[pic] | COMMISSION OF THE EUROPEAN COMMUNITIES |

Brussels, 18.12.2006

COM(2006) 829 final

2006/0266 (ACC)

Proposal for a

COUNCIL REGULATION

setting up a Community regime for the control of exports of dual-use items and technology

(presented by the Commission)[COM(2006) 828 final][SEC(2006) 1696]

EXPLANATORY MEMORANDUM

1) CONTEXT OF THE PROPOSAL

Grounds for and objectives of the proposal

The proposal for the amendment and recast of Council Regulation N° (EC) 1334/2000 on the control of exports of dual-use items and technology has the objectives of strengthening and improving the EU dual-use export control regime. This will enable the EU to meet standards set by the UN Security Council Resolution 1540 and to implement most of the recommendations noted by the General Affairs Council following the "peer reviews" of the implementation of the Regulation by the Member States in 2004 in conformity with the Thessaloniki Action Plan endorsed by the Heads of States and governments in June 2003. It also aims at introducing more clarity and at reducing regulatory burdens in the implementation of controls by EU exporters.

General context

The EC Regulation on export controls of dual-use items and technologies contributes to the Member States' implementation of their commitments taken in international export control regimes or as State parties to the non-proliferation treaties and arrangements. The reason is that dual-use items are civil items that can be used for military purposes and, in some cases, for the production or as the means of delivery of weapons of mass destruction (nuclear, biological, chemical or missiles).

Since 11 September 2001, the mandates of international export control regimes, which were initially created by like-minded States to prevent the illicit acquisition by States of weapons of mass destruction or of their means of delivery, have been extended to the prevention of the acquisition by non-State actors of dual-use items in order to prevent attacks against civilians and states. Consequently, the European Council adopted in June 2003 the Thessaloniki Action Plan, which contained several provisions recommending the strengthening of the EU export control regime and an enhanced and more visible role for the EU in international export control regimes. It included considerations on an enhanced role for the Commission in those fora and also recommended an EU strategy to support the entry of new EU Member States in those regimes.

Following this Action Plan, several proposals were made to the Council in the autumn of 2003. They addressed the role of the Commission in the international regimes and a method to enhance EU coordination in those fora, proposing a strategy for the membership of new EU Member States. A "peer review" of Member States' implementation of the Regulation was coordinated by the Commission and implemented by the Member States, with the support of a small task force comprising the Commission, the Council Secretariat and Finland. The Task Force recommended actions which were noted by the General Affairs and External Relations Council (GAERC) in December 2004. Those recommendations stressed, among other priorities, the need for a more pro-active approach of the EU against the acquisition by State and non State actors of dual-use items focussing on risks.

Existing provisions in the area of the proposal

The existing Regulation (EC) N° 1334/2000 was adopted following two decisions of the European Court of Justice in 1995 which affirmed the exclusive competences of the European Community in the area of external trade in dual-use items. The current proposal aims at amending that Regulation.

Consistency with the other policies and objectives of the Union

The proposal to amend the Regulation will enable the EU to implement relevant aspects of the EU Strategy against the proliferation of Weapons of Mass Destruction and to contribute to other priorities of the EU such as the security of EU citizens, the prevention of biological, chemical or nuclear terrorist attacks, the support of EU defence-related industries in line with the Commission's communication on Defence made in 2003 and to EU and international security.

2) CONSULTATION OF INTERESTED PARTIES AND IMPACT ASSESSMENT

Consultation of interested parties

Consultation methods, main sectors targeted and general profile of respondents

The Commission launched a study via a consultancy firm to assess the views of exporters and other stakeholders in order to assess the impact of options to amend the Regulation.

In order to define a representative sample of stakeholders, a questionnaire was sent to about 450 potential dual-use exporters based in the EU including a large number of EU federations of industry. The consultation was also extended to any potential interested exporter as it was advertised on the DG TRADE website from 5 October 2005. The final sample of exporters who answered the questionnaire was representative of the distribution of suppliers and exporters of the 10 categories of dual-use items listed in Annex I of the Regulation. Based on the answers received, specific sub-samples of representative exporters were selected to be consulted on the various options to reform the EC Regulation. Because the options referred also to transit, transhipment and brokering controls, transporters and traders were also consulted.

Summary of responses and how they have been taken into account

The exporters were consulted on the final report of the impact assessment study and on the Commission services' assessment of the findings of the study. Opinions from member States and other stakeholders on the results of the study and the intended follow-up by the Commission services were collected from January until early July 2006 and are well reflected by this proposal.

Collection and use of expertise

Scientific/expertise domains concerned

The necessary expertise on dual-use was assured all along the processes of consulting and assessing the views of stakeholders. Expertise on dual-use items and on export control and security issues was a major criterion of selection in the call for tender.

Methodology used

The initial questionnaire aiming at identifying a representative sample of exporters has been prepared by DG TRADE and was included in the terms of reference of the call for tender. It was improved after consultation with a number of EU federations of industry. During the study, additional questionnaires on options tested were prepared by the consultancy firm and subject to Commission's endorsement before they were sent out to stakeholders (Member States' administrations and exporters).

Main organisations/experts consulted

EU federations of industry and individual exporters, Member States national competent authorities in particular national authorities competent to grant export authorisations and custom authorities.

