Member Article

The European Council has just adopted a new dual-use regulation. The new dual-use regulation is a recast of the current dual-use regulation and aims, among other things, to modernize European export controls in a number of areas. The regulation is directly applicable in all EU Member States and is expected to enter into force in 2021. In this Insight, Plesner's export control specialists outline the main changes resulting from the new dual-use regulation.

The new dual-use regulation (the "Regulation") is long awaited and has been under way since 2011, when the Commission published a Green Paper aimed at initiating a review of EU export controls in order to adapt it to the rapidly changing conditions in the modern world.

Once the European Parliament and the Council have signed the Regulation, it will be published in the Official Journal, which is expected to take place within the next few weeks. The Regulation enters into force 90 days after its publication in the Official Journal. The Regulation replaces the current dual-use Regulation (Regulation No 428/2009 as amended).

The Regulation seeks to modernize the field of export control by introducing regulation of certain areas of development and trends, including (i) the rapid scientific and technological development (eg cloud computing) and the growing availability of cyber-surveillance products and information and communication technologies that may be used in conflict human rights, (ii) developments in certain foreign policy areas and security risks, including growing challenges related to the proliferation of weapons of mass destruction and uncontrolled access to biological and chemical weapons materials in certain conflict areas; and (iii) the lack of uniform application of EU export controls; Member State level as well as insufficient exchange of information and coordination between Member States.

The main changes in European export controls resulting from the Regulation are set out below. 

Modernization of control provisions

On the basis of experience gained under the current dual-use Regulation and in order to address new developments, the following control provisions of the Regulation are clarified, simplified and improved:

• The definition of "dual-use products" is clarified so that all products that can be used for the design, development, production or use of nuclear, chemical or biological weapons or their means of delivery are by definition covered
• The definition of "exporter" is changed to clarify the application of controls on natural persons who may be "exporters", in particular in relation to the transfer of software or technology
• A definition of "technical assistance" is introduced and controls are harmonized
• A definition of "internal compliance program" or "ICP" is introduced, and its implementation is at the same time made a condition for obtaining a global execution permit.
• The definition of "broker" and "brokerage" is now extended to include legal persons and partnerships which are not domiciled or domiciled in a Member State and which carry on brokerage activities within the territory of the European Union.
• The rules on transit control in relation to non-listed products and military end uses are harmonized
  
  

Control of the export of cyber surveillance products

The Regulation introduces a new definition of "cyber-surveillance products" as well as new provisions on catch-all control of cyber-surveillance products not listed in the checklist in Annex I to the Regulation for the purpose of harmonizing export controls in this field.

In order to ensure effective control in this area, Member States are required to exchange information with each other and with the Commission, in particular on the technological development of cyber-surveillance products.

Optimization of licensing schemes

In order to reduce the administrative burdens associated with the various authorization schemes, the authorization procedures are harmonized by the following general amendments:

• The different permit types as well as common permit criteria for the respective permit types are determined, including e.g. determining certain periods of validity and stipulating that a global export authorization basically requires the implementation of an internal compliance program (ICP);  
• A definition of "export permit for a large project" is introduced, which allows for longer validity periods for individual or global export permits in relation to large-scale projects.
• New EU General Export Licenses (EUGEAs) are introduced for encryption and in-house software and technology transfer 
• The Commission is empowered to modify destinations or products covered by EUGEAs in order to ensure that the Regulation becomes more flexible and able to respond to technological or economic developments.
  
  

Modernization of government work

The regulatory framework for the work of the authorities is being improved in order to promote more effective and consistent export controls.

The amendments entail, inter alia, increased access to the exchange of information between the national competent authorities and the Commission, which will contribute to more efficient authorization procedures for all national competent authorities, and strengthen the authorities' access to controls, including technology to third countries. 

See the new dual-use regulation here