Customs Manager Ltd is delighted to present, in conjunction with WorldECR , a six-webinar series giving you the lowdown on the new EU export control regulation. (P)
This series has 6 sessions:
• Session 1: Overview of the key changes in a nutshell
• Session 2: The new cyber surveillance controls – what, why, how?
• Session 3: Could I be caught by catch-all?
• Session 4: Two new General Licences: Are they right for my company, and how do I use them?
• Session 5: The EU Export control regime – for non-EU companies
• Session 6: Putting it all together: What does the regulation mean for my ICP?
Let's explore Session 1.
Session 1: Overview of the key changes in a nutshell
In Session One, we move quickly through the key changes to the regulation, providing you with a checklist of areas to further explore – including, the new broader definitions of ‘exporter’, and broker, a new provision for member state information sharing, emphasis on cyber-surveillance and human rights concerns and broader catch-all provision. It also asks – and answers – whether, in practice, EU member states can now create their own control lists.
Script
Tom Blass, WorldECR: Tell me in a nutshell what the new regulation does.
Arne Mielken, Customs Manager Ltd: The new Export Control Regulation entered into force on 9 September 2021.
Overall Objectives:
1. tighten controls on trade in dual-use items – civilian goods and technologies with possible military or security use.
2. enhance the EU's capacity to protect human rights and support secure supply chains for strategic items.
Why is this needed?
to better respond to emerging threats in an increasingly volatile world.
Prime examples are the kind of “cyber-surveillance technologies” that can be misused for human rights violations.
What are the changes in a nutshell?
Well, before I say what does change, let me tell you what does NOT change:
The existing multilateral framework of export controls, namely the Wassenaar Arrangement, which forms the basis for many restrictions imposed by the regulation at the EU level remains. In other words, Annex A which holds the EU Dual-Use list does not change with this recast
The EU GEAs 1 to 6 does not change. They remain valid at the EU level and can be leveraged.
To those rules, however, and all others, there are some important modifications and enhancements.
Let me highlight a few now and some others a little later:
New and updated definitions – lots of legal updates, some improvements/effectiveness (e.g., the definition of exporter including carrying in personal luggage), reference to researchers and emphasis on natural persons.
Introduction of some concepts, essential to an effective Export Control System (e.g., enforcement, compliance, essentially identical transaction).
Innovative definitions e.g., Cyber-Surveillance Items and reference to risks associated with emerging technologies, not existing in the current Regulation.
Harmonisation of licensing procedures (e.g., the requirement for Internal Compliance Programmes, reporting, etc.). This one is very important for businesses.
There are two new General Export Authorisations on Intra-group export of software and technology (EU007) and Encryption (EU008).
Harmonisation of provisions and tightening of controls for services: Eu harmonisation of technical assistance, broker or supplier of Technical Assistance can be a non-EU resident or national;
There is partial “deemed export control” for Technical Assistance; provision on dual-use Technical Assistance to foreign nationals in the EU is now covered.
Regulation (EU) 2021/821 introduces a basis for EU autonomous controls allowing the EU to make its own decisions regarding cyber-surveillance items (goods and technologies) used or intended for use, in internal repression and/or the commission of serious violations of human rights and international humanitarian law. We will talk about this in detail on Thursday.
Tom Blass, WorldECR: What is the first thing that I need to do, as a result of the new regime?
Arne Mielken, Customs Manager Ltd:
Take this as an opportunity to review your supply chain for dual-use items and assess how the new rules affect you.
I would recommend a step-by-step approach, combing through the legislation, article by article (as far as it concerns businesses) asking yourself the key questions of the regulation about your supply chain.
Some obvious questions can easily determine if a new provision is in scope or out of scope for you:
If you are not involved at all in cyber-surveillance exports, there may be no need to consider this provision for your business. But what about dealing with countries where human rights abuses are suspected? Rather than being a matter that you could manage at export with an export authorisation, it appears more of a due diligence matter, so how strong are your due diligence checks? Do they need to be strengthened?
If you are not dealing with encryption or have no branch or subsidiary abroad (outside the EU), then no need to consider the new EU GEAs. But some national GAs may change, and so businesses need to review these to make sure you are trading with the latest permissions.
