Export control is legislation that regulates the export of goods, software and technology. Some items could potentially be useful for purposes that are contrary to the interest of the exporting country. These items are considered to be controlled. The export of controlled item is regulated to restrict the harmful use of those items. [1] Many governments implement export controls. [2] Typically, legislation lists and classifies the controlled items, classifies the destinations, and requires exporters to apply for a licence to a local government department.
A wide range of goods have been subject to export control in different jurisdictions, including arms, goods with a military potential, cryptography, currency, and precious stones or metals. Some countries prohibit the export of uranium, endangered animals, cultural artefacts, and goods in short supply in the country, such as medicines.
The United States has had export controls since the American Revolution, although the modern export control regimes can be traced back to the Trading with the Enemy Act of 1917 . A significant piece of legislation was the Export Control Act of 1940 which inter alia aimed to restrict shipments of material to pre-war Japan. In the United Kingdom, the Import, Export and Customs Power (Defence) Act of 1939 was the main legislation prior to World War II. [3]
Post WWII, the Coordinating Committee for Multilateral Export Controls (CoCom) was founded in 1948, [4] and continued until 1994. It was an early Multilateral export control regime.
In most export control regimes, legislation lists the items which are deemed 'controlled', and lists the destinations to which exports are restricted in some way. The lists of what is controlled often arise from some harmonised regime.
Goods may be classified using a various classification systems. The United States uses the Export Control Classification Number (ECCN), [5] India uses the Special Chemicals, Organisms, Materials, Equipment and Technologies (SCOMET) list [6] and Japan uses Ministry of Economy, Trade and Industry (METI) lists. [7]
Some items may be categorised as "designed or modified for military use", some as dual use , and some will not be export controlled. [8] Dual use means that the device has both a civilian and a military purpose. [9]
In several jurisdictions, classifications distinguish between goods, equipment, materials, software and technology; the last two being often considered intangible. Classifications may also be by destination purpose, including cryptography, laser, sonar and torture equipment.
An exporting country will consider the impact of its export control policy on its relationships with other countries. Sometimes countries will have trade agreements or arrangements with a group of other countries, which may specify that licences are not required for certain goods. For example, within the EU, licences are not required for shipping civilian goods to other member states; [10] however, licences are required for restricted, military goods. [11]
The exporting country's legislation will demand certain handling for goods in different classifications to destination countries. This could include:
The end user of the goods or some broker will typically be declared, and similar restrictions apply as to countries.
Some individuals or entities may be listed, so that even if the item could normally be exported to the country without a licence, additional restrictions apply for that individual or entity. [12]
For any given item being exported, the categorisations will typically lead to different treatments for a given destination, e.g. 'No Licence Required' (NLR) or 'Licence Required'. [8]
If a licence is required for the item, to the destination, the licence issuer will require information as part of the licence application, typically including:
The declaration from end user could be an End User Undertaking (EUU), [13] an End User Statement (EUS) [14] or an End-user certificate. These EUUs will typically include intended use, and make assurances as to the applications for the goods, e.g. not to be used within missiles.
Licences can subsequently be obtained from the appropriate government department in the exporter's jurisdiction.
A licence will usually have some terms, such as:
The process of classification, assessment, licensing, and then confirming the compliance with the licence terms is typically handled by government agency in the exporting country. These include BAFA (The Federal Office of Economics and Export Control) in Germany, [15] BIS (and E2C2) in US, ECJU in UK.
During the development of the Lockheed SR-71 Blackbird supersonic spy plane, the US used 'Third-world countries and bogus operations' in order to obtain sufficient ore to create the titanium for the aircraft [16]
These are known as Multilateral export control regimes
The regimes mean that supporting nations will tend to have similar classifications in their individual legislation. It reduces the administrative load on each of the nations. The harmonised regimes reduce the opportunity for 'tourism' where a particular country is chosen for its lax controls pertaining to some particular item. Even with the harmonised regimes, some countries choose to augment with additional classification, e.g. the USA with its 'xx99x' ECCN classifications in their Commerce Control List. [17]
There are several sets of legislation covering exports in the US.
The coordinating body for EAR is the Export Enforcement Coordination Center (E2C2), [18] and the web-based licence system is SNAP-R. [19] Several of the functions of the US Bureau of Industry and Security (BIS) pertain to Export Control, including the Office for Export Enforcement.
For ITAR, the coordinating body is the Directorate of Defense Trade Controls.
Companies engaging in export may be required to establish an Export Management and Compliance Program.
