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EU Dual Use Export Controls Update


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Overview of new EU Dual Use rules for Tech America Export Controls Webinar 10 December 2009.

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EU Dual Use Export Controls Update

  1. 1. EU Dual Use Export Controls Update The new EU Dual Use Regulation 428/2009 TechAmerica Export Controls Committee meeting December 10, 2009 Jasper Helder, partner Trade & Customs Bird & Bird LLP T + 31 646 17 94 82 E jasper.helder @ W / customs
  2. 2. Agenda <ul><li>EU Legislative Framework </li></ul><ul><li>Export licensing requirements </li></ul><ul><li>Intra-EU licensing requirements </li></ul><ul><ul><li>Sensitive items </li></ul></ul><ul><ul><li>Transit controls </li></ul></ul><ul><ul><li>Intra EU transfers for subsequent export </li></ul></ul><ul><li>Brokering licensing requirements </li></ul><ul><li>Intangible exports </li></ul><ul><li>Export licenses </li></ul><ul><li>National implementation </li></ul>
  3. 3. EU legislative framework (1) <ul><li>Common regime: Regulation (EC) 1334/2000 </li></ul><ul><li>Lastly amended by Regulation (EC) 1167/2008 </li></ul><ul><li>Replaced by Regulation (EC) 428/2009, “Recast” </li></ul><ul><ul><li>Effective as per August 2009 </li></ul></ul><ul><ul><li>Consolidation of amendments of the 1334/2000 regulation </li></ul></ul><ul><ul><li>Implementation of UN Security Council Resolution 1540/2004 </li></ul></ul><ul><ul><li>Amendments of Annex I Control List: </li></ul></ul><ul><ul><ul><li> </li></ul></ul></ul>
  4. 4. EU legislative framework (2) <ul><li>EU Regulation is not exhaustive </li></ul><ul><li>EU sanctions may control additional items </li></ul><ul><ul><li>Example: EU Sanctions vs. Iran </li></ul></ul><ul><li>National legislation EU Member States </li></ul><ul><ul><li>Control lists (national “Catch All” additions) </li></ul></ul><ul><ul><li>Sanctions and related control lists </li></ul></ul><ul><ul><li>Application procedures for export licences (incl. different license types) </li></ul></ul><ul><ul><li>Penalties for non-compliance </li></ul></ul>
  5. 5. Export licensing requirements (1) <ul><li>Exports of items subject to licensing (1) </li></ul><ul><ul><li>Export = sending goods out of the customs territory of the EU, incl. transmission of intangibles to destination outside EU </li></ul></ul><ul><ul><li>Export of Annex I to non-EU countries </li></ul></ul><ul><ul><ul><li>Annex I of Regulation (EC) 1334/2000 </li></ul></ul></ul><ul><ul><ul><li>Categories 1 through 9 </li></ul></ul></ul><ul><ul><ul><li>Described by ECCN & product/technology description </li></ul></ul></ul><ul><ul><ul><li>With General Notes on interpretation & application </li></ul></ul></ul>
  6. 6. Export licensing requirements (2) <ul><li>Exports of items subject to licensing (2) </li></ul><ul><ul><li>National “Catch All”: export licensing for non-Annex I items </li></ul></ul><ul><ul><ul><li>Imposed on National Authorities initiative </li></ul></ul></ul><ul><ul><ul><li>Exporters must notify “Catch All” circumstances to National Authorities who can then decide to impose licensing requirements </li></ul></ul></ul><ul><ul><ul><li>4 Reasons for “Catch All” </li></ul></ul></ul><ul><ul><li>National “Catch All” 1 : WMD items </li></ul></ul><ul><ul><ul><li>“ May be” intended for use related to chemical, biological, nuclear weapons </li></ul></ul></ul><ul><ul><ul><li>Notification obligation for exporter </li></ul></ul></ul><ul><ul><ul><li>Discretion of National Authorities to impose licensing requirements </li></ul></ul></ul>
  7. 7. Export licensing requirements (3) <ul><li>Exports of items subject to licensing (3) </li></ul><ul><ul><li>National “Catch All” 2 : Military Use items for embargoed (arms) countries </li></ul></ul><ul><ul><ul><li>Destination subject to UN, EU or OSCE arms embargo </li></ul></ul></ul><ul><ul><ul><li>Military end-use (incl. manufacturing, maintenance etc. of Military List items) </li></ul></ul></ul><ul><ul><ul><li>As per EU export country national Military List </li></ul></ul></ul><ul><ul><ul><li>Notification obligation for exporter </li></ul></ul></ul><ul><ul><ul><li>Discretion of National Authorities to impose licensing requirement </li></ul></ul></ul><ul><ul><li>National “Catch All” 3 : Prior Irregular Exports </li></ul></ul><ul><ul><ul><li>Items for use in military products exported without or contrary to prior export license </li></ul></ul></ul><ul><ul><ul><li>Notification obligation for exporter </li></ul></ul></ul><ul><ul><ul><li>Discretion of National Authorities to impose licensing requirement </li></ul></ul></ul>