Summary of advice received and used

The impact assessment study revealed a number of weaknesses in the options that DG TRADE had put for testing with the consensus of the different associated DGs. In some cases, DG TRADE knew that the options were weak but considered nevertheless that they had to be tested to confirm initial opinions shared with the Member States.

Some comments and suggestions made by industry could not be retained for a variety of reasons, and in particular as they would go beyond what is achievable in the context of the current revision of the Regulation. These include for example:

- The exemption of a multinational company from export controls of intangible transfers between its EU base and its foreign subsidiaries

- The change of the current system based on ex ante and case by case export control decisions granted to individual exporters for most of the Annex I items to third countries to a system of certified exporters through regular audits of their internal compliance programmes and intensive government to industry dialogue.

- The introduction of a pre-established maximum deadline for the process by national authorities of export authorisations applications.

- Introduction of an exemption for all small samples and small value shipments from export authorisations. However, the Commission will examine in 2007 the possibility to propose new Community export authorisations to facilitate certain exports to certain destinations based on industry's relevant input, and this could include the introduction of a de minimis rule in certain instances.

- The elimination or a radical simplification of the controls on non-listed items that Member States are enabled to conduct in addition to the items listed in the Regulation.

However, the Commission is sensitive to the concerns of industry, and it will continue its work in order to provide the least possible burdensome regulatory framework in order to enhance its international competitive position. For this reason, a review clause has been added to the proposal for amendment to the Regulation.

Means used to make the expert advice publicly available

The results of the study were made available on 23 February 2006 at the following URL address: http://ec.europa.eu/comm/trade/issues/sectoral/industry/dualuse/pr230206_en.htm

Impact assessment

As to the decision to clarify the definition of intangible transfers of technology, it is not clear if the current Article 2biii) covers the transmission of controlled dual-use technology via the access to intranet by third parties located outside the EU. This can have an impact on industry as currently there is no EU-wide definition and no harmonisation of the enforcement of controls on intangible technology. However such impact could be reduced by the adoption of EU guidelines for the implementation of controls of intangible transfers which would include a practical understanding of the scope of technologies in the public domain.

Different options to control transit and transhipment have been considered. Given the high volume of trade passing through the EU, the option to submit all transit or transhipment of dual-use items to systematic pre-authorisation requirements was excluded as impracticable and excessively burdensome. The option kept is to allow all Member States' competent national authorities to take possession of a dual-use item in transit or transhipped when there are reasonable indications (mainly from intelligence sources) that the item is or may be intended for illicit proliferation in a third country. This option already exists in some Member States as it enables them to implement the Proliferation Security Initiative. The impact of this option on those few Member States who used to impose systematic prior authorisation on transit of dual-use items should be minimum as the volume of such authorisations that they reported is below 10 per year.

Different options to sanction illicit brokering of dual-use items have been studied based on the definition that brokering is a service facilitating a transaction covering dual use items . They have taken into account that brokering controls would cover goods located outside the EU and hence submitted to third country's legislation. The study has revealed the extreme difficulty to enforce such controls. It was concluded that controls should only cover the two following cases:

- when the broker is aware of the illicit WMD end uses of the goods in third countries

- when the Member State where the broker is located has informed him of such risks .

Those two cases will trigger the obligation for the broker /supplier of intermediation services to apply for an authorisation if he aims at doing the transaction.

The explicit reference to the possibility for Member States to introduce electronic management of export applications and authorisations in recasted Article 10.4 will facilitate the work of national administrations and exporters.

Different options have been tested to harmonise the conditions of use of the different types of export authorisations that are available in conformity with the Regulation so as to create a level playing field and improve EU security.

Regarding the Community General Export Authorisation (CGEA) , the impact assessment study has led the Commission to opt for clarifying the meaning of "registration" and "reporting" which are currently defined in Annex II of the Regulation, and for limiting the conditions under which the CGEA can be denied (Recasted Article 6.1.a)). This lead to greater convergence of practices across the EU.

Regarding the harmonisation of the conditions of use of the National General Export Authorisations (NGEA), the impact assessment study has revealed that some Member States had no system of registration and therefore, by lacking information on users, could not fully ensure the enforcement of the Regulation. The option to amend the Regulation aims at filling this gap. The study has also highlighted that the exporters who could benefit from National General Export authorisations at national level[1] do enjoy a comparative advantage compared to other exporters. The Commission's proposal to create new Community General Export Authorisations has been widely supported by industry and favoured by Member States. The Commission will try to make those proposals in 2007 based on information to be supplied by exporters and discussions with Member States.

Regarding the option to harmonise the Member States' practices of granting global export authorisations by obliging the exporter to carry out an internal compliance programme (ICP ), the study has revealed that when implemented, ICPs are considered as positive factors. In fact, those ICPs significantly enhance the capacity of the exporters to comply with export control provisions. The Commission proposal is to encourage Member States to grant global export authorisations to companies having ICPs in place.