There are some particular treatments for cryptographic exports, where the NSA may require separate notification of intent to publish cryptographic software. [20]
On October 7, 2022, the U.S. Department of Commerce announced a major set of export control policy changes toward China, with a focus on Artificial Intelligence and semiconductor technologies. [21] In January 2023, these export controls were expanded multilaterally in an agreement between the United States, the Netherlands, and Japan. [22]
The export control legislation applying in the EU is Council EU Regulation 2021/821, which came in to force 2021-09-09. This recast the previous legislation 428/2009. [23] The regulation demands that authorisations are required for exports of sensitive items to certain places.
Competent authorities in each EU member state provide the licensing service, e.g. BAFA in Germany, SBDU in France and UAMA in Italy. [24]
Organisations performing exports should have an Internal Compliance Programme (ICP).
The principal legislation is the retained EU regulation 428/2009 which still applies with amendments, because of the EU Withdrawal Act. [26] This regulation is harmonised with the Export Control Order. [27] The newer 'recast' EU regulation 2021/821 does not apply to mainland Britain since that comes after Brexit. There is the similar-sounding Export Control Act of 2002 which grants powers to the Secretary of State to impose such rules and this still applies. [28]
Since Brexit, the Northern Ireland Protocol keeps Northern Ireland within the UK customs territory, but de facto means Northern Ireland is aligned with the EU customs. Consequently exports from Northern Ireland are subject to the EU regulations, [26] including the new EU regulation 2021/821. [29] No export licences are required for movement of dual-use goods between Great Britain and Northern Ireland. [26] The Windsor Framework doesn't appear to impact export control.
The export classifications are declared in the UK strategic export control lists. [30]
It is administered by the Export Control Joint Unit (ECJU), part of the Department for Business and Trade, [31] with a web-based administration system SPIRE. [32] (A new system LITE is being phased in since 2021, [33] with a public beta for SIELs only from September 2024. [34] ) ECJU also manage enforcement and audit of licence compliance. [35] It is recommended that companies involved in exports nominate staff, conduct training, keep records, perform internal audits and commit to compliance. [36]
Licences [37] include Standard Individual Export Licences (SIEL), [38] Open Individual Export Licences (OIEL) [39] and Open General Export Licences (OGEL) [40] also known as General Export Authorisation (GEA), formerly known before 2013 as an Open General Licence (OGL).
The Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies is a multilateral export control regime established on 12 July 1996, in Wassenaar, near The Hague, Netherlands. According to the Wassenaar Arrangement document, it was "established to contribute to regional and international security and stability by promoting transparency and greater responsibility in transfers of conventional arms and dual-use goods and technologies, thus preventing destabilizing accumulations. Participating states seek, through their national policies, to ensure that transfers of these items do not contribute to the development or enhancement of military capabilities which undermine these goals, and are not diverted to support such capabilities".
Customs is an authority or agency in a country responsible for collecting tariffs and for controlling the flow of goods, including animals, transports, personal effects, and hazardous items, into and out of a country. Traditionally, customs has been considered as the fiscal subject that charges customs duties and other taxes on import and export. In recent decades, the views on the functions of customs have considerably expanded and now covers three basic issues: taxation, security, and trade facilitation.
The Bureau of Industry and Security (BIS) is an agency of the United States Department of Commerce that deals with issues involving national security and high technology. A principal goal for the bureau is helping stop the proliferation of weapons of mass destruction, while furthering the growth of United States exports. The Bureau is led by the Under Secretary of Commerce for Industry and Security.
The Incoterms or International Commercial Terms are a series of pre-defined commercial terms published by the International Chamber of Commerce (ICC) relating to international commercial law. Incoterms define the responsibilities of exporters and importers in the arrangement of shipments and the transfer of liability involved at various stages of the transaction. They are widely used in international commercial transactions or procurement processes and their use is encouraged by trade councils, courts and international lawyers. A series of three-letter trade terms related to common contractual sales practices, the Incoterms rules are intended primarily to clearly communicate the tasks, costs, and risks associated with the global or international transportation and delivery of goods. Incoterms inform sales contracts defining respective obligations, costs, and risks involved in the delivery of goods from the seller to the buyer, but they do not themselves conclude a contract, determine the price payable, currency or credit terms, govern contract law or define where title to goods transfers.
International Traffic in Arms Regulations (ITAR) is a United States regulatory agency to restrict and control the export of defense and military technologies to safeguard national security and further its foreign policy objectives.
Non-tariff barriers to trade are trade barriers that restrict imports or exports of goods or services through mechanisms other than the simple imposition of tariffs. Such barriers are subject to controversy and debate, as they may comply with international rules on trade yet serve protectionist purposes.
The export of cryptography from the United States to other countries has experienced various levels of restrictions over time. World War II illustrated that code-breaking and cryptography can play an integral part in national security and the ability to prosecute war. Changes in technology and the preservation of free speech have been competing factors in the regulation and constraint of cryptographic technologies for export.
