expanding the list of persons subject to restrictive measures - prohibiting the export of equipment which may be used for internal repression - prohibiting the export of telecommunications monitoring equipment - prohibiting related TA, brokering & financial assistance Link to Regulation 264/2012 http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2012:087:0026:0036:EN:PDF 12
  13. 13. New EU sanctions on Syria Council Regulation 36/2012 replaced Regulation 442/2011 Council Regulation 36/2012, adopted in January 2012, consolidates and expands all existing EU measures against Syria - It maintains the EU arms embargo and a ban on Syrian crude oil imports - In addition, Council Regulation 36/2012 introduced prohibitions of a) the transfer of telecommunications and internet monitoring equipment, technology and software, without prior authorization, and b) the transfer of oil and gas equipment and equipment used in the construction of electricity generating power plants (with the possibility for the latter equipment of a contractual exemption for certain exports) Link to Regulation 36/2012: http://eur- lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2012:016:0001:0032:EN:PDF On 14 May 2012, the Council reinforced once more EU restrictive measures against the Syrian regime (adding to the list of persons subject to restrictive measures) : http://eur- lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2012:126:0003:0005:EN:PDF 13
  14. 14. Partial and temporary suspension of EU sanctionsagainst Myanmar In February 2012, the EU had already suspended a visa ban for President Sein and other leaders of the Myanmar government In April, in the context of the annual review (the sanctions against Myanmar were set to expire on 30 April), the EU suspended for one year all sanctions other than the arms embargo and the embargo on equipment which may be used for internal repression COUNCIL REGULATION (EU) No 409/2012 of 14 May 2012 suspending certain restrictive measures laid down in Regulation (EC) No 194/2008 renewing and strengthening the restrictive measures in respect of Burma/Myanmar. http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2012:126:0001:0002:EN:PDF 14
  15. 15. Expanded EU sanctions on BelarusCouncil Regulations 588/2011, 999/2011 and 114/2012 expanded the sanctions which had been imposed in Regulation 765/2006 by - expanding the list of persons subject to restrictive measures - prohibiting the export of equipment which may be used for internal repression - imposing an arms embargo - prohibiting related TA, brokering & financial assistanceLinks to Council Regulations amending Council Regulation (EC) 765/2006Council Regulation (EU) No 588/2011http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2011:161:0001:0006:EN:PDFCouncil Regulation (EU) No 999/2011http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2011:265:0006:0007:EN:PDFCouncil Regulation (EU) No 114/2012http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2012:038:0003:0005:EN:PDF 15
  16. 16. Adding to the compliance challenges» Dual use rules – Keeping up with international changes – Further EU-level changes : new CGEAs, new proposal for further changes – Greater transparency in MS variations» Economic sanctions – Quicker and far-reaching changes – Greater impact on all payments – Myanmar developments 16
  17. 17. Thank you! 17