Options to increase coordination and the sharing of sensitive information among Member States national authorities on the national implementation of the "end use control" have been tested. The results have led the Commission to propose a middle position between the option tested during the impact assessment study (a systematic sharing of information between national customs authorities of all Member States' valid national requests) and the current situation, which is unsatisfactory from a trade and security point of view. The proposal aims at obliging Member States to share with other Member States and the Commission the general requirements that they impose on national exporters regarding the obligation of an export authorisation for non-listed items aimed at being exported to certain end users. In due course this should lead to greater convergence of national policies, and better information of and transparency for the exporting industry.

Amendments have been made to Article 7.2, Article 9 and Article 15 of the Regulation in order to:

- Align the EU legal framework on the informal but politically binding rules set in international export control regimes which regularly review the validity of denials;

- Ensure wider consultations between Member States in case of divergences of appreciation on some export application cases and to create a level playing-field within the EU;

- Enable the Commission to develop, in the future, an electronic secure system to share sensitive and possibly classified EU information.

The impact of those above mentioned proposals is expected to be positive both on trade and security issues.

The proposed recasted Article 11 establishes that amendments to the list of controlled items will be carried out using a comitology procedure, established in recasted Article 19 instead of requiring a formal Council Regulation. It will result in speedier update of the list of controlled items in accordance with the decisions adopted in the export control regimes.

The obligations regarding record keeping under Article 16 have been amended to take due account of demands from industry, supported by work carried out with Member States' experts, to improve the current situation by introducing proportionate and enforceable requirements depending on the transfers at stake.

The recast Article 21 provides for the imposition of criminal sanctions for at least serious infringements of the Regulation and implementing provisions will provide a deterrent for the violation of export controls regulations.

The impact of the creation of a recast Article 22 on international cooperation will:

- contribute to solving current situations such as those, among others, where exporters in third countries and in the EU are obliged to apply controls to transfers of dual-use items in the single market (concretely when third countries' laws impose re-export rules within the single market of dual-use items imported)

- allow for mutual recognition of export authorisations which has the potential to greatly facilitate joint industrial projects or research projects in particular with third countries members of international export control regimes or listed in the current CGEA.

- allow for the adoption of EU-wide specific export control rules that would be applicable to the technologies developed in the EU in the context of Community-financed international programmes involving third countries and would also cover access through intangible means to those technologies.

The impact of the replacement of the existing prior authorisation for transfers between Member States of items in current Annex IV (recast Article 25) by pre-notifications will facilitate transfers within the internal market without having a negative impact on security as Members States will retain the possibility of blocking such transfers for justified reasons.

Finally, a number of proposals are made in order to adopt in specific areas best practices and administrative measures whose impact has not been assessed but whose political justification can be found in developments in international export control regimes and in the recommendations adopted by the Council on the follow up to the "peer reviews".

3) Legal elements of the proposal

Summary of the proposed action

This proposal is a recasting of Council Regulation (EC) N°1334/2000 in line with the Interinstitutional Agreement on the recasting technique for legal acts. It incorporates in a single text both the substantive amendments it makes to Council Regulation (EC) N°1334/2000 and the unchanged provisions thereof. The proposal will replace and repeal this Regulation . This will help make Community legislation more accessible and transparent.

Among the proposed amendments to the Regulation, there are in particular five items where the changes proposed go beyond a technical revision and update of Regulation (EC) N°1334/2000. These are the following:

- a proposal for the introduction of a "comitology" procedure for the amendment of the annexes of the Regulation (lists controlled items and forms) and for the adoption of implementing measures;

- a replacement of the authorisation requirement for the transfer of items within the internal market which are listed in recasted Annex V with a "pre-notification" procedure destined to facilitate trade within the EU internal market without compromising security interests;

- the introduction of a provision according to which Member States must apply criminal sanctions at least for violations of the Regulation; it responds to the call in the Thessaloniki Action Plan for a common EU approach regarding the criminalisation of illegal dual use exports, and to the call by UNSC Resolution 1540 for the introduction of appropriate civil or criminal penalties for violations of such export control regulations. The current sanction regimes of most Member States include both administrative and criminal penalties. The new provision will rule out through a minimum harmonization on EU level that, at least for serious infringements, offenders can profit from purely administrative sanctions in some Member States;

- a recital clarifies that the Regulation provides for a comprehensive legal framework for the export of dual use items, technology and related services. In this context, legal security is essential for those exports of dual use items, technology or services subject to this Regulation and performed in conformity with its provisions and with those adopted for its implementation in compliance with this Regulation. The legal security is particularly important in respect to third countries' legislation that might consider the same exports as criminal offences;

- the introduction of an article providing for the conduct of negotiations with third countries destined to deal with issues such as re-export requirements, in particular when they aim at preventing the full use of the single market by the EU importers of those dual-use technologies of non EU origin and to adopt specific project-based export control rules when EC financed projects involved third countries;

The other main proposals for the recast and amendment of Regulation (EC) N°1334/2000 are the following:

- the introduction of controls on transit ;

- the introduction of controls of brokering and the sanctioning of illicit brokering of dual-use items linked to a weapons of mass destruction programme;

- the clarification and update of controls of intangible transfers of technology including the provision of technical assistance;

- the introduction of some limited adjustments regarding the application of national controls on items non-listed in the Regulation to improve their efficiency and transparency

- the harmonisation of the conditions of use of general authorisations

- the inclusion of a criterion to enhance the granting of global licences to exporters implementing internal compliance programmes

- the introduction of possibilities for wider consultation among concerned Member States prior to granting authorisations essentially similar to denied transactions

- the improvement of the exchange of denials and other sensitive information and the possible introduction in the future of an encrypted electronic system for exchanging information on denials as well as other classified information

- the obligation of registration of exporters and of suppliers of the most sensitive items within the Community to competent national authorities

- provision for the establishment by national authorities of indicative deadlines for the processing of applications for export authorisations, and of deadlines for the treatment of requests for information from licensing authorities concerning the application of national controls.

