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Dual-use items: new EU regulation tightens export rules

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23 June 2021

The European Union (EU) has created a new regulation for the control of exports, brokering, technical assistance, transit and transfer of dual-use items. 

The regulation modernises the EU’s dual-use regime. The changes were published in the Official Journal on 11 June 2021 and will come into force on 9 September 2021. Read the new rules.

Dual-use items

Dual-use items are, in broad terms, goods, materials, software and technology that can be used for civil and military purposes.

Changes to the regulation of dual-use items

The main features of the new regulation are as follows.

  • Stricter export control rules for cyber-surveillance technology. A new EU-level coordination mechanism to allow for greater exchange between Member States concerning the export of these items.
  • Two new general EU export authorisations – one for cryptographic items and one for intra-group technology transfers, under certain circumstances.
  • Enhanced enforcement of the controls through improved cooperation between licensing and customs authorities.
  • A new provision for emerging technologies. In certain cases, this allows a member state to introduce export controls on the basis of the legislation established by another member state. This enables a cross-border effect of member states’ export controls.
  • The EU-level harmonisation of rules applicable to technical assistance with regard to dual-use items (currently regulated at a national level).
  • New reporting rules aimed at creating greater transparency on trade in dual-use items.

Drivers for regulatory change

The new regulation responds to technological, economic and political changes since the existing rules were adopted in 2009. Read the existing rules.

In particular, the new regulation tightens controls on emerging technologies such as cyber-surveillance in order to prevent human rights violations and security threats.

Proposal negotiations

The initial legislative proposal was originally presented by the Commission in 2016. View the proposal.

However, negotiations remained deadlocked until the Council agreed on a negotiation mandate in June 2019. Read the mandate for negotiations.

The final version comes as a result of long negotiations between the European Parliament and the Council of the EU.

Impact of the regime

The new regime significantly bolsters the EU’s export control toolbox. The EU will be able to respond effectively to evolving security risks and new technologies. This comes amidst the EU’s continuing focus on human rights issues across the world. Read our article on the EU’s recent new human rights sanctions regime. 

It is unclear whether the UK Government will follow suit with equivalent changes at present. Therefore, the EU’s regime as of 31 December 2020 remains substantially in force in the UK.

Actions for businesses

Businesses that deal with dual-use goods will need to carefully consider the regime’s implications.

Many will welcome a relaxation in the rules to allow for easier intra-group technology transfers.

Businesses in the cyber-surveillance technology sector will need to ensure that they understand and comply with the new restrictions when they come into force. 

To discuss the implications of the new regime, contact us or your usual Allen & Overy contact.