The Commission has issued non-binding guidance to companies producing and trading in dual-use products. Dual-use items are goods, software and technology that can be used for both civilian and military applications.
The EU controls the export, transit and brokering of dual-use items so as to contribute to international peace and security and prevent the proliferation of Weapons of Mass Destruction.
EU export controls reflect commitments agreed in key multilateral export control regimes such as the Australia Group, the Wassenaar Arrangement, the Nuclear Suppliers Group and the Missile Technology Control Regime.
Over time, controls on dual-use items have been subject to greater attention and legislative changes. EU export controls on dual-use products are set out in Council Regulation 428/2009 (EU Dual-Use Regulation).
On 5 August 2019 [1] the European Commission published non-binding guidelines on the core elements that EU enterprises should build on when implementing internal controls on exports and compliance programmes for international sanctions.
The Dual-Use Regulation already provided that, when assessing an application for a global export authorisation, Member States shall take into consideration the application by the exporter of proportionate and adequate means and procedures to ensure compliance with the provisions and objectives of this Regulation and with the terms and conditions of the authorisation.
Prior to July this year the presence of Internal Compliance Programmes hasn’t constituted an integral part of the examination of by EU Member States of applications for export permissions. This is different to the situation in the United States.
The main objective of the Commission Guidelines is to provide some guidance to the exporters to help them identify and mitigate risks associated with dual-use trade and to ensure compliance with the EU rules. It is also intended to support the competent authorities in the Member States in the assessment of risks, in the issuing export authorizations, in giving authorizations for brokering services, trans-shipments of non-EU dual-use items or in authorizations for the transfer within the EU of the particularly sensitive items listed in Annex IV of the EU Dual-Use Regulation.
The new Guidelines provide a precise list of the core elements needed for an effective internal compliance programme (ICP). These include:
For each core element, the section "What is expected?" describes the intended objective(s). The section "What are the steps involved?" further outlines possible actions for developing or implementing compliance procedures.
Furthermore, there are three annexes to the Guidance:
On 17 October 2019, the European Commission adopted a delegated regulation to integrate the 2018 reviews of the dual-use international framework, especially the Wassenaar Arrangement and the Missile Technology Control Regime. In other words, the list of controlled items and associated technologies is likely to change with the entry into force of the Regulation by the end of this year, in the absence of any objections from the European Member States or the European Parliament.
These changes will result in additional compliance obligations for companies and might require them to adapt their internal compliance programmes accordingly. They will have to review the changes proposed in the new list of dual-use items for any extension of controls, as well as engage with the relevant authorities to anticipate any changes to the compliance obligations, such as new due diligence requirements regarding dual-use items that may be used in the violation of human rights.
Nctm recommends that its clients trading in goods or services subject to dual-use rules, review their compliance programmes or, if they do not already have a compliance programme in place, move to implement one.
This article is for information purposes only and is not intended as a professional opinion. For further information, please contact Bernard O’Connor.