Some measures, such as adaptation of the model form in Annex III to comply with the United Nations Layout Key for trade documents, which has provided Governments, organisations and the business community with a basis for a standard and aligned design of documents used in trade and transport in order to facilitate the use of the licence, have been left for further regulatory action under the comitology procedure.

Legal basis

Article 133 of the EC Treaty.

Subsidiarity principle

The proposal falls under the exclusive competence of the Community. The subsidiarity principle therefore does not apply.

Proportionality principle

The proposal complies with the proportionality principle for the following reasons:

Only the amendments to the Regulation which are necessary and whose justification has been confirmed have been proposed. Other issues will be dealt with and are addressed through administrative action or best practices or actions at national level.

As stated above, the financial and administrative burden is reduced to the minimum as the new obligations have been limited to what can be reasonably enforced and some of the new measures will facilitate the management of export controls.

Choice of instruments

Proposed instrument: Regulation.

Other means would not be adequate, first because an amendment to the existing legal instrument (Council Regulation) can only be done through another Regulation. Secondly, the decisions of the European Court of Justice have made it clear that export controls of dual-use items are an exclusive Community competence. Other measures that are of a non-legal nature and which have met the criteria that they can bring an added value to the EU have been proposed in the Communication.

4) Budgetary implications

In the short term the proposals will not have significant financial consequences for the EU. The possible development and establishment of an EU secure system for sharing denials and other sensitive information would have a moderate financial cost, although a decision on whether or not such a system should be developed will be taken in agreement with Member States not before early 2007. An assessment of the costs of establishing such a system is provided in the annex..

5) ADDITIONAL INFORMATION

Simplification

The proposal provides for simplification of legislation, and of the administrative procedures for public authorities (Community or national), and for private entities.

The use of the recasting technique allows the Community to combine in a single text both the substantive amendments proposed to the Council Regulation and the unchanged provisions thereof. Moreover, the original text of the Regulation has been improved and clarified in the interests of better regulation.

A number of proposals will simplify the work for the Community administrations (a comitology procedure for changes to the annexes and for the adoption of guidelines) and for private entities (adoption of best practices for the implementation of the Regulation, harmonisation of the conditions of use of export authorisations and their format, e-systems for the management of licence applications).

Repeal of existing legislation

The adoption of the proposal will lead to the repeal of existing legislation .

Recasting

The proposal involves recasting.

Annex

Costs of the possible establishment of a secure system for the exchange of information mentioned in the amended Article 15.4 of the proposal of Regulation

Introduction

The proposed new paragraph 4 of Article 15 of the recasted Regulation establishes the possibility of setting up a secure system for the exchange of information among Member States and as appropriate also the Commission. Such a system would be destined in particular to have access on-line to a database containing the denials of export authorisations (information currently shared via a CD-Rom), although other possible uses to facilitate the exchange of information provided for in the Regulation might also be considered.

The proposal at this stage only intends to provide a legal basis in case such a decision is taken; it does not prejudge any such future decision, which would have to be taken only after consideration of the parameters required for such a system and in agreement with the Member States.

Budget line concerned

20.02.01, within the operational part of the budget, and within the current amounts available.

Estimated costs

In case in the future a decision to go ahead with such a system was taken, the budget could be split into five parts detailed in the table below:

2007 | 2008 | 2009 | 2010 | Total |

Development | 200.000 | 50.000 | 0 | 0 | 250.000 |

Maintenance | 10.000 | 20.000 | 20.000 | 50.000 |

Infrastructure | 30.000 | 10.000 | 40.000 |

Network | 25.000 | 15.000 | 15.000 | 55.000 |

Support infra | 30.000 | 20.000 | 20.000 | 70.000 |

Support user | 40.000 | 30.000 | 30.000 | 100.000 |

Total | 200.000 | 185.000 | 85.000 | 95.000 | 565.000 |

The development would consist in refurbishing the current database using a server technology and including additional functions and possibilities. However, a significant part of the current database (e.g. the format) would be reused.

As regards the network costs, in principle they should be very limited as the current "Testa secure" would be used. Such costs do not include the connexion costs incurred by Member States. Should a separate ad-hoc network be considered, it would require a specific budget, but this is not the option under consideration.

The user support budget would consist of setting up a helpdesk, which could be shared with other existing projects.

1334/2000

2006/0266 (ACC)

Proposal for a

COUNCIL REGULATION

setting up a Community regime for the control of exports of dual-use items and technology

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article 133 thereof,

Having regard to the proposal from the Commission,

Whereas:

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1. Council Regulation (EC) No 1334/2000 of 22 June 2000 setting up a Community regime for the control of exports of dual-use items and technology[2] has been amended substantially, and it should be recast in the interests of clarity.