Another key point on the bucket list is to implement an ICP if not already done. And if you have one, the dual-use regulation is a great opportunity to update the current one.
Tom Blass, WorldECR: What is the new definition of ‘exporter’ under 821?
Arne Mielken, Customs Manager Ltd:
The definition of an ‘exporter' also applies to any natural or legal persons or any partnerships. This now includes also researchers involved in dual-use technology transfers.
The person that
contracts with the consignee in the third country and/or has the power to determine the sending of the items out of the EU.
transmits software or technology electronically to a destination outside the EU or makes them available in the electronic form to a person outside the EU any natural person carrying the dual-use items in the person’s baggage
Tom Blass, WorldECR: Is there anything really important for non-EU companies to know?
Yes, I would at least 5 points that are important for exporters from non-EU countries that move goods through the EU, such as the UK.
1. There are no extraterritorial controls in the EU like in the US, but this does not mean you can ignore EU export controls.
2. Don’t assume that the rules in your country as regards export controls are the same as in the EU, even where your country and the EU are signatories to the Wassenaar Agreement.
3. Remember that this regulation enables the EU to implement autonomous controls and so it may be that, in the future, there will be controls that do not exist in your country.
In the future, there will be an EU mechanism for human rights controls on cyber-surveillance exports, including the publication in the Official Journal (C series) of an “EU watch list”, that also non-EU companies need to know about.
There is also a mechanism for the EU to “react rapidly to new risks associated with emerging technologies”, including the publication in the Official Journal of national controls on such emerging dual-use technologies;
There are practical changes, too.
4. If you are moving dual-use items through the EU, think about the transit changes. There is a certain level of harmonisation and revision of provisions on transit, to make it more effective in practice (e.g., any MS can prohibit a transit through its territory).
5. Question of jurisdiction. Next, remember that when a dual-use item enters the EU and then are exported, third-country companies may need to make an export control application in the Member States that the Dual-Use Items are. This often requires a person in the EU, to be held legally responsible. How will you get a Polish or Slovak Export Control licence though?
Tom Blass, WorldECR: Will the new regulation be applied uniformly across the EU?
Arne Mielken, Customs Manager Ltd:
The regulation is directly appliable across all of the EU 27, so yes the rules are the same. But not all rules can be acted upon right away.
We are now at the implementation stage, so expect gradual changes and amendments to national licences and processes and procedures.
I don’t expect a disruptive change in the next weeks. The new Regulation requires actions for the implementation of new rules:
Expect provision of guidelines to exporters and licensing authorities (e.g., due diligence for human rights, internal compliance programmes, etc.), so this should greatly assist with the uniform implementation.
With that said, do not forget that licences and decisions regarding licences are a national competence, so there will be a certain degree of divergence.
Tom Blass, WorldECR: Is there anything in the regulation that will make compliance easier for my company?
Arne Mielken, Customs Manager Ltd:
I think so. Some are five less practical consequences of these new rules. They are not tangible immediately but they should improve the way the EU authorises licences.
1. More harmonisation across the EU should be about a certain degree of stability and predictability, making it easier for businesses to plan and stay compliant. The rules allow for the EU countries to work more closely amongst themselves and with allies on emerging technologies. For example, there will be an “Emerging Technology Expert Group” (ETEG) on certain emerging technologies.
2. Secondly, transparency. This allows our businesses to know what the rules are and what we need to do, for all Member States. Again, this can boost compliance. There is enhancing information exchange between licensing authorities and the EU Commission to increase the transparency of licensing decisions; robust enforcement of controls
3. Training: There will be an EU capacity-building and training programme for Member States' licensing and enforcement authorities. May the EU could consider making this training available to exporters as well as the EU does in the area of customs.
4. Outreach to industry and transparency with the business community and the developing a structured relationship with the private sector through specific consultations of stakeholders by the relevant Commission group of Member States experts;
5. IT: There is a move to an EU electronic wide licensing platform rather than individual applications like is the case now. This could simplify and streamline processes and, therefore, improve compliance. There is a website already where the current system can be explored plus a promotional video which I have placed on the expert blog on customsmnager.org for participants to download and watch.
The most practical compliance area of compliance facilitation is, however, of course, the new two GEAs 007 and 008, no doubt. We will talk about that in a couple of weeks.
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