Dual-use regulation – what you need to know for export

What does the EU Dual-Use Regulation actually regulate and what do exporters need to know? What are dual-use goods and what makes them so problematic? When is an approval requirement and are my goods affected by such an obligation? What exactly do I have to consider when exporting? In the following we would like to give you a first overview of the most important regulations of the Dual-Use Regulation of the European Union.

The Dual-Use Regulation affects all exporters

Export control in the cross-border movement of goods is always an important issue for companies. Therefore, even before dealing with customs duties and other import charges, a company should first check whether the goods to be exported are allowed to leave the domestic market without further ado or whether they may not be subject to strict export controls.

The German export control system is fundamentally based on the freedom of foreign trade. However, this freedom also requires a high degree of individual responsibility on the part of each company.

Every company decides autonomously and on its own responsibility to conclude contracts, export goods, software and technologies, provide services abroad or make its know-how available elsewhere. However, this freedom of decision then goes hand in hand with the obligation to independently examine whether the traded goods are subject to any restrictions or licensing obligations in foreign trade.

Export restrictions usually have a security policy background. In particular, the provisions of the Dual-Use Regulation are detailed and strict in this respect. Violations of the dual-use regulation may result in high fines or even criminal penalties.

In view of these consequences, it is therefore advisable for entrepreneurs to consider the question of whether it might not be sensible for them to establish an appropriate compliance program.

Why export control is important

In foreign trade, the principle of the free movement of goods initially applies at both national and European level. This means that all goods and services can in principle circulate freely within the framework of a uniform competition system – which means that in principle all goods can be exported from any country and imported into any country.

For very specific reasons, however, exceptions to this principle can also be made. Such an exception is always conceivable if orders and restrictions of trade obligations appear necessary with a view to safeguarding certain higher-ranking objects of protection.

The central goal of export control is to prevent a threat to Germany or its allies from conventional weapons and weapons of mass destruction. Moreover, German exports to crisis regions should neither exacerbate conflicts nor contribute to internal repression or other serious human rights violations. Last but not least, export controls also serve to enforce embargo decisions of the United Nations Security Council and the implementation of EU embargo regulations.

Regulation (EC) No 428/2009 of 5 September 2009, the so-called Dual-Use Regulation, is intended in particular to ensure that dual-use items are effectively and effectively controlled when they are exported from the European Union. This control, which takes place through a common export control system, is necessary to ensure that the international obligations and responsibilities of the Member States and the European Union with regard to the non-proliferation of certain goods are respected.

Tip: The lists of goods listed in the annexes to the Dual-Use Regulation are regularly reviewed, updated and processed in order to adapt them to new scientific and technical knowledge and to counter any new security risks that may have arisen in the meantime. Companies that export sensitive goods should therefore regularly check whether the goods they export have in the meantime been included in the annexes of the dual-use regulation.

In the Regulation, the European Union has paid particular attention to the re-export and final recovery of goods.

What does the Dual-Use Regulation regulate?

In Regulation (EC) No 428/2009, the EU established common licensing requirements and procedures for its Member States for the export of dual-use items.

Dual-use items are those which can be used in any way for both civilian and military purposes.

This naturally raises the question of what exactly the term “goods” actually means. In this respect, it is important to know that the term “goods” under export control law is much broader than the term “goods” under customs law. Thus, the term “goods” does not only include physical objects. Rather, the goods covered by the Dual-Use Regulation also include certain chemicals, machines and materials. But software and special technologies can also fall under the dual-use concept.

Article 3 of the Dual-Use Regulation (EC) No. 428/2009 stipulates that the import of all goods listed in Annex I of the Dual-Use Regulation is subject to authorisation.

In the case of listed goods, it is therefore comparatively easy to check whether your own goods are subject to an authorisation requirement, although – as you will see later – considerable problems may arise in individual cases. However, the situation is problematic with regard to a regulation contained in Article 4 of the Dual-Use Regulation. Accordingly, the export of non-listed dual-use goods may also be subject to authorisation (so-called catch-all offence).

Tip: Please note – the Dual-Use Regulation also applies to goods that are merely transacted through the territory of the Community. This also applies to goods which are not placed under a customs treatment other than the external transit procedure or which are merely placed in a free zone or free warehouse, as they do not have to be recorded in approved stock records.

Do my goods fall under the dual-use regulation? How will I know?

As already mentioned, export control is one of the core areas that companies have to deal with. This, however, raises the question of how companies can now actually determine whether their exported goods are subject to authorisation.

In principle, there are two ways in which you can check whether you are exporting goods subject to approval in your company yourself:

You can recognise that listed dual-use goods are subject to authorisation by the fact that the corresponding goods are listed either in Annex I or in Annex IV of the Dual-use Regulation (EC) No 428/2009.

In Annex I of the Dual-Use Regulation you will find all dual-use goods that are uniformly controlled throughout the European Union. The annex is comprehensive and, due to its length, quite confusing in some areas. However, they may make use of the nomenclature of Annex I to the Regulation.