In politics, diplomacy and export control, dual-use items refer to goods, software and technology that can be used for both civilian and military applications.
The presence of the logo on commercial products indicates that the manufacturer or importer affirms the goods' conformity with European health, safety, and environmental protection standards. It is not a quality indicator or a certification mark. The CE marking is required for goods sold in the European Economic Area (EEA); goods sold elsewhere may also carry the mark.
The Export Administration Regulations (EAR) are a set of United States export guidelines and prohibitions. They are administered by the Bureau of Industry and Security which regulates the export restrictions of sensitive goods. The EAR apply to scenarios where something is exported from the US, re-exported from a foreign country, or transferred from one person to another in a foreign country. The EAR apply to physical objects as well as intellectual property such as software.
A controlled substance is generally a drug or chemical whose manufacture, possession and use is regulated by a government, such as illicitly used drugs or prescription medications that are designated by law. Some treaties, notably the Single Convention on Narcotic Drugs, the Convention on Psychotropic Substances, and the United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances, provide internationally agreed-upon "schedules" of controlled substances, which have been incorporated into national laws; however, national laws usually significantly expand on these international conventions.
VAT-free imports from the Channel Islands to the United Kingdom took place for a few years during the early 21st century as a result of low-value consignment relief (LVCR). This is a tax relief that applies to low-valued imports to the European Union, exempting them from value-added tax (VAT). Although the UK was a part of the EU from 1973 until Brexit in 2020, the Channel Islands were not and, unlike the UK, they did not charge VAT on purchases. The UK government applied LVCR to imports from the Channel Islands, resulting in the construction of distribution centres on the islands and the export of many low-valued goods from there to the UK. The practice was unilaterally brought to an end in April 2012 by HM Treasury, the finance department of the UK government.
The TARIC code is designed to show the various rules applying to specific products when imported into the EU. This includes the provisions of the harmonised system and the combined nomenclature but also additional provisions specified in Community legislation such as tariff suspensions, tariff quotas and tariff preferences, which exist for the majority of the Community’s trading partners. In trade with third countries, the 10-digit Taric code must be used in customs and statistical declarations.
Custom brokers or Customs House Brokerages are working positions that may be employed by or affiliated with freight forwarders, independent businesses, or shipping lines, importers, exporters, trade authorities, and customs brokerage firms.
Export restrictions, or a restriction on exportation, are limitations on the quantity of goods exported to a specific country or countries by a Government. Export restrictions could be aimed at achieving diverse policy objectives such as environmental protection, economic welfare, social wellbeing, conversion of natural resources, and controlling inflationary pressures. There are various forms of restrictions on export as defined by WTO's Trade Policy Reviews (TPR), for example, export duties, quantitative restrictions, voluntary export restrictions, export prohibitions and licensing requirements. Although some countries apply export restriction of various policy purposes, restrictions on exports provide price advantage for the domestic industries because these restrictions create price difference between domestic goods compared to the price of the same goods to foreign investors. Export restrictions don't always provide benefits for the country and more income for the government. In the field of agriculture and food sector export restrictions are aimed at protecting the domestic food security from international supply. During the food crises of 2007–2008, more than thirty countries imposed various export restriction measures such as quantitative export restrictions, prohibitions, export taxes, and price controls to protect the domestic food supply. However, this created additional pressures on the food crises by imposing high global prices and affecting the supply of food in the international market.
A Certificate of Origin or Declaration of Origin is a document widely used in international trade transactions which attests that the product listed therein has met certain criteria to be considered as originating in a particular country. A certificate of origin / declaration of origin is generally prepared and completed by the exporter or the manufacturer, and may be subject to official certification by an authorized third party. It is often submitted to a customs authority of the importing country to justify the product's eligibility for entry and/or its entitlement to preferential treatment. Guidelines for issuance of Certificates of Origin by chambers of commerce globally are issued by the International Chamber of Commerce.
The EUR.1 movement certificate is a form used in international commodity traffic. The EUR.1 is most importantly recognized as a certificate of origin in the external trade in legal sense, especially within the framework of several bi- and multilateral agreements of the Pan-European preference system.
The Office of Export Enforcement (OEE) is a part of the United States Department of Commerce, Bureau of Industry and Security.
The Federal Office for Economic Affairs and Export Control is a German federal agency. The BAFA is authorised to make the final decision on whether German goods are permitted for export.
The UKCA marking is a conformity mark that indicates conformity with the applicable requirements for products sold within Great Britain. The government intended that it should replace the CE marking for products sold in Great Britain. Both markings continue to be accepted in the UK market.