The EU issued its current dual-use regulation in 2009, which is now drawing criticism for being out of date. Legislative changes have been discussed by the European Commission, the member states, and EU Parliament since 2016 with plans to implement in 2020. But corona has now unexpectedly paused the reform
The dual-use ordinance regulates certain EU-wide licensing requirements and procedures for exporting dual-use goods. This includes goods that can be used for both civil and military purposes.
The aim of the regulation is to create an efficient and effective export control system to ensure the security within free international trade worldwide.
But how do you know if the exported goods are subject to licensing?
Because the risk of possible sanctions for violation of the Dual-Use Regulation is high, conducting an external audit is often recommended for companies.
Ask us about export control and the dual-use regulation — our customs attorneys would be happy to help you.
What does the new dual-use regulation entail?
In order to keep up with new technological developments, Regulation (EC) No 428/2009 is currently being revised and reformulated. The emergence of massive global data networks that are vulnerable to attack as well as the growing availability of cyber tools, information, and communication technologies make new regulations and export restrictions necessary.
There was also increased evidence that surveillance technology exported from the EU fell into the wrong hands. It is said to have been used above all in connection with violent clashes in the “Arab Spring” and in armed conflicts to commit serious human rights violations.
What's new in the dual-use regulation draft?
- Inspections in the field of security-related electronics, telecommunications, and information technology
- Introduction of an “autonomous” EU list for cyber-surveillance technologies
- New regulations for “brokering“
- New definition of “exporter”
- Regulations for a level playing field among EU member states
- Modernization of export inspection
- Guidelines to support inter-agency cooperation
between licensing and customs authorities
- Regulations to reinforce prevention against the spread of weapons of mass destruction
- Regulations for uniform export controls in the EU member states
- Measures to promote effective exchange of information between countries
Expanded definition of “dual-use goods”
The commission wants to expand the definition of “dual-use goods” to explicitly include cyber-surveillance technology so that it will be seized in export inspections, going forward. Digital surveillance technologies that are misused to commit serious human rights violations and likewise pose a threat to international security or EU security interests are thus also considered dual-use goods. The criteria “suitable for military purposes ” is not included here.
Additionally, goods used in the design, development, production, use and deployment of nuclear, chemical and biological weapons are also classified as dual-use goods.
Brokering: subsidiaries outside the EU
The draft also contains new provisions on brokering: the definition is extended so that subsidiaries of EU companies based outside the Union are also considered brokers.
Brokerage services provided by non-EU nationals within the EU are also classified as brokering.
New definition of exporter
The biggest change likely concerns the defintion of “exporter”. Until now, under the dual-use regulation, the person on whose behalf an export declaration was submitted was considered to be the exporter. This meant that at the time of receipt of an export declaration, the person who holds a contract with a recipient in another EU country and has the power to determine if the goods will be exported would be considered the exporter.
Individuals who decided to make available or send software or technology via electronic media to a recipient in another EU country were also considered exporters.
The following extension is new in the draft:
New exporter term
An exporter shall also mean any natural person who transports the product to be exported and carries the goods concerned in his personal luggage.
Note: Any private person travelling across borders could be considered an exporter under the new dual-use regulation.
Human rights violations as a new justification
The draft also proposes to introduce the criteria of human rights violation as an explicit justification for export controls. The technology industry has expressed concern about this, fearing disadvantage to non-European competitors as a result of the new regulations.
One of the many challenges will then be to find an appropriate balance between security concerns and unnecessary or disproportionate restrictions on the technology industry. Security and trade should always be in balance.
Loopholes in the draft
Some questions still need clarification, however, before the dual-use regulation is adopted. It is not yet clear from the draft under what circumstances a human rights violation can be classified as serious.
Moreover, there is no indication as to what makes a particular technology likely to threaten security interests of the EU or its member states.
But the European Commission has confirmed one thing: the export of information and communication technology used, for example, by law enforcement and for research on internet security should not be made more difficult by the new regulation.
Your contact person
Anton SchmollAttorney-at-lawABC-Str. 2120354 Hamburg