When is an Export Licence Required and How Do I Obtain an Export Licence?
There are several reasons why governments aim to control the export of goods, software and technology. These reasons include the development of weapons of mass destruction and conventional weapons in a foreign country, commitments to international treaties, as well as foreign policy and national security of the implementing country.
This blog looks at which items (goods, software and technology) require an export licence and how to obtain a UK export licence.
Which goods must have an export licence?
Strategic items (goods, software and technology) include items that have been specially designed or modified for military use, as well as dual-use items which can be used for both civil and military purposes. These items are listed in the military and dual-use control lists respectively.
Any item shown in the military or dual-use list will need an export licence from the Export Control Joint Unit (ECJU) before being exported from the United Kingdom. Note the rules below on dual-use goods when exported from Northern Ireland to the European Union.
Military list items
Military list items are shown in Schedule 2 of the Export Control Order 2008, and include goods in finished and semi-finished form, as well as components specially designed or modified for those goods. Both permanent and temporary exports of military items require an export licence from the UK’s Export Control Joint Unit.
As an example, if a semi-finished military component is temporarily exported from the UK for a machining operation in an EU member state, then an export licence must be obtained from the ECJU prior to export. A licence is also required for any export of military controlled drawings or specifications if exported in hard copy form with the controlled component, or if exported separately in electronic form. An export licence may also be required from the EU member state when returning the item(s) to the UK.
Military items are designation ‘ML’, for example ML9 (see Schedule 2 of the Export Control Order 2008) relates to vessels of war, special naval equipment, accessories, components and other surface vessels as described under this heading. Paramilitary items are also described in Schedule 2 of the Export Control Order 2008, under control list entry PL5001.
Dual-Use list items
Dual-Use list items are described in Annex I and Annex IV to Council Regulation (EC) 428/2009, as retained under the EU (Withdrawal) Act 2018 for Great Britain. An export licence is needed to export dual-use list-controlled items from Great Britain to any country, including the European Union and Channel Islands.
An export licence is not needed to export dual-use list-controlled items from Great Britain to Northern Ireland. An export licence is needed to export dual-use list-controlled items from Northern Ireland to any country outside the European Union.
Items described in Annex I are categorised by equipment type as follows:
- Category 0 Nuclear materials, facilities and equipment
- Category 1 Special materials and related equipment
- Category 2 Materials processing
- Category 3 Electronics
- Category 4 Computers
- Category 5 Telecommunications and "information security"
- Category 6 Sensors and lasers
- Category 7 Navigation and avionics
- Category 8 Marine
- Category 9 Aerospace and Propulsion
Each category is highly technical and goods classified within each category are given an export control classification number (ECCN), which is determined by its technical specification against the control list entry. As an example, a microprocessor with an extended operating temperature range i.e., rated for operation over the entire ambient temperature range from -55°C to +125°C is given the ECCN of 3A001.a.2.c.
Annex IV to Council Regulation (EC) 428/2009, as retained under the EU (Withdrawal) Act 2018 for Great Britain contains a list of dual-use controlled items which are more tightly export controlled than items listed in Annex I.
Additional UK national dual-use controlled items are listed in Schedule 3 of the Export Control Order 2008, under control list entries PL8001 and PL90XX.
Items subject to sanctions
The Export Control Joint Unit (part of the Department for International Trade) implements trade sanctions and embargoes. Trade sanctions relates to measures which restrict the import and export of goods, or technology (including software) or non-financial services (e.g., technical services) from and to a sanctioned country.
As an example, and amongst many other controls “The Russia (Sanctions) (EU Exit) Regulations 2019” contains comprehensive lists of goods and raw materials and finished goods, controlled for export (and import) reasons.
Items listed in “The Russia (Sanctions) (EU Exit) Regulations 2019”, include luxury goods such as alcohol, perfumes and cosmetics, as well as electrical goods, clothing, jewellery and precious stones, watches, motor vehicles etc., Luxury items are shown in Schedule 3A of the Russia Regulations.
The Russia Regulations also prohibit the export of critical-industry goods and critical-industry technology as listed in Schedule 2A, including machinery, electronic components and assemblies, telecommunications equipment, information security, lasers etc.,
It is not permitted to export any goods to Russia or territory in Ukraine which has been annexed by Russia unless permitted by an export licence. Separately, financial sanctions may apply to items which do not require an export licence from the ECJU. The Office of Financial Sanctions Implementation (OFSI) is responsible for administering licences relating to financial sanctions.
Items subject to end-use controls
There is a requirement to obtain an export licence for items not listed in the controls lists, that are, or may be, intended for uses in connection with weapons of mass destruction (WMD). This test applies where the exporter has knowledge or suspicion, or has been informed by the UK Export Control Joint Unit.
There is also a requirement to obtain an export licence for items not listed in the controls lists, that are, or may be, intended for military end use or for a military end-user (including persons involved in procurement, research, development, production or use of the goods on behalf of military forces, para-military forces, police forces, security services or intelligence services) in an embargoed destination, or for use as parts of military goods illegally obtained from the UK, irrespective of the export destination. Here the exporter is normally informed by the Export Control Joint Unit of a licence requirement.