  8. 8. Export licensing requirements (4) <ul><li>Exports of Goods subject to licensing (4) </li></ul><ul><ul><li>National Catch-All 4 : Public Security/Human Rights </li></ul></ul><ul><ul><ul><li>Prohibition of export or licensing requirement for non-Annex I goods/technologies </li></ul></ul></ul><ul><ul><ul><li>No notification obligation exporter </li></ul></ul></ul><ul><ul><ul><li>Discretion of National Authorities to impose licensing requirement </li></ul></ul></ul>
  9. 9. Intra-EU licensing requirements (1) <ul><li>Intra-EU transfers of Goods subject to licensing </li></ul><ul><ul><li>Certain “sensitive” goods and technology </li></ul></ul><ul><ul><ul><li>Annex IV of Regulation (EC) 1334/2000 </li></ul></ul></ul><ul><ul><ul><li>Extract from Annex I </li></ul></ul></ul><ul><ul><li>If implemented by national laws: intra EU transfer for subsequent export without additional processing </li></ul></ul><ul><ul><ul><li>art. 22 para 2 EU Regulation 428/2009 </li></ul></ul></ul><ul><ul><ul><li>UK & others </li></ul></ul></ul>
  10. 10. Intra-EU licensing requirements (2) <ul><li>Transit Controls (1) </li></ul><ul><ul><li>New as per August 2009 </li></ul></ul><ul><ul><li>Transit = transport of non-EU dual-use items entering and passing through the EU with a destination outside the EU </li></ul></ul><ul><ul><ul><li>Non-EU </li></ul></ul></ul><ul><ul><ul><ul><li>other than EU origin </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Not in EU free circulation </li></ul></ul></ul></ul><ul><ul><li>National Rules may impose prohibitions or license requirements for Annex I items if: </li></ul></ul><ul><ul><ul><li>National “Catch All” 1 could apply (WMD items) </li></ul></ul></ul><ul><ul><ul><li>National “Catch All” 2 could apply (Military Use items for embargoed countries) </li></ul></ul></ul><ul><ul><li>National Rules may impose prohibitions or license requirements for non-Annex I items if: </li></ul></ul><ul><ul><ul><li>National “Catch All” 1 could apply (WMD items) </li></ul></ul></ul>
  11. 11. Intra-EU licensing requirements (3) <ul><li>Transit Controls (2) </li></ul><ul><li>Who is subject to transit controls? </li></ul><ul><ul><li>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 </li></ul></ul><ul><ul><li>“ Exporter” under EU Dual Use Regulation = </li></ul></ul><ul><ul><ul><li>Person/company on whose behalf re-export declaration is made: </li></ul></ul></ul><ul><ul><ul><ul><li>Person/company who holds the contract with consignee and power to determine shipment </li></ul></ul></ul></ul><ul><ul><ul><ul><li>In the absence of a contract: Person/company who holds the power to determine shipment </li></ul></ul></ul></ul><ul><ul><li>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) </li></ul></ul>
  12. 12. Intra-EU licensing requirements (4) <ul><li>Transit Controls (3) </li></ul><ul><ul><li>Example: Germany </li></ul></ul><ul><ul><ul><li>Customs will block transit items which are or could be for WMD end-use </li></ul></ul></ul><ul><ul><ul><li>Customs notify German Export Administration (“BAFA”) </li></ul></ul></ul><ul><ul><ul><li>BAFA will then decide whether to impose licensing requirements or prohibition </li></ul></ul></ul><ul><ul><li>Example: Netherlands </li></ul></ul><ul><ul><ul><li>Discretionary 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 </li></ul></ul></ul><ul><ul><li>Example: UK </li></ul></ul><ul><ul><ul><li>License is required for: </li></ul></ul></ul><ul><ul><ul><ul><li>all transit of Annex I items </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Transit of non Annex I items which are or could be for WMD end-use </li></ul></ul></ul></ul>
