• Andrew Skinner

No deal Brexit and UK/EU exports of Annex 1 dual-use controlled goods



Introduction

In the event of a 'No Deal Brexit' on 31 December 2020, then certain list-controlled goods, technology and software will need export authorisation when exported from the UK to any European Union (EU) member state, and similarly from any EU member state to the UK.


At present less sensitive dual-use goods, technology and software controlled by Annex 1 to Council Regulation (EC) No 428/2009 [1] can move freely between EU member states subject to Article 22(10) of the regulation, which requires the related commercial documents to indicate that those items are subject to export controls if exported beyond to EU. Sales contracts, invoice, dispatch notes, confirmation of order are all considered to be acceptable commercial documents for this purpose. [2]


In the event of a no-deal Brexit, then exporters of Annex 1 controlled dual-use goods, technology and software will be required to obtain an export licence prior to exporting from the UK to any EU member state, and similarly from any EU member state to the UK.


Exports from UK to EU (Including the Channel Islands)

On 1 February 2019, the UK Export Control Joint Unit (ECJU) published an Open Export Licence (export of dual-use items to EU member states) [3] in anticipation of the UK leaving the EU without a trade deal, and it has been possible for exporters to register for this licence since its publication, using the ECJU’s online portal SPIRE. [4]


Exporters of dual-use goods should already know whether or not their items are Annex 1 dual-use controlled, as they are currently required to comply with (Article 22(10)) of the dual-use regulation. [5]


Exporters will need to ensure that they have the necessary processes and procedures in place to comply with the requirements of the new OGEL. In particular, they will need to ensure that their items are properly classified (ECCN), and that the accompanying export documents make proper reference to the export licence (as stated in the licence conditions). [6]


Exporters will also need to ensure that details of each licensed shipment are declared properly through the Customs Handling of Import and Export Freight (CHIEF)* system which advises Customs of the export declaration. [7]


CHIEF allows exporters (usually via their freight forwarders) to complete a Customs declaration electronically, and it provides exporters with the necessary documentary evidence of the export, which the exporter should file for ECJU audit purposes. Under the conditions of this licence exporters must ensure that they ‘retain certain records relating to each such export for at least three years from the end of the calendar year in which the export takes place’. [8]


*Customs Handling of Import and Export Freight (CHIEF) is to be replaced by the Customs Declaration Service (CDS), although this is not likely to happen until the middle of 2020.


Exports from EU to UK

Equally, Annex 1 dual-use controlled goods will become licensable within the EU when exported to the UK. The EU will therefore amend the existing Union General Export Authorisation 001 (UGEA 001) to include the UK. Currently, the UGEA 001 permits exports of most Annex 1 dual-use items to Australia, Canada, Japan, New Zealand, Norway, Switzerland (including Lichtenstein) and the United States of America. EU exporters must be aware that the UGEA 001 does not permit exports for WMD end-use applications, or to a customs free zone or free warehouse located in a destination covered by authorisation. [9]


Exports from the UK to Australia, Canada, Japan, New Zealand, Norway, Switzerland (including Lichtenstein) and the United States of America.

Should there be a no-deal Brexit on 31 October, 2019 then the Union General Export Authorisation 001 (UGEA 001) [10] in its current draft will no longer be available to UK exporters of Annex 1 dual-use controlled items, as the UGEA 001 is a European Union licence. As such, these items will require an alternative method of licensing when exported to Australia, Canada, Japan, New Zealand, Norway, Switzerland (including Lichtenstein) and the United States. The UK Export Control Joint Unit (ECJU) has indicated that it may simply transfer the UGEA 001 into UK domestic law and make any necessary drafting changes, and that this licence in its revised UK draft will be issued automatically to existing UK holders of the European UGEA 001.


However, at present the ECJU has not formally issued a ‘notice to exporters’ advising them of this proposal. In the event that the ECJU does not reissue this licence in a revised UK format (albeit unlikely), then the only method of licensing Annex 1 controlled goods come 31 October, 2019 will be to request a Standard Individual Export Licence (SIEL) through the UK governments SPIRE portal [11]. A SIEL currently takes the ECJU around 20 working days to process (following submission) and the applicant is required to obtain original hard copy end-use documents.


In Summary

Traders should take all necessary steps to prepare for a no-deal Brexit. In particular, they should confirm that their goods are properly classified for export control reasons (ECCN). UK exporters of dual-use controlled goods should register with SPIRE in order to use the UK’s new Open Export Licence (export of dual-use items to EU member states). Prior to using this licence, exporters should ensure that they have proper processes and procedures in place to fully comply with its conditions.


Similarly, exporters in EU member states will need to ensure that they are registered with the relevant EU authority for use of the UGEA 001 if they wish to export dual-use Annex 1 controlled goods to the UK.


References

[1] https://eur-lex.europa.eu/legal-content/GA/TXT/?uri=CELEX:32009R0428#d1e32-12-1

[2] https://eur-lex.europa.eu/legal-content/GA/TXT/?uri=CELEX:32009R0428#d1e1057-1-1

[3] https://www.gov.uk/government/publications/open-general-export-licence-export-of-dual-use-items-to-eu-member-states

[4] https://www.spire.trade.gov.uk/spire/fox/espire/LOGIN/login

[5] https://eur-lex.europa.eu/legal-content/GA/TXT/?uri=CELEX:32009R0428#d1e1057-1-1

[6] https://www.gov.uk/government/publications/open-general-export-licence-export-of-dual-use-items-to-eu-member-states

[7] https://www.gov.uk/guidance/chief-trader-import-and-export-processing-system

[8] https://www.gov.uk/government/publications/open-general-export-licence-export-of-dual-use-items-to-eu-member-states

[9] https://eur-lex.europa.eu/legal-content/GA/TXT/?uri=CELEX:32009R0428#d1e32-253-1

[10] Ibid

[11] https://www.spire.trade.gov.uk/spire/fox/espire/LOGIN/login



Please contact amskinner@amskinnersolicitors.co.uk if you have any questions or need any trade compliance advice.


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