Brexit: what export controls impacts are we seeing so far and what can we expect?

1. Dual Use Goods

When the UK became a 'third country' according to European Union (‘EU’) law, licence-free movement of dual-use goods to and from the EU ceased to apply. The immediate impact was mitigated by the introduction of a number of new authorisations and the UK Export Control Joint Unit ('ECJU') has published extensive guidance on exporting controlled and dual-use items after Brexit.

Immediate issues were addressed through a series of new/updated authorisations, as follows:

• The UK introduced an Open General Export Licence (OGEL) to authorise exports from the UK to the EU;
• The EU updated the Union General Export Authorisations (UGEAs), to include the UK in its list of 'friendly' countries (alongside the likes of Australia, Canada and New Zealand); allowing for the export of all but the most sensitive items.
• For exports from the UK to the UGEA countries, UK legislation recognised 'retained GEAs' (rGEA) as a new version of the UGEA (which resulted in the issuance of new licence registrations numbers, for the retained GEA licences). Retained GEAs permit exports from Great Britain and exporters from Great Britain should check their new licence registration number and ensure it is visible on any export documentation.

However, while these changes might be regarded as largely administrative, there is potential for divergence between the UK and EU Dual-Use Regulation, even in the short term. The EU intends to issue in the near future an update of the EU dual use regulation ( Council Regulation (EC) No 428/2009 of 5 May 2009 ), which has a number of changes.

The most striking feature of the new EU Regulation is the strengthening of catch-all end use controls, to cover items not necessarily on the dual-use lists, used for cyber surveillance involved in internal repression or breaches of human rights law. Furthermore, end use controls for brokering and technical assistance will now cover, in addition to weapons of mass destruction items, items with a military end use in states subject to embargo. Efforts have also been made to improve speed of response, flexibility and reduce the bureaucratic burden on exporters, including two new UGEAs, covering intra-group exports of software and technology, and encryption. Therefore, unless the UK regulation is similarly amended, the two sets of regulations will be out of step. It is not yet clear what position the British government will take on this issue.

2. Military Goods

Although in principle, licensing requirements for military goods, to and from the EU, remain largely unchanged, EU Member State military goods import and export regulations sometimes treat transactions with non- EU countries differently from those with other EU Member States. Failure to verify this can lead to complications and delays. In practice, we are seeing some companies experience delays arising from the fact that some EU countries (e.g. France and Italy) apply different rules for military transactions from EU and non-EU countries. For example, a demand for proof that UK companies are approved military exporters, or requesting an import licence for sensitive goods.

Northern Ireland

Currently, there are no immediate changes to export licensing requirements for dual-use items moving between Northern Ireland and Great Britain, and between Northern Ireland and the EU. Under the Northern Ireland protocol, Northern Ireland will continue to be treated as if it was part of the EU for export control purposes and licences will not be required to authorise the movement of dual-use goods between the EU and Northern Ireland . UGEAs will remain valid for exports from Northern Ireland. The new EU dual use regulation update will apply to exports from Northern Ireland (see guidance for further information)

Embargoes

Any exporters dealing with destinations that are subject to an arms embargo should refer to the relevant sanctions regulations under the Sanctions and Anti-Money Laundering Act 2018. There are no immediate substantive changes to embargoes imposed by the UK, but exporters are warned to check the new regulations carefully since differences in the language of the UK regulations may lead to differences in application. In any event, UK embargoes may differ from EU embargoes over time as the UK is no longer part of the EU embargo regime.

Support with UK Export Compliance

For support with compliance with national and international export controls, please contact our Regulatory Risk team members:

• Stacey Winters is a Partner in Deloitte’s Risk Advisory Practice
• Julia Bell is a Director in Deloitte’s Risk Advisory Practice
• Serena Helate is a Consultant in Deloitte’s Risk Advisory Practice