  13. 13. Brokering licensing requirements (1) <ul><li>Brokering Controls (1) </li></ul><ul><ul><li>Brokering </li></ul></ul><ul><ul><ul><li>Buying/selling dual-use items located in non-EU country for transfer to non-EU country </li></ul></ul></ul><ul><ul><ul><li>Negotiating/arrangement of such buying/selling </li></ul></ul></ul><ul><ul><ul><li>Excluded are ancillary services: transportation, financial services, (re)insurance, general advertising, promotion </li></ul></ul></ul><ul><ul><li>License is required </li></ul></ul><ul><ul><ul><li>For Annex I items </li></ul></ul></ul><ul><ul><ul><li>Which are or could be for WMD use </li></ul></ul></ul><ul><ul><ul><li>Notification obligation for broker if he is aware of WMD use </li></ul></ul></ul><ul><ul><ul><li>Authorities then have discretionary power to impose licensing requirement </li></ul></ul></ul>
  14. 14. Brokering licensing requirements (2) <ul><li>Brokering Controls (2) </li></ul><ul><li>Who is subject to Brokering Controls? </li></ul><ul><ul><li>Any legal/natural persion resident or established in the EU engaging in brokering activities </li></ul></ul><ul><li>Brokering license </li></ul><ul><ul><li>For a set quantity of specified items moving between two or more non-EU countries </li></ul></ul>
  15. 15. Brokering licensing requirements (3) <ul><li>Brokering Controls (3) </li></ul><ul><ul><li>Example: Germany </li></ul></ul><ul><ul><ul><li>Imposes license requirement for all brokering of Annex I items </li></ul></ul></ul><ul><ul><ul><li>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 </li></ul></ul></ul><ul><ul><li>Example: the Netherlands </li></ul></ul><ul><ul><ul><li>Same as EU Regulation 428/2009 </li></ul></ul></ul>
  16. 16. Intangible exports <ul><li>Intangible Exports </li></ul><ul><ul><li>T ransmission 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 </li></ul></ul><ul><ul><li>Clarification EU Commission 26 January 2009: </li></ul></ul><ul><ul><ul><li>Transit of software, technology or technical assistance on carrier medium can be subject to transit controls </li></ul></ul></ul>
  17. 17. EU Export licences (1) <ul><li>Community General Export Authorisation </li></ul><ul><ul><li>For exports to: Australia, Canada, Japan, New Zealand, Norway, Switzerland, USA </li></ul></ul><ul><ul><li>Certain specific ECCN’s are excluded (certain nuclear items/software, pathogenes and GMO, missile related parts & technology) </li></ul></ul><ul><ul><li>Exporter must register with national authorities to use CGEA </li></ul></ul><ul><ul><ul><li>May also be done retroactively, but no later than 30 days after export </li></ul></ul></ul><ul><ul><ul><li>License automatically granted </li></ul></ul></ul><ul><ul><li>CGEA can not be applied when: </li></ul></ul><ul><ul><ul><li>Exporter is notified of or aware of possible: </li></ul></ul></ul><ul><ul><ul><ul><li>military end use in arms embargoed country </li></ul></ul></ul></ul><ul><ul><ul><ul><li>WMD end use </li></ul></ul></ul></ul><ul><ul><ul><li>Goods are destined for free zone or free warehouse in of the 7 CGEA destination countries </li></ul></ul></ul>
  18. 18. EU Export licences (2) <ul><li>Individual export License </li></ul><ul><ul><li>One exporter, one end-user/consignee, one or more dual use items </li></ul></ul><ul><li>Global export license </li></ul><ul><ul><li>One exporter, more end-users/consignees in more non-EU countries, for type/category of dual use items </li></ul></ul><ul><li>National general export license </li></ul><ul><ul><li>Under national legislation </li></ul></ul><ul><ul><li>One exporter, one end-user/consignee, one or more dual use items </li></ul></ul><ul><ul><li>Certain ECCN are excluded (same as GCEA) </li></ul></ul><ul><ul><li>Can not be applied in case of national “Catch Alls” 1 through 3 </li></ul></ul><ul><ul><ul><li>Exporter is notified/aware of potential WMD, military end use ) </li></ul></ul></ul>
  19. 19. EU Export licences (3) <ul><li>Project Licence </li></ul><ul><li>Cross border projects involving exports from multiple EU countries </li></ul><ul><ul><li>License application in EU country where contractual exporter is established </li></ul></ul><ul><ul><li>Only for individual export license (one exporter, one consignee, may include multiple dual use items) </li></ul></ul><ul><ul><li>For all destinations other than GCEA countries (Annex I items), and all destinations (Annex IV items) </li></ul></ul><ul><ul><li>Exporter must indicate location of other goods/technologies in application </li></ul></ul><ul><ul><li>Consultation between EU country that receives application and other EU countries </li></ul></ul><ul><ul><ul><li>Objections must be raised within 10 working days </li></ul></ul></ul><ul><ul><ul><li>May be extended in ‘exceptional cases’ up to 30 days </li></ul></ul></ul><ul><ul><ul><li>Objections are binding: one EU country refuses no license granted! </li></ul></ul></ul><ul><ul><ul><li>No response: no objections </li></ul></ul></ul>
