2018 EU Export Control Forum: What You Need to Know!

Posted by Arne Mielken on December 18, 2018

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european_commission_invasive_alien_speciesThe European Commission (EC) and the Austrian Presidency of the Council hosted the European Union 2018 Export Control Forum in Brussels. This year, the Export Control Forum focused on identifying new emerging technologies, such as artificial intelligence (AI) and smart ledger technology and discussing how legislation should change to allow authorities to impose controls when and where needed.

This year’s forum hosted a variety of guests including EU Member States, the European Parliament, and key industry & civilian thought leaders. It was an opportunity to exchange information about ongoing export control implementation in the EU, to review the state of current legislation regarding the modernization of EU export controls, and to discuss current geopolitical events that will effect export controls and legislation on a global scale.

The 2018 Export Control Forum was opened by the EU Trade Commissioner, Ms. Cecilia Malmström, Mr. Klaus Buchner, a member of the European Parliament, Rapporteur, and INTA, and Ms. Christine Göstl of the Foreign Trade Administration, the Federal Ministry for Digital and Economic Affairs, and the Austrian Presidency of the Council.

For each of the eight sessions, the EU assembled a panel of experts that would present a topic and then host an open dialogue with the attending stakeholders. Allow us to walk you through the top six sessions to find out how the changing market might affect your business:

The Proliferation Threat Landscape in 2018

The session on the proliferation threat landscape in 2018 had four main speakers with different views. These speakers included Mr. Diego Candano, the Chair of the Consultative Group of the Nuclear Suppliers Group (NSG), Ms. Luciana Sandu-Penker, the Deputy Head of the JCPOA Procurement Channel Section and the EU Delegation to International Organizations in Vienna, Ms. Karen Nies Vogel, the Director of the Office of Exporter Services of the Bureau of Industry and Security (BIS) of the US Department of Commerce, Ms. Aude Jalabert of Infineon Technologies and the European Semiconductor Industry Association (ESIA), and the moderator, Dr. Ian J. Stewart, Head of Project Alpha at King’s College in London.

Nuclear Suppliers Group (NSG)

Mr. Diego Candano was the first to present on this panel. He focused on discussing export controls and emerging threats. The NSG consists of 48 participating Governments to prevent the proliferation of nuclear weapons through the implementation of export controls for nuclear and nuclear-related material, “dual use” material, equipment, software and technology, without hindering international cooperation on peaceful uses of nuclear energy. The group manages the NSG Guidelines and Control Lists which are fully integrated parts of the EU and other regions. Amber Road holds the export control lists of more than 160 countries in its software solutions. Candano noted the importance of a strong rules-based international organization in tackling proliferation among other transnational security challenges. He reaffirmed the importance of the NSG for the global nuclear non-proliferation regime and reiterated the NSG’s firm support for the full, complete and effective implementation of the Treaty on Non-proliferation of Nuclear Weapons (NPT) as the cornerstone of the international non-proliferation regime.

The JCPOA and the Procurement Channel: A Non-Proliferation Success Story?

Ms. Luciana Sandu-Penker, the Deputy Head of the JCPOA Procurement Channel Section and the EU Delegation to International Organizations in Vienna presented next, updating participants on the latest developments of the JCPOA and the Procurement Channel. The JCPOA is a detailed, 159-page agreement with five annexes reached by Iran and the P5+1 (China, France, Germany, Russia, the United Kingdom, and the United States) on July 14, 2015. The agreement is meant to verify Iran’s compliance with the nuclear-related provisions. For certain specified activities with Iran for nuclear and non-nuclear civilian end-use, states need to obtain prior approval. The Procurement Channel is the mechanism to review these and obtain the necessary approval.

