What are export licensing controls?

What are export licensing controls?

All goods are subject to movement restrictions, some are controlled more than others.

International Trade Compliance Specialist, Mike Court explains some of the important considerations behind export licensing controls.

Import and export licenses are issued to ensure cross border trade is secure and legal. The international trade environment considers this extra burden of administration a price worth paying to keep the global population as safe as possible. Prohibitions and restrictions on goods have been developed in treaties at a global level.

If goods are not listed on the Control Lists, there may still be a need for a licence under End-Use Controls. This applies if the goods are likely to be sent to an end-user where there are concerns that they might be used in a Weapons of Mass Destruction WMD programme. These global treaties fall into three types;

  • multilateral conventions, which are open to all to become members,
  • plurilateral conventions, which involves three or more parties,
  • and bilateral involving just two parties.

All of these conventions involve a restraint on trade.

How does this work alongside WTO rules?

These restrictions go against the principles of the General Agreement on Tariffs and Trade (GATT) so they would be deemed as unlawful under WTO rules, unless they fall within one of the two exceptions within the GATT agreement. Article XX contains the term General Exceptions; a wide-ranging list of grounds on which governments can intervene in normal trade. They may, for example, limit the amount of gold and silver exported. Article XXQ of the GATT contains the Security Exceptions which allows controls to be in place to protect national security relating to the maintenance of peace and security.

An example of the cooperation required is a World Customs Organisation (WCO) recommendation of 26 June 2009 which requests users of the Harmonized System (HS) to insert in their national statistical nomenclatures subheadings for 34 chemicals falling within the Chemical Weapons Convention, that are considered to be the most relevant to trade by the Organisation for the Prohibition of Chemical Weapons (OPCW). 

Another example refers to terrorism and the threats to the security of global supply chains around the world. Under the WCO’s SAFE Framework which is designed to increase cooperation between Customs agencies and between Customs and the trading community to identify potentially harmful consignments, and to deter terrorists from using the supply chain as a means of transporting weapons, precursors and weapon components.

Military and dual-use goods

In the UK the export of military goods and dual-use goods, including technology is controlled by the Export Control Joint Unit (ECJU). The ECJU brings together operational and policy expertise from the Department for International Trade, Foreign and Commonwealth Office and the Ministry of Defence. The UK military goods list is based on the Wassenaar Arrangement Munitions List. Whereas the Dual-Use list is based on the following international conventions, Wassenaar Arrangement, Missile Technology Control Regime, Nuclear Suppliers Group, Australia Group and Chemical Weapons Convention.

The UK Export Control Act 2002, The Export Control order 2008 (amended), Export of Radioactive Sources (control) Order 2006, EU Council Regulation 428/2009 (dual use regulations), EU Council regulation 1236/2005 the torture regulations and Sanction orders, is the UK legislation and is updates regularly and issued online via the UK Government Notice to exporters system.

The UK Military List and the UK Strategic Export Control List have been consolidated into the UK Strategic Export Control Lists and it covers items of strategic military and dual-use items that require export authorisation. The UK Strategic Export Control Lists provide a useful consolidation of the various international requirements. Examples of Military goods are, Military ground vehicles & components, Civil vehicles with ballistic protection and ballistic components, Bombs, grenades, rockets, missiles and other pyrotechnic devices and Military crash helmets.

Dual-use items are goods which are commercial but have a military application, examples of Dual- Use listed items are, electronic component (integrated circuits, travelling wave tubes, microwave transistors & amplifiers), laser calibration & measurement equipment, equipment for manufacturing semi-conductor devices, spectrometers, recording equipment, surveying equipment and radar equipment At present trade between the UK and the EU is not considered to be covered by export controls. However, there is legislation in place in the form of EU Regulation 428/2009 Article 22 (10) which covers articles of Dual-Use.

Applying controls to goods

When considering if an export is subject to any of these controls, the following points are to be considered, the actual shipment of controlled goods to a foreign country, downloads of software in or to a foreign country, the posting of controlled information onto the internet, transmission of controlled data to a foreign person, accessing controlled information stored on a US server from overseas. It is the exporters responsibility to obtain the necessary licence from the ECJU this process takes some time.

Export licences in the UK

The most common UK export licences are:

  • Standard Individual Export Licence (SIEL)
    • used for a specific item, set number of items and is valid for 2 years (permanent) or 1 year (temporary), or until all quantities exhausted, or until revoked.
  • Open General Export Licence (OGEL)
    • used for dual-use items to less sensitive destinations. Registration is required with the ECJU.
    • Used for specific items, suitable for unlimited shipments of specific items to specific destinations, must comply with all terms and conditions, and keep the appropriate records.
  • Open Individual Export Licence (OIEL)
    • Used for generic item descriptions, not always limited by quantity, specific destinations, valid up to 5 years these licences are issued on history of SIEL usage.

Obtaining export licences

Application for any of these UK export licenses is via the government export licencing system SPIRE. All businesses involved in the export of these types of goods will need to be registered onto SPIRE and each application has its own reporting requirements. Each licence application together with all supporting documentation and correspondence is to be done on the SPIRE system.

In comparison with the UK the USA controls the release of technology information to a person who is not a citizen, or other authorised national in their home country (either outside or inside that country’s borders). The release of that information is considered an export to the foreign national’s home country. Controlled activities include an export from anywhere in the world, for a controlled product with U.S. content. Key U.S. Export Control Laws include, Export Administration Regulations (EAR) and the International Traffic in Arms Regulations (ITAR). While EAR contain the Commercial Control List (CCL) of regulated commercial items, including those that have both commercial and military applications, the International Traffic in Arms Regulations (ITAR) contain the United States Munitions List (USML) of restricted goods and services.

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