EU Announces New Rules on Trade of Dual-Use Items

December 04, 2020

Nicola Bonucci, Jon Drimmer, Tara Giunta

On November 9, 2020 the EU announced a provisional agreement reached between the German Presidency and members of the European Parliament on a revised regulation setting out a new regime for the control of “dual-use” goods – e.g., items normally used for civilian purposes but which may have military and other applications, including exports, brokering, technical assistance, transit and transfer of dual-use items.

These new regulations - to be adopted by the end of the year and to enter into force in 2021 - will update regulations instituted in 2009, necessitated because of “the changing technological, economic and political circumstances” (from EU press release).

A 400-page draft of the regulation (with a number of technical annexes ) is now available[1] but for those who are not brave enough to try to read the entire document in detail, the press release issued by EU provides the following detailed description:[2]

To prevent human rights violations and security threats linked to the potential misuse of cyber-surveillance technology, the new rules include provisions subjecting covered items to stricter export controls in certain circumstances.
Moreover, the regulation will include an EU-level coordination mechanism which allows for greater exchange between member states concerning the export of cyber-surveillance items.
The regulation introduces two new, general EU export authorizations for the export of dual-use items – one for cryptographic items and one for intra-group technology transfers under certain circumstances – intended to reduce the administrative burden for both companies and licensing authorities.
The regulation strengthens the enforcement through improved cooperation between licensing and customs authorities, and introduces mechanisms allowing member states to strengthen their cooperation in this area.
The regulation also introduces a new provision on transmissible controls, allowing, in certain cases, a member state to introduce export controls on the basis of the legislation established by another member state, thereby allowing for a cross-border effect of member states’ export controls.
The regulation harmonizes at EU level the rules applicable to certain services with regard to dual-use items currently regulated at national level (technical assistance).
Finally, new reporting rules will allow for more transparency on trade in dual-use items while at the same time respecting the confidentiality of trade secrets and of national security interests.

In presenting the new rules, the German Minister for Economic Affairs and Energy and Chair of the EU Council indicated that the EU “will in the future be better equipped to allow legitimate trade to be carried out smoothly, but also to put an emphasis on control of certain technologies, especially cyber-surveillance items, which can be misused in connection with human rights violations.”

It is useful to recall that in September, the U.S Department of State issued “Guidance on Implementing the UN Guiding Principles for Transactions Linked to Foreign Government End-Users for Products or Services with Surveillance Capabilities,”[3] which provides guidance on human rights due diligence and monitoring for certain kinds of dual-use items.

Both documents appear to take a balanced approach to preventing prevent misuse of surveillance technology, though the EU initiative appears to be broader and more prescriptive. Absent coordination, however, the multiple initiatives could lead to a fragmentation of the legal and policy framework. The time thus appears ripe for internationally-agreed guidance for this important and sensitive sector.

[1] https://data.consilium.europa.eu/doc/document/ST-12798-2020-INIT/en/pdf

[2] https://www.consilium.europa.eu/en/press/press-releases/2020/11/09/new-rules-on-trade-of-dual-use-items-agreed/

[3] https://www.state.gov/release-of-u-s-department-of-state-guidance-on-implementing-the-un-guiding-principles-for-transactions-linked-to-foreign-government-end-users-for-products-or-services-with-surveillance-capabilities/