2018 US Export Control Reform Act

Developments in the the 2018 US Export Control Reform Act were presented by Ms. Karen Nies-Vogel. Nies-Vogel focused on an Advanced Notice of Proposed Rule-making in emerging technologies. She said the Department was specifically looking at new technologies, such as biotechnology, AI, Position, Navigating, and Timing technology, quantum information and sensing technology, data analytics and logistics technology, robotics, additive manufacturing (3D printing), smart ledger technology, advanced materials, and much more. Comments on the US Export Control Reform Act are due on December 19, 2018 with a proposed rule to be published sometime in 2019.

Impact of New Technologies on Export Controls: An Industry Assessment

Finally, Ms. Aude Jalabert of Infineon Technologies took the stage to explain how connected, intelligent factories of the future will be able to benefit from new value chain models by making optimal use of the new technological developments mentioned by Nies-Vogel in the previous presentation. As an example, she explained that the car of tomorrow will routinely feature advanced driver assistance using AI (e.g. deep learning) and sensor technologies (e.g. radar), will carry out communication & data exchange Car-2-Car (e.g. platooning) or Car-2-X (e.g. infrastructure, cloud services, edge computing). Future cars will also offer data security solutions such as combined hardware & software cryptography for secure authentication and blockchain (e.g. IOTAs Tangle System).

EU Export Controls in 2018: The State of Play

The second session to be held during the 2018 Export Control Forum focused heavily on recent updates for export controls in the EU. This panel consisted of Mr. Stéphane Chardon, the Coordinator for Export Control, DG TRADE in the European Commission, Mr. Bruno Leboullenger, the Chef du Service des Biens à Double Usage (SBDU), Ministère de l'Economie of France, Mr. Spencer Chilvers of the Export Control Committee and the Aerospace and Defense Industries Association of Europe (ASD), and was moderated by Mr. Antonio Mesa Fortun, the Head of the Dual-Use Sector, Secretariat of State for Trade, and Spanish Ministry of Industry, Trade and Tourism.

The Implementation of Controls in the EU: Latest Developments

Mr. Stéphane Chardon summarized the latest policy developments within the EU. The annual updates to the EU dual-use export control list in Annex I to Regulation (EC) No. 428/2009 is expected to be published any time now. The changes to the EU list are the result from amendments that were agreed to at the 2017 Plenary of the Wassenaar Arrangement. This includes changes, deletions, new entries and new decontrols. There are expected to be about 250 changes, many of which are editorial and technical in nature. Chardon shared some impressive statistics from the EU annual dual-use report:

  • There were over 40,000 applications for licences, which resulted in about 25,000 global licences being issued. This does not take into account general export licences.
  • Controlled exports volume exceeded 45 billion euros in 2016 according to the data available.
  • The value of intra-EU dual-use trade is even higher. There were only 690 denials in 2016! 2.6.% of all EU exports are controlled exports and the percentage of denied exports were so small they are negligible.
  • USA, China and Russia are the top 3 countries to which the EU sends dual use items. The EU Commission also noted an increase in licences to import cyber-surveillance items. There were only 17 denials.

The EU Commission will update their new national measures notice (e.g. with the new Italian changes) in early 2019. As a final note, Chardon noted that the EU is implementing a trail on electronic licencing which will potentially evolve to a single licencing system in the future. The first trial results are promising.

An Industry Perspective on Implementation of Dual-Use Controls and Related Matters in 2017-2018

Mr. Spencer Chilvers presented the perspectives and priorities of the technology industry. He explained that the electronic transfers of technology remain a huge issue for businesses, mainly due to the lack of clarity from the government about what is permissible and what is not. Any official guidance that is announced is often dated. Chilvers expressed the need for the EU to have a consistent approach. This will allow businesses to be efficient, but also compliant. Another key issue he spoke on was Cyber Security; the ability to keep ones’ own technology safe, while also sharing information with universities and shared centers. “How do you make sure there is no weak link?”, Chilvers asked.  The industry calls for an EU-wide combined electronic licensing system which is easy to use. All parties should be linked together and the optimal use of such a system should be used. It will help subject matter experts (SMEs) with record-keeping and act as a report for all exporters on transfers made, when such information is required. This combined licensing system should also integrate with existing ERP systems.

