On 16 October 2020, the UK’s Export Control Joint Unit ("ECJU") issued a timely reminder to UK businesses that an Open General Export Licence ("OGEL") will be required where a business is exporting dual-use items, as set out in Annex 1 of EU Regulation 428/2009 (the "Dual-use Regulations"), to any EU member state, and the Channel Islands, from 1 January 2021.
Prior to 1 January 2021, the export of these items from the UK to the EU has broadly been unfettered, save for a small number of the most high-risk items subject to individual controls at a state level.
The UK Government has stated that "The overall framework of controls for dual-use exports will not change"; rather, exporters will need to take steps to register under the new regime and exporters who may not previously have needed a licence to export may now need one.
Which items does the new OGEL apply to?
The UK Government first granted a new dual-use OGEL on 2 April 2019, under the Dual-Use Regulations and the Export Control Order 2008. This new OGEL relates to the export of systems, equipment and components, test inspection and production equipment, materials, software and technology, and covers all areas of production.
The following categories of items/sectors of interest are all within scope of the new OGEL:
- nuclear materials and processing equipment;
- materials processing - machine tools;
- electronics;
- computers - specific parameters;
- telecommunications;
- information security including cyber and crypto;
- sensors and lasers including imaging equipment and radars;
- navigation and avionics;
- marine; and
- aerospace and propulsion.
Please see Annex 1 of the Dual-Use Regulations for further details.
What steps must be taken in order to export?
To export under the new OGEL, an exporter must first sign up to the Department for International Trade's SPIRE system (which is the only way to apply for an export license in the UK). Once signed up, an exporter can then in turn register for the new OGEL. This process must be carried out either before export or within the first 30 days of making first use of the OGEL.
This requires an exporter to provide details relating to record-keeping, and to nominate an address where records may be inspected by the ECJU.
All physical exports under the OGEL must include a note either stating that the items are being exported under the OGEL or stating the exporter's SPIRE reference number. A border force officer may request to verify this note.
Practical next steps
In light of these changes, companies that might be affected should:
- Review how exports from the UK into the EU (and vice versa) could be affected by the new licensing requirements;
- Check whether exports of controlled items are currently made from the UK under a licence granted by EU-27 authorities; and
- Consider establishing an exporting entity in the UK for exports from the UK, and in the EU for exports from the EU. This is something that many businesses are currently considering, although ultimately this may be dependent on the outcome of the current EU-UK negotiations, in addition to other important factors such as a your customer base.
Conclusion
Whilst it is not anticipated this change of rules will have a significant impact on seasoned exporters, it does mean that many new businesses will require an OGEL. Of potential concern, some businesses that were previously not subject to these controls in the first place may end up being caught unaware (such as those exporting software, which can at times slip below the radar from an export control perspective).
This is particularly important as the export of controlled items without a licence is a criminal offence, which may lead to imprisonment of up to ten years, an unlimited fine and the items exported incorrectly being seized.