1334/2000 recital 1 (adapted)

(2) Dual-use items (including software and technology) should be subject to effective control when they are exported from the European Community.

1334/2000 recital 2

(3) An effective common system of export controls on dual-use items is necessary to ensure that the international commitments and responsiabilities of the Member States, especially regarding non-proliferation, and of the European Union, are complied with.

1334/2000 recital 3

(4) The existence of a common control system and harmonised policies for enforcement and monitoring in all Member States is a prerequisite for establishing the free movement of dual-use items inside the Community.

1334/2000 recital 4 (adapted)

(4) The current regime of export controls on dual-use items established by Regulation (EC) No 3381/94[3], and Decision 94/942/CFSP[4], needs to be further harmonised in order to cntinue to guarantee the effective application of controls.

1334/2000 recital 6

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(5) The responsibility for deciding on applications for ð individual, global or general national ï export authorisations ð or for authorisations for the provision of intermediary services or for the transfer supervision of Annex V dual-use items within the single market ï lies with national authorities. National provisions and decisions affecting exports of dual-use items must be taken in the framework of the common commercial policy, and in particular Council Regulation (EEC) N° 2603/69 of 20 December 1969 establishing common rules for exports[5].

1334/2000 recital 7 (adapted)

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(6) Decisions to update the common lists of dual-use items subject to export controls must be in full conformity with the obligations and commitments that each Member State has ð States have ï accepted as a member ð members ï of the relevant international non-proliferation regimes and export control arrangements, or by ratification of relevant international treaties.

1334/2000 recital 5 (adapted)

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(7) Common lists of dual-use items, destinations and guidelines are essential elements for an effective EU export control regime system; such lists have been established by Decision 94/942/CFSP and subsequent amendments and should be incorporated into this Regulation.ð and it is appropriate that the decisions agreed by Member States in international export control regimes are quickly reflected into amendments to the Annex I of the Regulation listing the items under control in the EU, and that procedures are established for the adoption of measures by the Commission for the implementation of the Regulation in consultation with a Committee composed of Member States' representatives. ï

1334/2000 recital 8

(8) Transmission of software and technology by means of electronic media, fax or telephone to destinations outside the Community should also be controlled.

1334/2000 recital 9

(9) Particular attention needs to be paid to issues of reexport and end-use.

1334/2000 recital 10

(10) On 22 September 1998 representatives of the Member States and the European Commission signed Protocols additional to the respective safeguards agreements between the Member States, the European Atomic Energy Community and the International Atomic Energy Agency, which, among other measures, oblige the Member States to provide information on transfers of specified equipment and non-nuclear material.

1334/2000 recital 11

(11) The Community has adopted a body of customs rules, contained in Council Regulation (EEC) No 2913/92 of 12 October 1992 establishing the Community Customs Code[6] and Commission Regulation (EEC) No 2454/93[7] implementing Regulation (EEC) No 2913/92 which lay down, among other things, provisions relating to the export and reexport of goods. Nothing in this Regulation constrains any powers under and pursuant to the Community Customs Code and its implementing provisions.

1334/2000 recital 12

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(12) Pursuant to and within the limits of Article 30 of the Treaty and pending a greater degree of harmonisation, Member States will retain the right to carry out controls on transfers of certain dual-use items within the European Community in order to safeguard public policy or public security. ð These intra-community controls of items listed in Annex V will consist in pre-notifications of shipments made within the EU in order to ensure both greater consistency with the provisions of the Euratom Treaty and to ease intra-Community dual-use trade. Measures adopted by Member States to implement these new provisions shall not involve the application of internal frontier controls within the Community, but solely provisions aimed for instance at ensuring traceability of items circulating in the single market and applied as part of control procedures applied in a non-discriminatory fashion throughout the territory of the Community. ï Where these controls are linked to the effectiveness of controls on exports from the Community, they will be periodically reviewed by the Council.

1334/2000 recital 13

(13) In order to ensure that this Regulation is properly applied, each Member State should take measures giving the competent authorities appropriate powers.

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(14) The UN Security Council Resolution 1540, adopted 28/04/2004, calls in particular for adequate prevention of illicit export, re-export, transit, transhipment and brokering of dual-use items. Accordingly, a possibility for Member States authorities to intercept and take possession of a dual-use item in transit when it may or is intended for proliferation of weapons of mass destruction or of their means of delivery in a third country should be explicitly established, and controls should be introduced on provision of intermediation services when the intermediary has been informed by competent national authorities or is aware that it might lead to production or delivery of illegal weapons of mass destruction in a third country.

(15) It is desirable to achieve a uniform and consistent application of controls throughout the EU in order to avoid undermining EU and international security and unfair competition among EU exporters. With this objective, it is decided, in line with the recommendations of the Thessaloniki Action Plan adopted by Heads of States and Governments in June 2003 and complemented by the WMD strategy:

- to enlarge the circumstances when the Member States can enter into consultation with other Member States prior to granting an export authorisation which could, for example, threaten another Member State's essential security interests

- to ensure greater convergence of the conditions of implementation of the national controls on dual-use items not listed by the Regulation

- to complement the definition of intangible transfers of technology to include making available controlled technology to persons located outside the EU and including technical assistance services provided via electronic means; and to adjust, by amendments to Article16, the record keeping requirements for intangible transfers of technology to the actual possibilities of exporters

- to harmonise the conditions of use of the different types of authorisations that can be granted under the Regulation

- to further align the modalities of exchange of sensitive information among Member States with some of the existing practices of the international export control regimes, in particular by introducing in the Regulation the concept of denials in effect or of valid denials, and to provide for the possibility of establishing a secure electronic system for sharing information among the Member States.

