Last reviewed 16 September 2016
Dual-use items are defined as goods, software, technology, documents or diagrams that have both civil and military applications and/or that can contribute to the proliferation of Weapons of Mass Destruction (WMD). Eric Davies discusses some of the specifics involved in trading these items.
They include raw materials, components and complete systems. The Department for International Trade (DIT) cites as examples aluminium alloys, bearings and lasers. It also notes that the definition covers items used in the production or development of military goods, including machine tools, chemical manufacturing equipment and computers.
In order to reduce the risks that these items may pose for international security, trade in dual-use items is controlled.
For members of the EU, the export control regime is primarily governed by the provisions of EC Regulation 428/2009 “setting up a Community regime for the control of exports, transfer, brokering and transit of dual-use items” (the EU Dual-Use Regulation).
The regulation sets out control rules for all Member States and lists more than 1800 dual-use items divided into 10 categories (the EU Control List). It also provides for co-ordination and co-operation in order to promote consistent implementation and enforcement throughout the EU.
A number of amendments have been made to the regulation. In October 2015, for example, the EU Control List in Annex I was updated to incorporate more than 100 changes, including the control of machine tools, avionics technology and aircraft wing-folding systems, spacecraft equipment and civil unmanned aerial vehicles (drones).
The UK also maintains its own Dual-Use List, which includes a small number of items subject to controls under UK-specific legislation.
Businesses wanting to export items on either the EU or UK list will need to apply to the Export Control Organisation (ECO) for an export licence.
The ECO issues three main types of licence: Open General Licences (OGLs), Standard Individual Export Licences (SIELs) and Open Individual Export Licences (OIELs).
OGLs are described as pre-published fixed framework licences designed for licensing controlled goods that are being exported to less restricted destinations or that are of a less restricted nature.
By contrast, SIELs only permit the export of specific items to a specific destination and to a stated consignee or end-user.
OIELs are a concessionary type of licence that permits multiple shipments of specific goods to multiple destinations.
The European Commission’s recent annual report on the implementation of Regulation 428/2009 (COM(2016) 521) presents data on dual-use exports. Based on figures for 2014 (the most recent available), it estimated that the total value of applications to export dual-use items was €59 billion. Controlled dual-use exports, therefore, represented some 3.4% of total extra-EU exports. Authorised dual-use trade amounted to €41.5 billion (2.4% of total extra-EU exports). The majority of those transactions were authorised under the 25,000 or so individual licenses issued in 2014.
The USA is the main destination for exports of dual-use items from the EU (by value). The USA is followed by China, Switzerland, Russia, the United Arab Emirates, and — in sixth place — Turkey.
In 2014, following a review of EU export control policy, the Commission outlined a number of options for modernising EU strategic export controls. In 2015, the Commission launched an impact assessment to evaluate the options it had identified. Formal proposals to amend Regulation 428/2009 are expected to be published this year.