# Presentation: 844929

## EU Export Controls and Trade Sanctions

- Export Control Coordinators Organization
- Annual Meeting, May 23, 2006
- Alison Stafford Powell
- Baker & McKenzie LLP, Washington DC
- Alison.Stafford.Powell@bakernet.com

## EU Trade Restrictions

- EU Export Controls
- EU Trade Sanctions
- Penalties and Enforcement
- Anti-terrorism Controls
- Trends/Developments

## EU Export Control Regime

- Dual-use items regulated at EU level
- Member States responsible for licensing and enforcement
- EU Regulation 1334/2000, as amended http://www.dti.gov.uk/export.control/legislation/ecreg.htm
- Military items regulated at Member State level (some EU coordination)

## Comparison to US Export Control Regime

- Fewer unilateral controls
- No reexport controls (and no willingness to enforce US reexport rules)
- No deemed export rule
- No denial of export privileges
- No “General Prohibition Ten” – dealing in illegally exported items
- Differences in classification interpretation
- All controlled items require license for export from the Community to any country (no Country Chart)
- Very few items also require a license for intra-Community transfer
- Penalties higher e.g., in UK; greater enforcement in US
- Statute of limitations (e.g., 20 years in UK vs. 5 years in US)

## Controlled Exports

- Physical shipments, including hand-carry of goods and technology
- Transmission of software or technology by electronic media, fax, and in some cases telephone (if reading contents of document or describing contents so as to achieve substantially the same result)
- Generally does not apply to items simply passing through EU (in-transit rules)

## EU Control List

- Control List (common to each Member State with some limited national additions):
- Annex 1: Require a license for export from the Community
- Annex IV: Require a license for export from the Community AND for intra-Community transfer
- http://www.dti.gov.uk/files/file26940.pdf

## Annex I Items	

- Require authorization for export from the Community
- May require authorization for export to other MS if final destination is known to be outside the EU and no processing/working is to be performed in the MS to which items are exported

## Annex IV Items

- Require authorization for export to any country, including other MS
- Documents must clearly state items are subject to control if exported from Community

## WMD Catch-all Control

- Items not listed in Annex 1 may also require a license if:
- They are or may be intended for use in _chemical, biological, nuclear weapons or missiles_ capable of delivery of such weapons
- Purchasing country or country of destination is under military embargo
- Items are or may be intended for use in military items included in national military lists
- Where exporter is “aware” or “is informed”.  Exporters must notify national authorities if they are aware of such intended use.

## Military End-Use Control

- EU Regulation does not strictly apply to military goods, but exports of dual-use items not listed on Annex 1 require a license where:
- Destined for “military end-use”
- In countries under arms embargo (EU, OSCE, UN), includes:
- Armenia, Azerbaijan, Bosnia & Herzegovina, Burma, Burundi, Cote d’Ivoire, Congo, Iraq, Liberia, Rwanda, Sierre Leone, Sudan, Somalia, Tanzania, Uganda, Zimbabwe, Uzbekistan
- Where exporter is “aware” or “is informed”
- See 2003 Wassenaar Statement of Understanding on Control of Non-Listed Dual-Use Items
- UK does not implement this against China

## Licensing

- Member States (not EU) issue export licenses (other than CGEA)
- Member States responsible for enforcement, prosecution and penalties

## Community General Export Authorization (“CGEA”)

- ‘Administered at EU level’
- Covers all items in Annex 1 (some exceptions)
- Valid throughout Community (EU25)
- For exports to: Australia, Canada, Japan, New Zealand, Norway, Switzerland and US

## CGEA Limitations

- Cannot be used if:
- Items are or may be intended for use in chemical, biological, nuclear weapons or missiles for delivery of such weapons
- Items intended for military end-use in country subject to EU, OSCE, UN arms embargo
- Items are to be exported to customs free zone or free warehouse
- Items are in Annex IV (sensitive items)

## CGEA Requirements

- No need to apply
- Member States can impose registration and/or reporting requirements
- Member States can require additional information on exported items covered by CGEA

## National Licenses

- For exports of all other items:
- License by Member State where exporter is established
- License valid throughout Community
- Issue of license may be subject to requirements and conditions (e.g. end-user statement)
- Individual, global or general