(16) As EU exporters operating in different countries may be subject to different export control standards, it is provided that the Commission can negotiate with third countries so as to obtain in particular the recognition of the EU regime and its specificities such as the single market for dual-use items and the common external trade policy which applies to dual-use items.

1334/2000 recital 14 (adapted)

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(17) Each Member State should determine the ð effective, proportionate and dissuasive ï penalties applicable in the event of breach of the provisions of this Regulation.

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(18) In order to strengthen the EU regime on the export of dual-use items and related services and pursuant to UN Security Council Resolution 1540, it is necessary to provide for the imposition of criminal penalties in particular for serious infringements of the Regulation and of the regulations adopted by Member States for its implementation. In addition, the European Council on 17/18 June 2004 adopted a declaration on criminal sanctions, recalling the commitment expressed by Member States in the European Strategy against the proliferation of WMD adopted on 12 December 2003, to adopt common policies related to criminal sanctions for illegal export, brokering and smuggling of WMD-related material.

(19) The Regulation provides for a comprehensive framework regulating the export of dual-use items, technology or services from the European Union. In this regard, legal security is essential for exporters of items or services subject to this Regulation, who have acted in conformity with its provisions and with those adopted for its implementation in compliance with this Regulation, in respect to differing third country legislation that might consider such exports as criminal offences.

(20) National competent authorities in charge of the implementation of the Regulation must know the exporters intending to export dual-use items or the suppliers intending to transfer items listed in the Annex V to the Regulation within the community so as to efficiently enforce its provisions.

1334/2000 recital 15 (adapted)

The European Parliament expressed its views in its resolution of 13 April 1999[8].

1334/2000 recital 16 (adapted)

In view of the foregoing, Regulation (EC) No 3381/94 should be repealed,

1334/2000

HAS ADOPTED THIS REGULATION:

CHAPTER I

SUBJECT AND DEFINITIONS

1334/2000 (adapted)

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Article 1

This Regulation sets up a Community system regime of export controls of exports of for dual-use items ð and related services and of transit of dual-use items ï.

1334/2000 Art. 2 (adapted)

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Article 2

For the purposes of this Regulation:

(a) «dual-use items» shall mean items, including software and technology, which can be used for both civil and military purposes, and shall include all goods which can be used for both non-explosive uses and assisting in any way in the manufacture of nuclear weapons or other nuclear explosive devices;

(b) «export» shall mean:

(i) an export procedure within the meaning of Article 161 of Regulation (EC) No 2913/1992 (the Community Customs Code);

(ii) a re-export within the meaning of ÕArticle 182 of that Code,; and

(iii) transmission of software or technology ð , or the provision of technical assistance, ï by electronic media, including by fax, or telephone ð , electronic mail or any other electronic means, ï to a destination outside the European Community; this applies to oral transmission of technology by telephone only where the technology is contained in a document the relevant part of which is read out over the telephone, or is described over the telephone in such a way as to achieve substantially the same result ð , and includes making available in an electronic form such software, technology or technical assistance ï ;

ð (iv) the provision of the services of intermediation in transactions of dual-use items from the European Community intro the territory of a third country. ï

(c) «exporter» shall mean any natural or legal person ð or partnership : ï

(i) on whose behalf an export declaration is made, that is to say the person who, at the time when the declaration is accepted, holds the contract with the consignee in the third country and has the power for determining the sending of the item out of the customs territory of the European Community. If no export contract has been concluded or if the holder of the contract does not act on its own behalf, the exporter shall mean the person who has the power for determining the sending of the item out of the customs territory of the European Community shall be decisive;

(ii) «exporter» shall also mean any natural or legal person who decides to transmit ð or make available ï software or technology ð or provides technical assistance ï by any electronic media, fax or telephone means to a destination outside the European Community;

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(iii) who provide services as intermediaries within the meaning of point (e)

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Where the benefit of a right to dispose of the dual-use item belongs to a person established outside the Community pursuant to the contract on which the export is based, the exporter shall be considered to be the Ccontracting Pparty established in the Community.

(d) «export declaration» shall mean the act whereby a person indicates in the prescribed form and manner the wish to place dual-use items under an export procedure.;

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(e) "Intermediation services related to dual-use items" shall mean activities of persons, entities and partnerships:

- negotiating or arranging transactions that have as an object the purchase, sale or supply of dual-use items listed in Annex I from a third country to any other third country; or

- who buy, sell or supply such items from a third country to any other third country.