Other export controlled items
Other controlled items are listed in the ‘Non-military Firearms List’ (Annex I to Regulation No. 258/2012), ‘Human Rights List’ (Annexes II, III & IV of Regulation No. 125/2019), ‘UK Security and Human Rights List’ (Articles 4A and 42S to the Export Control Order 2008 and ‘UK Radioactive Source List’ (Schedule to the Export of Radioactive Sources (Control) Order 2006).
Additionally, the Home Office is responsible for the export licencing of controlled drugs, and the Arts Council England for the export licencing of Cultural Goods, including paintings, vintage vehicles, archaeological material, vintage firearms etc.. The need for an export licence is dependent on the age and value of the item.
How do I obtain an export licence?
There are many different types of export licence available from the Export Control Joint Unit. The process for obtaining an export licence will depend on which type you require.
Open General Export Licence (OGEL)
An Open General Export Licence (OGEL) may be available to exporters of both military and dual-use items. Each type of Open General Export Licence provides an individual authorisation and has a specific set of terms, conditions, and documentary requirements. Exporters should therefore check the licence terms and conditions carefully prior to use.
If a suitable OGEL is available, then it can be registered through the exporters SPIRE account. Registration of the licence will notify the Export Control Joint Unit (ECJU), which will make the exporter subject to ECJU compliance audits. An OGEL is not restricted by value or quantity, and it can be used immediately subject to compliance with all terms and conditions.
Exporters should ensure that they keep detailed records of each export when using any OGEL, as they will need to provide evidence of their compliance when audited by the Export Control Joint Unit. Exporters should also ensure that they submit their annual ‘Open Licence Return’ through SPIRE.
Standard Individual Export Licence (SIEL)
A Standard Individual Export Licence (SIEL) can be used where the exporter is not able to meet the terms and conditions of an Open General Export Licence. A SIEL is specific to the items described in the licence, including the quantity and GBP value. The consignee and end-user’s name and address are stated on the licence and no deviation is permitted unless expressly authorised by the Export Control Joint Unit.
A SIEL may be used for multiple exports providing that the value and quantity of items are not exceeded, and that all other licence conditions are met. A SIEL expires two years from the date of issue or upon the value or quantity of exported items being exhausted, whichever takes place first.
The Standard Individual Export Licence (SIEL) is requested through SPIRE. The applicant is required to provide sufficient details of the item in order for the Export Control Joint Unit (ECJU) to determine the correct export classification control number (ECCN). The ECJU normally requires drawings, specifications and an end-user undertaking.
The application process takes on average around 20 working days from the date of submission, and should the ECJU refuse to issue a licence, then the applicant has a right of appeal.
The end-user undertaking is a standard ECJU document which requires the end-user (overseas company) to provide their details, details of each consignee (if different from the end-user details), a full description of the end-use application, as well as other specific information, and a signed declaration confirming that the goods will not be used in any nuclear explosive device. The ECJU places great emphasis on the end-user document, and the licence applicant is responsible for ensuring that it meets the required standard before being presented to the ECJU.
The SIEL end-user document is available on the ECJU’s website and includes a set of comprehensive notes to aid completion. The applicant must retain a copy of each undertaking as the ECJU may wish to audit these at a later date.
Standard individual Export Licences (SIELs) require the exporter to present the licence and shipping documents to HMRC when the goods are exported. For SIEL exports made within the European Union, exporters must ensure that they notify HMRC at least 3 days in advance of the shipment date.
The notification must include a copy of the export licence and details of the goods location as HMRC may wish to inspect the goods prior to export. A copy of the licence must also be attached to all goods destined for a location within the European Union. The Standard individual Export Licence also contains certain other terms and conditions with which the exporter must comply.
Other export licences are available from the ECJU, however a number of these licences require the exporter to demonstrate a business need and previous compliance history in the use of OGELs and SIELs.
What must I do when using an export licence?
- Ensure that the goods are correctly classified against all-applicable control lists, and that full and comprehensive information is provided to the ECJU when making any export licence application.
- Comprehensive records of each export should be kept, including original end-use documents where required, and Single Administrative Documents (SAD), as these carry details of the export licence and can be used as evidence during compliance audits.
- Consult with a freight forwarder, to ensure that controlled exports are fully prepared in accordance with all applicable licence conditions prior to making any customs entry.
- Always check the terms and conditions of any export licence prior to use.
- Seek professional advice if there are any doubts whatsoever as to export control law.
What are the penalties for failing to comply with export controls?
In the UK, HMRC is the prosecuting authority for export control offences. Failure to comply with export control law is a strict liability criminal offence, so even unintentional breaches may result in criminal action. Where the offence is intentional, then the offender(s) can be imprisoned for up to 10 years.
Alternatively, HMRC may choose to offer a compound penalty. Compound penalties are used in unintentional less serious cases and allow the person to settle a case through a penalty payment, thereby avoiding court action and potential criminal prosecution.
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