Dual-Use Goods Export Control Regulation Upgraded
Frédéric Saffroy and Alice Combastet
Dual-Use Items (or “DUI”) are substances, materials, equipment – including technology, software and know-how – which may have both civilian and military uses, or which may contribute – in whole or in part – to the development, production, handling, functioning, maintenance, stockpiling, detection, identification or dissemination of weapons of mass destruction (nuclear, biological, chemical).
In accordance with international commitments of the European Union Member States, the export of these goods is subject to authorisation (License) under Council Regulation (EC) No. 428/2009 of May 5, 2009 setting up a Community regime for the control of exports, transfers, brokerage and transit of dual-use items. In France, these licenses are issued by the Dual-Use Items Department (“Service des biens à double usage” or “SBDU“) of the Ministry of the Economy.
After four years of work, the 2009 Regulation has been repealed and replaced since September 9, 2021, by Regulation EU 2021/821 dated May 20, 2021. This reform aims at strengthening and standardizing export controls of DUI, to prevent human rights violations and adapt to the latest technological developments.
This reform does not change the main principles of Regulation EC 428/2009, but strengthens its efficiency by introducing new measures, the main ones being:
1 – Strengthening the effective control of cyber-surveillance items – The export of means aiming at monitoring, intercepting, extracting, collecting or analysing individuals’ communications (voice and data) is subject to license – even if they are not listed in Annex I to the Regulation – if the exporter has been informed by the competent authority that these items are or may be intended for use in connection with:
• internal repression and/or
• the commission of serious violations of human rights and international humanitarian law.
Moreover, if the exporter is aware, according to its due diligence findings, that cyber-surveillance items not listed are intended for any of the above-mentioned uses, he shall notify the competent authority (article 2, § 20 and article 5 of the Regulation).
In France, the manufacture, import, possession, rental or sale of communication interception devices are subject to prior authorisation. Any failure is punishable by a five-year imprisonment and a 300,000 euros fine (article 226-3 of the Criminal Code)
2 – Extended control of technical assistance – Technical assistance in connection with a DUI covers many operations (development, testing, manufacturing, assembly, repair, maintenance) in many forms (instructions, advice, training) and various means (in writing, by phone, orally). Such assistance – now defined by the Regulation – is subject to license in the same way as the DUI to which it relates. In particular, like “deemed export” as per the US EAR Regulation, technical assistance provided in a Member State to a resident of a third country who is temporarily in the country, is subject to authorization (article 2, § 10 & 11, of the Regulation).
3 – Internal Compliance Programme (or “ICP”) by companies holding global export licenses – The content of such programmes – which should include due diligence measures – will be defined by Member States (article 2, § 21 and article 12.4, § 3 of the Regulation). However, the European Commission has already issued its general guidelines in Recommendation 2019/1318 of July 30, 2019, and just issued guidelines on ICP for research involving dual-use items (Recommendation 2021/1700 of September 15, 2021).
4 – Two new general export licenses – One for intra-group export of software and technologies (EU007) and the other (EU008) for encryption (article 12.1.d of the Regulation).
5 – Creation of “large project authorisation” –It is a license which is either individual or global, and is valid for a maximum duration of 4 years for a specific large project (article 2, § 14, and article 12.3 § 2 of the Regulation).
6 – Enhanced cooperation between Member States and the European Commission, including by the creation of a Dual-use Coordination Group chaired by a representative of the European Commission and composed of a representative of each Member States (articles 23 and 24 of the Regulation). Also, when a Member State establishes national control lists of non-listed DUI for which a license is required, this Member States shall inform the other Member States and the Commission (it was merely an option before). The other Member States shall take this “national control list” into account.
Finally, it should be noted that France has adopted a decree, in June 25, establishing a general national control list “low value” for the export of six categories of DUI (orders under EUR 5,000.00 euros), including riot gas masks, electronic system coolers, heat exchangers, pump parts or toxin and virus filtration elements. However, this licence excludes many destinations countries including China, Egypt, Israel, Lebanon or Russia.
Frédéric Saffroy, Partner and Alice Combastet, Associate in Compliance and Regulatory.