Triennial commission report on the implementation of regulation (ec) no. 428/2009

As is well known, since the now distant year 2009, the European Union has had a regulation that has regulated the export, transfer, brokering and transit of so-called “dual use” or dual-use items, i.e., those goods and technologies (including software, designs, etc.) that, while designed and marketed for civilian use, may also have military use, including products that can be used to make nuclear weapons or other nuclear explosive devices. This is specifically Regulation (EC) No. 428/2009 (Council Regulation of May 5, 2009 setting up a Community regime for the control of exports, transfer, brokering and transit of dual-use items), which entered into force on August 27, 2009. The regulation è directly applicable throughout the European Union, however, member states had to adopt internal measures to implement some of its provisions (primarily with reference to the penalty aspect). The purpose of this regulation è is to introduce a set of controls aimed at ensuring, alongside the national interest of individual member states, compliance and respect for the European Union’s international commitments and responsibilities, particularly with regard to the nonproliferation of chemical, biological and nuclear weapons.

In a nutshell, the core of the system è represented by an authorization mechanism, it being necessary to obtain a’special prior authorization in order to be able to export dual-use items (in the above-explicit meaning) from an EU member country to a third country. In particular, it should be noted that Annex I of the said Regulation No. 428/2009 (most recently updated by Commission Delegated Regulation (EU) 2018/1922 of October 10, 2018) identifies the items considered dual use, which, as such, are in any case subject to prior authorization for export, an authorization to be requested from the Ministry of Economic Development and which is issued according to the modalities established by the individual countries, in compliance with the criteria set forth in the Regulation. The items listed in’Annex I, although they cannot be exported without the prescribed authorization, can still circulate/be traded freely within the European Union; on the contrary, in’Annex IV are identified goods for which’prior authorization is also required for the case of transfer within the borders of the Union.

The list of dual-use items is subject to periodic updating, with the Commission being empowered to adopt delegated acts by which to update the list to adapt it to technological advances over time and the need to comply with any regulatory developments in terms of the Union’s international commitments. Having said the above, we would like to point out here, in particular, the recent publication, on November 4, 2019, of the European Commission's three-yearly report to the European Parliament and the Council on the implementation of Reg. EC 428/09, a kind of snapshot on the “state of the’art” of the implementation of the regulation.

Based on the data reported therein, it can be firstly noted that, in the year prior to drafting (year 2018), export numbers covered approximately 1,846 dual-use products included in the aforementioned Annex I, which together account for about 2.3 percent of total EU exports. In the words of the Report, “These dual-use items correspond to about 1,000 goods under customs supervision, comprising chemicals, metals and non-metallic mineral products, computers, electronics and optics items, electrical equipment, machinery, vehicles and transport equipment, etc., and generally constitute the high-technology segment of this vast and heterogeneous commodity area”.

With reference to the destination countries, the clear majority of exports falling under the’scope of Regulation No. 428/2009 are to the United States, and, followed by China, Switzerland, Russia and Turkey. As for the economic incidence of export license applications, their total value, according to the latest data available and reported in the Report, is around 50, 2 billion euros (representing approximately 2.7 percent of total extra-EU exports).

Of the total number of applications, trade worth 36.6 billion euros (representing approximately 2% of total extra-EU exports) was authorized; on the other hand, the applications made were denied in an extremely small number of cases, registering (again based on the most recent data collected and reported by the Commission, and covering the year 2017), about 631 denials (i.e., 1.5 percent of the value of dual-use exports subject to controls and 0.04 percent of total extra-EU exports). From a simple reading of such numerical data, one can infer the absolutely significant weight that the matter holds for numerous European companies in their commercial transactions, and how the same must necessarily be known and mastered in order to avoid running into the sanctions provided for in case of violation of the relevant discipline. The sanctioning aspects are dealt with in detail in the Annex to the Report, which lists the regulatory measures adopted by individual countries to implement the regulation, as well as the specific sanctions provided by each member state, of an administrative and/or criminal nature.

With particular reference to’Italy, the implementing legislation è represented by Legislative Decree No. 221, Article 18, December 15, 2017 (which goes so far as to deem even attempted illegal exportation/intermediation/technical assistance to be punishable). According to the aforementioned provision, when the infringement consists of a violation of administrative formalities based on negligence, a fine ranging from 15,000 euros to 90,000 euros may be imposed, while, when the infringement is based on intent, the penalty provided for may consist of a fine of up to 250.000 and/or imprisonment for up to six years (e.g., in case of export or transit without a license, false declarations and/or documentation), as well as seizure of the goods (or other goods of the same value, in the exporter’s possession). Also with reference to the’enforcement of Regulation No. 428/2009, it should be noted that in the year 2017, 120 violations of the control regulations were recorded, and in terms of sanctions, 130 administrative sanctions and two criminal sanctions were disbursed by national law enforcement authorities.

Finally, to conclude with more detailed indications as to the goods to be considered dual-use, it is recalled that the Regulation empowers the Commission to adopt delegated acts (under Article 23a) by which to update the list of dual-use items in Annex I. Under this delegated power (introduced in’2014), the Commission proceeded to adopt five delegated acts (namely: Delegated Regulation (EU) No. 1382/2014 of the Commission, dated October 22, 2014; Delegated Regulation (EU) 2015/2420 of the Commission, dated October 12, 2015; Delegated Regulation (EU) 2016/1969 of the Commission, dated September 12, 2016; Delegated Regulation (EU) 2017/2268 of the Commission, dated September 26, 2017; Delegated Regulation (EU) 2018/1922 of the Commission, dated October 10, 2018), regulatory acts from which it will not be possible to disregard for the correct identification of products falling within the scope of the Regulation, with the consequent need for the adoption of the relevant measures and procedures.
 

Report from the Commission to the European Parliament and the Council on the implementation of Regulation (EC) No 428/2009 setting up a Community regime for the control of exports, transfer, brokering and transit of dual-use items

• file_download Attached to the report