On 28 September 2016, the European Commission published its
proposal to modernise the regulation on dealings in dual-use items
(the EU Dual-Use Regulation). Modernisation was deemed necessary to
keep up with new threats and rapid technological changes. The
proposal attempts to make export controls more efficient,
consistent and effective.
The proposal has received some criticism, mainly about the
extension of the catch-all provision to include products and
technology that may cause human rights violations. There is concern
that this would unnecessarily complicate the foreseeability and
accessibility of export authorisations.
All eyes are now on the ongoing legislative process. In
practice, adoption of the proposal in its current form will likely
mean that companies will face additional licensing, reporting and
other regulatory requirements on newly-added products and
technologies under export control. It will also require additional
due diligence related to the expanded catch-all provision. It is
therefore important to follow ensuing developments. We will keep
you informed of these.
A draft of the proposal was leaked a few months before
publication, but the contents of the leaked document appear to have
largely remained the same. The proposal aims to strike a balance
between ensuring a high level of security and adequate
transparency, and maintaining the competitiveness of European
companies and legitimate trade in dual-use items. Specifically, the
Commission proposes to make export controls more efficient,
consistent and effective. It also proposes to simplify the
administrative process, and controls on technology transfers. The
proposal also foresees harmonisation of controls on brokering,
technical assistance and transit of dual-use items throughout the
EU, and the implementation of specific provisions targeting
terrorism and human rights violations.
The proposal inspired comments and expectations in relation to
changes such as the intensified focus on software and
cyber-surveillance technology, which could lead to violations of
human rights. It now includes cyber-surveillance technology as a
dual use item listed in a new annex to the regulation. This annex
has not yet been published but may include items such as location
tracking devices, interception equipment, intrusion software and
other items. However, the consequences of the inclusion of
cyber-surveillance technology are still difficult to foresee, since
the categories of these items are broadly defined. Therefore,
further specification of 'cyber-surveillance technology' is
required in order to determine the effects on exports in the cyber
and technology industry in Europe.
Another amendment that is the subject of much debate is the
expansion of the catch-all provision of the regulation. In the
proposal, this provision includes potential violations of human
rights and humanitarian law, and the potential use of goods in
connection with acts of terrorism as a basis for the imposition of
an ad hoc licence obligation on the export of non-listed dual-use
items. This expansion of the catch-all control was said to
frustrate the Commission's objective of clarifying and
harmonising the definition and scope of catch-all provisions to
ensure uniform application throughout Europe. It has led to
questions concerning the practical use of such undefined terms.
Further interpretation and guidelines are needed to provide clarity
to exporters on when an export may need a licence.
Besides the expansion of the catch-all provision, the scope of
the regulation is also broadened by the requirement that European
parent companies must seek approval for brokering activities by
their non-EU subsidiaries as well.
All eyes are now on the ensuing legislative process. Practical
effects of the adoption of the proposal in its current form would
additional requirements with regard to licensing, reporting,
and other regulatory requirements on newly added technologies,
additional due diligence related to the expanded catch-all
In light of this, it is important to follow further developments
and we will, of course, keep you informed.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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