Brexit and restrictions on trading in dual-use items


The UK ceased to be a member state of the EU on 31 January 2020, and EU law will cease to apply to the UK when the transition period expires on 31 December 2020. This means that from 1 January 2021, the Dual-Use Regulation will not apply to the UK.

Export of dual-use items to the UK

Under the Dual-Use Regulation (Council Regulation (EC) No 428/2009 of 5 May 2009 setting up a Community regime for the control of exports, transfer, brokering and transit of dual-use items) and under the Polish Act on Trading in Strategic Products (Act on Foreign Trading of Goods, Technologies and Services of Strategic Importance for State Security and for Maintaining International Peace and Security of 29 November 2000), movement of dual-use items (i.e. items with both civilian and military uses) between EU member states is not treated as export, but as an intra-Community transfer not requiring authorisation (except for items listed in Annex IV to Regulation 428/2009).

After the end of the Brexit transition period, trade controls under Regulation 428/2009 and the Act on Trading in Strategic Products will apply to exports to the United Kingdom, as they currently apply in the case of third countries. Under Art. 7(1) of the Polish act, export of dual-use items from the EU to a third country generally requires a licence from the competent authority for control of trade, i.e. the minister for economy.

This would mean that exporters planning to ship dual-use items to the UK would have to obtain a licence from the competent authority of the EU member state where the exporter has its registered office, which would impose a significant burden on EU enterprises, hurting their competitiveness. To mitigate the impacts of Brexit, the UK will be added to Annex IIa to Regulation 428/2009, which contains a list of “safe” countries covered by the Union General Export Authorisation (GEA). The countries currently on the list are Australia, Canada, Japan, New Zealand, Norway, Switzerland (including Liechtenstein), and the United States.

Consequently, it will be possible to conduct export of most dual-use items to the UK on the basis of Union GEA No EU001. For export of other dual-use items to the UK, it will be necessary to obtain an individual or global authorisation.

Exporters using the Union GEA must notify the competent authorities of the member state where they are established of their first use of the authorisation, no later than 30 days after the first export takes place.

It should also be pointed out that after the end of the Brexit transition period, it will not be possible to export dual-use items located in Poland on the basis of an individual or global authorisation issued by the UK.

Under Art. 22 of Regulation 428/2009, some dual-use items, listed in Annex IV to the regulation due to their special properties or intended use, are subject to controls of intra-Community transfers. After the end of the transition period, transfers of these products from the EU to the UK will constitute exports requiring authorisation under the conditions set forth in Regulation 428/2009 and the Polish Act on Trading in Strategic Products.

However, with respect to authorisations for intra-Community transfer issued before the end of the transition period by a competent authority in an EU member state for transfers to the UK, they will continue to be valid authorisations for export to the UK after the end of the transition period, until the expiry of the authorisation.

Export of dual-use items from the UK to the EU

If goods or services are currently subject to dual-use control but do not require authorisation because they are exported to the EU, to continue exporting them after 31 December 2020 the exporter will have to register to obtain an open general export licence (OGEL) in the UK. Detailed information on OGELs is available at the website of the UK’s Department for International Trade. A licence is not required until the end of the transition period, but registration is currently open via SPIRE, the electronic system for issuance of licences by the department’s Export Control Joint Unit.

The Department for International Trade has confirmed that if an exporter already holds a licence for export of dual-use items to a country outside the EU, issued by the UK, it will remain valid for export from the UK. This includes registrations of OGELs and general export licences, which will continue to function as British authorisations.

Ongoing transfer of dual-use items

Under Art. 47(1) of the withdrawal agreement, “A movement of goods which has started before the end of the transition period and ends thereafter shall be treated as an intra-Union movement regarding importation and exportation licencing requirements in Union law.”

Northern Ireland

After the end of the transition period, commercial relations with Northern Ireland will be governed by the Protocol on Ireland and Northern Ireland. The IE/NI Protocol, for which the initial period of application is four years after the end of the transition period, is subject to periodic review by the Northern Ireland Assembly.

The IE/NI Protocol provides that the Dual-Use Regulation will apply to Northern Ireland during the period when the protocol is in force. This means that the movement of dual-purpose items from the EU to Northern Ireland and vice versa will constitute an intra-Community transfer for purposes of Regulation 428/2009, and that movement of dual-use items from Northern Ireland to a third country or the UK will constitute an export for purposes of Regulation 428/2009, subject to the relevant authorisations.

Sanctions

The UK’s current policy with respect to sanctions is to continue to be closely coordinated with the EU’s policy. The Sanctions and Anti-Money Laundering Act 2018 aligned the UK’s regulations with the EU’s sanctions systems (including those involving Iran, Myanmar, Russia, South Sudan and Venezuela), so that UK sanctions reflect the current position of the EU.

Summary

Businesses should prepare for the changes arising out of the United Kingdom’s change in status from an EU member state into a third country with respect to the European Union. It should be borne in mind that not only the export of goods, technologies and services is subject to controls, but also technical assistance related to items for dual military and civil uses, as well as brokering in the trade in dual-use items. It is always up to the business to verify in each case whether a given transaction is subject to trade controls.

Anna Olejniczak-Michalska, attorney-at-law, Private Client practice, Reprivatisation practice, Wardyński & Partners