(f) "Intermediary" shall mean any legal or natural person or partnership providing intermediation services related to dual-use items listed in Annex I from the customs territory of the European Community into the territory of a third country

(g) "Transit" shall mean a transport of dual-use items entering and passing through the customs territory of the European Community with a destination outside the European Community

(h) "Individual export authorisation" shall mean an authorisation granted to one specific exporter for one end user in a third country and covering one or more dual-use items or technologies

(i) "Community General Export Authorisation" shall mean an export authorisation (EU 001) for exports to certain countries of destination available to all exporters who respect its conditions of use as listed in Article 6(1) and Annex II.

(j) "Global export authorisation" shall mean an authorisation granted to one specific exporter in respect of a type or category of dual-use item which may be valid for exports to one or more specified end users in one or more specified third countries.

(k) "National general export authorisation" shall mean a national authorisation published in the official journal of a Member State which is valid for all exporters based in the Member State where it is published who meet the conditions set in the national law, covering one or several specified countries as well as a number of dual-use items defined in the national law and not subject to notifications under Article 9.

(l) "Supplier" shall mean any legal or natural person or partnership who transfers a dual-use item listed in Annex V to the Regulation from one Member State to another Member State.

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CHAPTER II

SCOPE

ARTICLE 3

1. An authorisation shall be required for the export of the dual-use items listed in Annex I.

2. Pursuant to Article 4 or Article 5, an authorisation may also be required for the export to all or certain destinations of certain dual-use items not listed in Annex I.

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3. An authorisation for the provision of intermediation services related to dual-use items listed in Annex I is required when the intermediary has been informed by the competent authorities of the Member State where he is established or has grounds for suspecting that those dual-use items are or may be intended for proliferation of weapons of mass destruction or their means of delivery in violation of relevant international treaties and obligations.

4. This Regulation does not apply to dual-use items which only pass through the territory of the Community, that is those which are not assigned a customs-approved treatment or use other than the external transit procedure or which are merely placed in a free zone or free warehouse and where no record of them has to be kept in an approved stock record.

4. National customs authorities can temporarily stop for the purpose of control dual-use items listed in Annex I being in transit. If as a result of such controls, national competent authorities have reasonable grounds for suspecting that those items are or may be intended for illegal proliferation or attempts at international security in violation of international treaties and obligations, they can decide to take possession of them.

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53. This Regulation does not apply to the supply of services or the transmission of technology if that supply or transmission involves cross-border movement of natural persons.

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Article 4

1. An authorisation shall be required for the export of dual-use items not listed in Annex I if the exporter has been informed by the competent authorities of the Member State in which he is established that the items in question are or may be intended, in their entirety or in part, for use in connection with the development, production, handling, operation, maintenance, storage, detection, identification or dissemination of chemical, biological or nuclear weapons or other nuclear explosive devices or the development, production, maintenance or storage of missiles capable of delivering such weapons.

2. An authorisation shall also be required for the export of dual-use items not listed in Annex I if the purchasing country or country of destination is subject to an arms embargo decided by a common position or joint action adopted by the Council or a decision of the OSCE or an arms embargo imposed by a binding resolution of the Security Council of the United Nations and if the exporter has been informed by the authorities referred to in paragraph 1 that the items in question are or may be intended, in their entirety or in part, for a military end-use. For the purposes of this paragraph, «military end-use» shall mean:

(a) incorporation into military items listed in the military list of Member States;

(b) use of production-, test- or analytical equipment and components therefor, for the development, production or maintenance of military items listed in the abovementioned list;

(c) use of any unfinished products in a plant for the production of military items listed in the abovementioned list.

3. An authorisation shall also be required for the export of dual-use items not listed in Annex I if the exporter has been informed by the authorities referred to in paragraph 1 that the items in question are or may be intended, in their entirety or in part, for use as parts or components of military items listed in the national military list that have been exported from the territory of that Member State without authorisation or in violation of an authorisation prescribed by national legislation of that Member State.

4. If an exporter is aware that dual-use items which he proposes to export, not listed in Annex I, are intended, in their entirety or in part, for any of the uses referred to in paragraphs 1, 2 and 3, he must notify the authorities referred to in paragraph 1, which will decide whether or not it is expedient to make the export concerned subject to authorisation.

5. A Member State may adopt or maintain national legislation imposing an authorisation requirement on the export of dual-use items not listed in Annex I if the exporter has grounds for suspecting that those items are or may be intended, in their entirety or in part, for any of the uses referred to in paragraph 1.

6. A Member State which imposes an authorisation requirement, in application of paragraphs 1 to 5, on the export of a dual-use item not listed in Annex I, shall, where appropriate, inform the other Member States and the Commission. ð Member States shall also provide information to the other Member States and the Commission on any authorisation requirements applied generally in accordance with this Article for the export of non-listed items subject to such authorisation requirements, and on the names of end-users/consignees to which these requirements apply ï . The other Member States shall give all due consideration to this information and shall inform, to the extent possible, their customs offices and other relevant national authorities.

7. The provisions of Article 9(2) and (3) shall apply to cases concerning dual-use items not listed in Annex I.

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8. Exporters can request a reply from the competent authorities of the Member State where they are established on whether the export of a non-listed item is subject or not to an authorisation requirement under this Article. The national competent authorities shall provide a reply within a delay of 20 working days from the presentation of a complete request by the exporter.

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89. This Regulation is without prejudice to the right of Member States to take national measures under Article 11 of Regulation (EEC) No 2603/69.

