What are military end-use controls in relation to China?
End-use controls apply to items (goods, technology, or software), which are not listed in the military or dual-use control lists, so items which would not normally require an export licence may do so in certain circumstances. This post will discuss changes made to UK military end-use controls in May, 2022 which may affect exports of certain items when exporting to China. If you need help making sure that your business is compliant with export controls, then please contact AM Skinner Solicitors for advice.
What are military end-use controls?
Military end-use controls fall into three categories, as follows:
- Where the purchasing country or country of destination is an embargoed destination, and the Export Control Joint Unit (ECJU) has informed a person (in writing), or where that person is aware, that non-list-controlled items are or may be intended for a military end-use. Military end-use means:
a. incorporation into military items listed in the military list of the United Kingdom;
b. use of production, test or analytical equipment and their components, for the development, production or maintenance of military items listed in the above list;
c. use of any unfinished products in a plant to produce military items listed in the above list.
- Where the ECJU has informed a person, or where that person is aware, that non-list-controlled items are or may be intended for use as parts or components of military items listed in the military list of United Kingdom or when those military items were originally exported without ECJU authorisation or in violation of that authorisation.
- Where the ECJU has informed a person that the items being export to an embargoed country are or may be intended for use by an entity described in the Export Control Order 2008.
Do military end-use controls apply to China?
On 19th May, 2022, the Export Control Amendment Order 2022 (Amendment Order) came into force. The Amendment Order added Articles 12A and 12B to the Export Control Order 2008.
Article 12(B)(10) creates new China export controls, in that it adds “China (People’s Republic other than the Special Administrative Regions)”, “Hong Kong Special Administrative Region”, and “Macao Special Administrative Region” to Part 2 of Schedule 4, of the Export Control Order 2008, thereby making them embargoed countries (and Subject to Transit Control for Military goods). These controls also apply to an arms embargo imposed the Organization for Security and Co-operation in Europe, or by a binding resolution of the Security Council of the United Nations.
Article 12A uses the terms “relevant person” and “relevant entity”. A person (“relevant person”) must not export items (goods, software, or technology) or transfer technology or software to a “relevant entity” in an embargoed destination (including China), where those items are not controlled by the UK military or dual-use control lists, and where that person has been informed by the ECJU that the items in question are, or may be intended, for use by a relevant entity, unless properly licenced or subject to exceptions in Article 12B.
The term “relevant entity” means any military forces, para-military forces, police forces, security services or intelligence services of the embargoed country, as well as any person involved in the procurement, research, development, production, or use of the items on behalf, or at the direction, of military forces, para-military forces, police forces, security services or intelligence services.
These export controls are far reaching and can for example, extend to universities in China carrying out research for military forces, para-military forces, police forces, security services or intelligence services.
What should I do if my goods are subject to military end-use controls?
If your goods are subject to the military end-use controls in Article 12 of the Export Control Order 2008, then you will be informed by the Export Control Joint Unit. This may be as a result of your goods being stopped by the UK Border Force upon export from the UK, in which case you will be required to apply for an export licence.
Alternatively, the ECJU offers an ‘End User Advice Service’ through their online portal SPIRE, for goods which are not list controlled. The ECJU will either state that they have no military end-use or WMD end-use concerns with a specified entity, or alternatively that they do have concerns, in which case you will be required to apply for an export licence.
The ‘End User Advice Service’ is available through SPIRE, for entities in all export destinations (including exporting to China), except for Australia, Canada, Japan, New Zealand, Norway, United Kingdom, United States, and all countries of the European Union.
What happens if I do not follow end-use regulations when exporting goods to China?
Exporters who commit export control offences in the United Kingdom are investigated by HMRC. In serious cases, HMRC officials may refer a matter to the Crown Prosecution Service which may decide to prosecute offences in the criminal courts.
Exporting any item without the relevant licence where the exporter deliberately does so in order to evade export control law, is chargeable with a fine or a custodial sentence of up to ten years’ imprisonment. Many other offences are offences of strict liability, meaning that a person may be found liable, even if unaware that a licence was required.
Get in touch for legal advice on end-use controls
Please get in touch for fast, expert advice from an export controls lawyer. For a free initial 15-minute consultation to find out how Andrew can help you with China export controls, as well as other export controls and sanctions matters, please call +44 (0) 1423 734019 or make an enquiry. All enquiries will be responded to promptly.