Commentary on the report from the Commission to the European Parliament and the Council on the implementation of Regulation (EU) 2021/821 on Dual Use

The European Commission recently published its report on the implementation of Regulation (EU) 2021/821, the latest in a series of previous Regulations that have governed the Union's regime on the control of exports, transit and transfer of dual-use goods and technologies for over 20 years.

The most significant data

The report covers activities in 2021 and is therefore beyond the scope of examining technical aspects related to export controls affected by the war in Ukraine and related restrictive measures taken by the EU in the form of sanctions.

However, of considerable importance is the figure highlighted within that document, according to which exports of dual-use items account for 2.7 percent of the total exports of the 27 Member States, worth 128 billion euros. As many as 559 denials were issued last year, according to the Commission, representing about 1.4 percent of the value of dual-use exports of products and technologies. It’ should be stressed that controls by European Customs Authorities, taking into account the current geo-political situation, are constantly increasing and the risk, for exporting companies, of being subjected to denials and/or sanctions è certainly high. In reality, è it is estimable that the above figure does not reflect the real situation of dual-use export, as a large number of companies export dual-use goods without having obtained prior authorization, either in good faith for not being aware of the “dual use” regulations or knowingly, in order not to have to restrict their business due to the authorization regime.

The list of dual-use items, as well as software and technologies that could potentially be used for both civilian and military purposes, contained in Annex I of the aforementioned Regulations, is periodically updated to reflect changes in multilateral export control regimes.

The updated and consolidated EU control list è entered into force on January 7, 2022 but it is vital, especially for companies that maintain constant foreign trade relations, to stay up-to-date on regulatory changes regarding the list of dual-use goods and technologies.

Internal compliance programs (I.C.P.) and new technologies

The European Commission report also showed that EU guidelines on Internal Compliance Programs (I.C.P.), for research on dual-use items, have been completed, to be applied also to the transfer of technologies and knowledge associated with such research.

Companies wishing to benefit from the’EU General Export Authorization’and the’Global Authorization “Major Projects”, which represent strong export facilitation, must necessarily adopt an Internal Conformity Program’. The I.C.P., è it is good to remember, consists of the set of procedures that companies must adopt internally in order to know and manage the risks associated with foreign operations and which includes a’thorough analysis of current regulations, restrictions, embargoes and potential sanctions related to them.

The Commission has also developed the electronic system related to dual-use items (DUeS), which is an extremely important IT system for the EU network aimed at monitoring exports. In fact, the platform plays an essential role in the implementation of the Regulation especially in the exchange of information on denials and intra-EU transfers of goods and products. The preparatory work conducted over several years has led, just in the course of 2021, to the refinement of the electronic licensing system for dual-use items, which enables customs authorities and exporters to exercise controls online in a more efficient way while significantly reducing administrative burdens and costs. Membership of the electronic licensing system is growing steadily, and the various EU countries involved include Italy.

Conclusions

In essence, following the various actions taken during the past year, the Commission and Member States will continue to work on strengthening controls over cyber surveillance technologies, implementation of EU capacity building and training programs directed at licensing and law enforcement authorities in the Member States.

It’s therefore vitally important for enterprises exporting their products abroad to remain constantly updated, especially at this stage, on developments in new information technologies and electronic systems for controlling the transfer of goods.