  20. 20. EU Export Licences (4) <ul><li>Licensing criteria: </li></ul><ul><ul><li>Previously: obligations of EU countries under non-proliferation regimes, EU CFSP and/or other sanctions & embargoes (UN etc.) </li></ul></ul><ul><ul><li>Now also: Exporters Internal Compliance Program = relevant factor </li></ul></ul><ul><ul><ul><li>Global license applications </li></ul></ul></ul><ul><ul><ul><li>Brokering license applications </li></ul></ul></ul><ul><ul><ul><li>EU countries favour no connection between licensing & ICP </li></ul></ul></ul>
  21. 21. Recordkeeping <ul><li>Previously: in accordance with the practice in force in the respective EU country </li></ul><ul><ul><li>Commercial documents such as invoices, manifests and transport documents containing sufficient information to identify: </li></ul></ul><ul><ul><ul><li>the description of the dual-use items </li></ul></ul></ul><ul><ul><ul><li>the quantity of the dual-use items </li></ul></ul></ul><ul><ul><ul><li>the name and address of the exporter and of the consignee </li></ul></ul></ul><ul><ul><ul><li>where known, the end-use and end-user of the dual-use items </li></ul></ul></ul><ul><li>Current: extended recordkeeping obligation for: </li></ul><ul><ul><li>Brokering </li></ul></ul><ul><ul><ul><li>nature of the items, technology or software </li></ul></ul></ul><ul><ul><ul><li>the period during which the items were transferred/subject of provision of intermediation services </li></ul></ul></ul><ul><ul><ul><li>destination of the transfers. </li></ul></ul></ul><ul><ul><li>3 years after export </li></ul></ul><ul><li>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) </li></ul>
  22. 22. Implementation (1) <ul><li>Common feature: Export of listed goods/technologies is prohibited </li></ul><ul><ul><li>Listed: EU Dual Use Reg Annex I </li></ul></ul><ul><ul><ul><li>May be supplemented on national level </li></ul></ul></ul><ul><ul><ul><li>May be supplemented by EU Sanctions regulations </li></ul></ul></ul><ul><ul><ul><li>“ Catch All” decisions on national level </li></ul></ul></ul><ul><ul><li>Unless licensed by national administration </li></ul></ul><ul><ul><ul><li>Categories of licenses are specified in EU Dual Use Reg </li></ul></ul></ul><ul><ul><ul><li>Additional (reporting and other) requirements may be imposed in licenses </li></ul></ul></ul><ul><ul><li>Unlicensed export/non-compliance with license conditions commonly defined as criminal offence </li></ul></ul>
  23. 23. Implementation (2) <ul><li>Transparency of administration varies substantially </li></ul><ul><ul><li>Some EU countries provide published guidance (e.g. UK, Germany, France), some do not (e.g. Belgium, Italy) </li></ul></ul><ul><ul><ul><li>Concrete licensing criteria </li></ul></ul></ul><ul><ul><ul><li>Controlled or “of concern” entities/individual lists </li></ul></ul></ul><ul><ul><ul><li>Published standardised license conditions (e.g. UK) </li></ul></ul></ul><ul><ul><ul><li>“ Catch all” additions to EU Dual Use control list may or may not be published </li></ul></ul></ul><ul><ul><ul><li>Some EU countries provide for institutionalised “control status” verification procedures (e.g. UK “rating enquiry”) </li></ul></ul></ul><ul><ul><ul><li>License application processing time varies between EU countries </li></ul></ul></ul>
  24. 24. Implementation (3) <ul><li>Licensing approach varies </li></ul><ul><ul><li>Some EU countries: emphasis on global licenses & ICP </li></ul></ul><ul><ul><li>Some EU countries: emphasis on individual specific licenses </li></ul></ul><ul><ul><li>8 Member States have created &quot;National General export authorisations“ </li></ul></ul><ul><ul><ul><li>Austria, France, Italy, Germany, Greece, Sweden, Netherlands, UK (OGEL, standardized conditions) </li></ul></ul></ul>
  25. 25. Thank you for your attention <ul><li>Jasper Helder </li></ul><ul><li>Bird & Bird LLP </li></ul><ul><li>T + 31 6 46 17 94 82 </li></ul><ul><li>E jasper.helder @ </li></ul><ul><li>W </li></ul>