## Record-Keeping

- Keep detailed register or record for at least _3 years_ from end of calendar year in which exports took place
- Contrast with US export controls: 5 years (recent cases)

## Penalties

- Member State responsibility - “effective, proportionate and dissuasive” penalties
- Criminal and civil penalties
- No denial of export privileges
- UK Example:
- Unlimited fines (₤1000 for record-keeping violations)
- Imprisonment up to 10 years (previously 7) (2 years for minor offenses)
- Forfeiture
- Revocation of licenses

## Enforcement Approach

- No formal voluntary disclosure mechanism
- Most enforcement to date on military side
- Less transparency
- Increased cooperation between Member States and third country enforcement agencies (e.g., US)
- Expect greater scrutiny (particularly viz. catch-alls) e.g., Multicore (UK)

## EU Trade Sanctions

- Generally Multilateral
- Targeted against individuals and entities associated with specific regimes rather than countries
- Follow a common format
- National licensing and enforcement

## EU Trade Sanctions – Jurisdictional Scope

- Within the EU
- Aircraft or other vessels under jurisdiction of an EU Member State
- Nationals of Member States, wherever located
- Any legal person, group or entity which is incorporated or constituted under the law of a Member State
- Any legal person, group or entity doing business within the Community

## EU Sanctions – Typical Measures

- Preferred types of sanctions at EU level:
- freeze of funds and economic resources
- prohibition to make funds and economic resources available
- prohibition to sell arms and related material
- prohibition to provide financing and/or technical advice or assistance
- prohibition on granting credit or purchasing shares
- visa/travel ban
- No complete prohibition to trade with sanctioned country (exception: arms and related material, and certain equipment)

## EU/UK trade sanctions against third countries and groups

| Country | Freeze of funds and economic resources | Ban on making funds or resources available | Ban on grant of credit or purchase of shares |
| --- | --- | --- | --- |
| Burma / Myanmar  |   |   |   |
|   DR Congo  |   |  |  |
| Iraq  |   |   |  |
| Ivory Coast  |   |   |  |
| Lebanon |  |  |  |
| Liberia  |   |   |  |
| Serbia & Montenegro  |   |   |  |
| Sudan |  |  |  |
| Syria |  |  |  |
| Zimbabwe  |   |   |  |
| Al-Qaida/Taliban |  |  |  |
| Global Terrorist Financing |  |  |  |
| ICTY |  |  |  |

## EU Anti-Terrorism Controls

- EU list of restricted terrorist persons and organizations: http://europa.eu.int/comm/external_relations/cfsp/sanctions/list/consol-list.htm
- National controls:
- Bank of England: http://www.bankofengland.co.uk/publications/financialsanctions/index.htm
- Restrictions on provision of financial services, funds, etc.

## Export Controls:  What Lies Ahead?

- Peer review of EU25 completed in May 2005 (WMD Action Plan)
- Possible proposals for reform:
- Minimizing divergences
- Adding controls on transit and transhipment
- Better guidance on recognizing dual-use items (“self-help tools”)
- Exchange information on denials, consider creation of database to exchange sensitive information
- Agree best practices for enforcement of controls
- Improve transparency to facilitate harmonization of implementation of catch-all
- Best practices on intangible transfers of technology
- Increased sensitivity to WMD and anti-terrorism concerns
- Bear in mind enforcement collaboration  coordinate voluntary disclosures

## Sanctions:  What Lies Ahead?

- Syria – UN Resolution 1636
- Iran – Informal Iranian embargo of UK and South Korea
- Belarus
- No plans regarding Palestinian Authority

## Sources

- EU Sanctions Website: http://ec.europa.eu.comm/external_relations/cfsp/sanctions/index.htm
- EU Financial Sanctions Consolidated List: http://ec.europa.eu.comm/external_relations/cfsp/sanctions/list/consol-list.htm
- UK Department of Trade and Industry, Export Control Organization:
- 	http://www.dti.gov.uk/europeandtrade/strategic-export-control/index.html
- Bank of England Consolidated List of Persons Subject to Financial Sanctions: http://www.bankofengland.co.uk/publications/financialsanctions/index.htm
- BAFA Export Control Website (Germany): http://www.bafa.de/1/en/tasks/01_control.htm

## Questions?

- Email:  Alison.Stafford.Powell@bakernet.com
- Tel:  (202) 452-7053