Chilvers also suggested that a certification program or a recognized qualification would be “explored at the EU Level”. He compared this to the Swedish Export Control Society which has developed a a similar program with much success. He mentioned that the UK is now in the early stage of developing a professional qualification with the UK’s Institute of Export & International Trade (IOE&IT). He ended his presentation by expressing concerns about how the EU’s GDPR (Article 10) conflicted directly with the US export control and sanctions provisions which oblige companies to screen employees, visitors, and partners for potential criminal convictions based on personal criminal records which are released in the public domain by US authorities. Currently, there is still no perceivable consensus among EU members on this difficult question.

The Development of the EU Industry Compliance Guidelines: After Public Consultation, What's Next?

Presentations and discussions within this session focused primarily on the EU ICP guidelines. The speakers were Dr. Johan Evers, the  Chair of the Technical Expert Group on the development of ICP Guidelines/Strategic Goods Control Unit of the Flemish Department of Foreign Affairs in Belgium,  Ms. Giovanna Maletta, a researcher of the SIPRI Dual-Use and Arms Trade Control Program, Dr. Bärbel Sachs the LL.M. Rechtsanwältin of Regulatory & Governmental Affairs, Noerr LLP, and was moderated by Dr. Christos Charatsis, a Project Officer at the Joint Research Centre of the European Commission. They presented a summary of the industry consultation and the state-of-play. They went on to present a variety of best practices, compliance guideline gaps, and the new Commission's proposal.

In order to support companies in maintaining strict compliance with EU and national export laws and regulations, the EU has developed a draft guidance to provide a framework to identify and manage dual-use trade control impacts and mitigate associated risks. The guidance focused on the 7 core elements for an effective ICP.

Each core element is further detailed by the section ‘What is expected from dual-use companies?’ which describes the objective(s) of each core element, and the section “What are the steps involved?” that further specifies the actions and outlines possible solutions for developing or implementing compliance procedures. The guidance concludes with a set of helpful questions pertaining to a company’s ICP, a list of diversion risk indicators, and ‘red flag’ signs about suspicious inquiries or orders.

The Digitialization of Export Controls

The "e-licensing project" and the modernisation of the IT infrastructure of the EU export control network was the subject of the next session.  Estonia presented its  e-licencing solution "Stratlink" – “a Baltic experience of digitalization and its benefits”.

Export Controls and Cyber-Surveillance Technology

“Cyber export controls” was next. A comprehensive update was presented by the Netherlands followed by an Information Security industry perspective on current and future EU export controls by the Symantec Corporation.

The Legislative Process: The Long March Towards a Modernised Export Control Regulation.

The Council 's long-debated position on the modernisation of EU export controls by Ms. Gabriela Ciupitu, Dual Use Division, Department for Export Controls-ANCEX, Ministry of Foreign Affairs, Romania, holder of the EU Presidency next year. This was followed by the presentation “Licensing simplifications for cryptography” from DIGITALEUROPE. Finally,  Amnesty International presented Civil society's perspective on the modernisation of EU export controls.

It is important to maintain consistent open dialogue regarding export control on a global scale. The 2018 Export Control Forum underlines this need and the need to digitize your companies' supply chain in order to stay current with constantly evolving supply chain needs. As you can see in the topic of each of these sessions, government bodies are starting to see the importance of creating and maintaining a digital system that allows companies to modernize complex compliance regulations. Attendees agreed and thought that such a forum was essential to engage with various stakeholders and bring the issues of export control into the forefront. We are looking forward to next year’s forum.

If you are looking to digitize your supply chain and increase your supply chain visibility while optimizing your global sourcing needs, contact us today to find out how our software can help you!

Making the Case for Global Supply Chain Digitization

This post was published on December 18, 2018 and updated on December 18, 2018.

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Topics: Export Management, Export Compliance, Export Violations, Export Customs Filing

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