Annex I is divided into categories and genera and also contains an index in alphabetical order. A first impression of the type of goods covered by the Annex can be obtained by looking at the various categories. In total, Annex I to the Regulation contains ten different categories, subdivided as follows:

Category 0Nuclear materials, plants and equipment
Category 1Special materials and associated equipment
Category 2Material processing
Category 3General Electronics
Category 4Computer
Category 5Telecommunications and Information Security
Category 6Sensors and lasers
Category 7Aeronautical electronics and navigation
Category 8Marine and ship technology
Category 9Spacecraft and propulsion technology

You can also use the index to search specifically for the goods you export. With regard to the index, however, there is the problem that only one very specific term is chosen for the transfer of goods. Related or alternative terms with the same meaning that are used synonymously are no longer included in the index. If a company has a very specific term in mind for the goods it exports, it can happen so quickly that the need for approval of the goods is accidentally overlooked.

Tip: Product knowledge and technical understanding are required to understand and comprehend the contents of Appendix I. Employees entrusted with checking and reviewing the goods list should therefore have appropriate technical expertise and be trained accordingly.

It is also often recommended that you consult the electronic customs tariff (EZT-online), which is made available to you as an electronic information application on the website of the German Customs Administration, to find out whether you are subject to approval. However, the tariff number is not an exhaustive criterion to infer the inclusion of a good on the dual-use goods list. This is because the dual-use list only lists goods that are controlled on the basis of their technical properties. However, several similar goods with different technical criteria are always recorded under one goods tariff number. Therefore, the commodity tariff number cannot always make a conclusive statement about the obligation to obtain approval for a specific good. This should always be taken into account when working with the EGTC. In the event of doubt or uncertainty, however, it is advisable in all cases to carry out a review that goes beyond the company with regard to the possible sanctioning of your company.

Authorisation may also be required for non-listed goods

It can be particularly difficult for you to recognize the licensing requirement for goods that are not listed in the dual-use regulation.

To put it simply, goods not listed in the Dual-Use Regulation are always subject to authorisation if the exporter knows that the goods are to be exported for specific purposes or if the Federal Office for Economic and Export Control (BAFA) has informed the exporter of such a possible use.

It is conceivable that the obligation to obtain a permit for goods that are not listed in principle would apply in the following constellations:

  • The goods are intended or may be intended for use in connection with the development, manufacture, handling, maintenance, storage, detection, identification or operation of nuclear, biological or chemical weapons and missiles for such weapons
  • An arms embargo has been imposed on the buyer or destination country
  • The goods are or may be intended, in whole or in part, for use as an integral part of military equipment which has previously been unlawfully exported, or
  • The goods are or may be intended for the construction, operation or installation in civil nuclear installations in Algeria, Iraq, Iran, Israel, Jordan, Libya, North Korea, Pakistan and Syria

Apply for an export license at BAFA

All authorisations and authorisation procedures relating to dual-use items are the responsibility of the Member State authorities. In deciding whether to grant an authorisation for items listed in the Annexes, they shall take into account their obligations under international agreements on the non-proliferation and control of sensitive items in the same way as they take into account obligations arising from sanctions imposed by the United Nations Security Council. They should also consider national foreign and security policy as well as the final destination and the risk of circumventing the regulations.

The first point of contact for all questions relating to dual-use goods is the Federal Office for Economic and Export Control (BAFA).

In the event of uncertainty as to whether a good is included in a list, the exporter can request a so-called “information on the list of goods”. However, this information then only makes a statement as to whether certain goods are included in a list of goods. However, this does not yet constitute legally binding and comprehensive information on any obligation to obtain a permit.

If an exporter wishes to have the missing authorisation requirement established in a legally binding manner, he has only the option of applying for the issue of a so-called “zero reply”. If the BAFA issues a zero decision, then this only makes a statement about the specific export project and cannot be transferred to later projects. You can submit such an application online via the ELAN-K2 export system provided by BAFA.

Is subject to approval? No export without export licence!

If you already know that you are exporting dual-use items, you must follow two basic procedures. On the one hand, you must apply to BAFA for a corresponding export permit for your goods and on the other hand, you must go through the export procedure with the German customs administration.

The BAFA export licence can only be applied for by the exporter of the specific transaction and is only issued under strict conditions due to the security relevance of the transaction. You can submit your export application online. Additional documents will then have to be added to the application. For example, the applicant exporter must designate a person responsible for exports and this person must in turn sign the applications to be submitted. He is then responsible for compliance with the statutory regulations and for internal control within the company.

The customs export procedure is simpler and only requires an export declaration to the competent export office.

Tip: For the sake of completeness, we would also like to point out that prohibitions and/or licensing obligations for certain goods may arise not only from the Dual-Use Regulation, but also from other legal provisions. Examples are the Firearms Ordinance, the Anti-Torture Ordinance and the War Weapons Control Act

Ask us your questions about export control and the dual-use regulation.

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Lawyer Dr. Tristan Wegner

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