Article 5

1. A Member State may prohibit or impose an authorisation requirement on the export of dual-use items not listed in Annex I for reasons of public security or human rights considerations.

2. Member States shall notify any measures adopted pursuant to paragraph 1 to the Commission immediately after their adoption and indicate the precise reasons for the measures.

3. Member States shall also immediately notify the Commission of any modifications to measures adopted pursuant to paragraph 1.

4. The Commission shall publish the measures notified to it pursuant to paragraphs 2 and 3 in the C series of the Official Journal of the European Communities Union .

CHAPTER III

EXPORT AUTHORISATION

ARTICLE 6

1. A Community general export authorisation for certain exports as set out in Annex II is established by this Regulation.

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(a) Exporters that intend to use the Community General Export Authorisation shall notify the competent authorities of the Member State where they are established of their intention to use or of their first use of the Community General Export authorisation; such notification shall take place no later than thirty days after the date when the first export took place. The Member States will share with the Commission and other Member States those registration notifications.

(b) The use of the Community General Export authorisation shall be denied by the national competent authorities of the Member State where the exporter is established if:

- the exporter has been informed by his authorities that the items in question are or may be intended, in their entirety or in part, for any of the uses referred to in paragraphs 1, 2 and 3 of Article 4,

- or if the exporter is aware that the items are intended for the abovementioned uses,

- or when the relevant items are exported to a customs free zone or free warehouse which is located in a destination covered by this authorisation.

In those cases, the competent authorities of the Member State shall assess individual applications on the basis of the criteria listed in Article 8 (1) to decide if the items can be exported with a global or individual export authorisation or if they must be denied.

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2. For all other exports for which an authorisation is required under this Regulation, such authorisation shall be granted by the competent authorities of the Member State where the exporter is established. Subject to the restrictions specified in paragraph 13, this authorisation may be an individual, global or general authorisation.

The authorisation All the authorisations shall be valid throughout the European Community.

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Member States shall establish targets for the treatment of the requests of export authorisation within certain deadlines and communicate them to the Commission and national exporters.

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The authorisation may be subject, if appropriate, to certain requirements and conditions, such as an obligation to provide an end-use statement.

3. Items listed in Part 2 of Annex II shall not be included in a general authorisation.

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3. National general export authorisations shall:

(a) Exclude from their scopes items listed in part 2 of Annex II and items and countries subject of valid denials issued under Article 9.2;

(b) Be used only by exporters who have notified to the competent authorities of the Member State where they are established their intention to use the national general export authorisation at the latest 30 days after the first shipment;

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4. Member States shall indicate in general authorisations that these may

(c) not be used if the exporter has been informed by his authorities that the items in question are or may be intended, in their entirety or in part, for any of the uses referred to in paragraphs 1, 2 and 3 of Article 4, or if the exporter is aware that the items are intended for the abovementioned uses.

45. Member States shall maintain or introduce in their respective national legislation the possibility of granting a global authorisation to a specific exporter in respect of a type or category of dual-use item which may be valid for exports to one or more specified countries.

56. Member States shall supply the Commission with a list of the authorities empowered to:

(a) grant export authorisations for dual-use items;

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(b) grant export authorisations for the provision of intermediation services related to listed dual use items

(c) decide to take possession of dual-use items in transit

(d) grant transfer authorisations only if these authorities are different from these listed in Article 6.5a).

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The Commission shall publish the list of these authorities in the C series of the Official Journal of the European Communities Union .

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Article 7

1. If the dual-use items in respect of which an application has been made for an individual export authorisation to a destination not listed in Annex II or to any destination in the case of dual-use items listed in Annex IV V are or will be located in one or more Member States other than the one where the application has been made, that fact shall be indicated in the application. The competent authorities of the Member State to which the application for authorisation has been made shall immediately consult the competent authorities of the Member State or States in question and provide the relevant information. The Member State or States consulted shall make known within 10 working days any objections it or they may have to the granting of such an authorisation, which shall bind the Member State in which the application has been made.

If no objections are received within 10 working days, the Member State or States consulted shall be regarded as having no objection.

In exceptional cases, any Member State consulted may request the extension of the 10-day period. However, the extension may not exceed 30 working days.

2. If an export might prejudice its essential security interests, a Member State may request another Member State not to grant an export authorisation or, if such authorisation has been granted, request its annulment, suspension, modification or revocation. ð Such request shall be circulated to the other Member States and to the Commission. ï The Member State receiving such a request shall immediately engage in consultations of a non-binding nature with the requesting Member State, to be terminated within 10 working days. ð The requesting and requested Member States may ask the Commission to raise the issue in the Coordination Group established in Article 18 within 10 working days. In case the requested Member State decides to grant the authorisation, this should be notified to the Commission and other Member Statesï

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Article 8

1. In deciding whether or not to grant an ð individual or global ï export authorisation ð or an authorisation for the provision of intermediation services ï under this Regulation, the Member States shall take into account all relevant considerations including:

(a) the obligations and commitments they have each accepted as a members of the relevant international non-proliferation regimes and export control arrangements, or by ratification of relevant international treaties;

(b) their obligations under sanctions imposed by a common position or a joint action adopted by the Council or by a decision of the OSCE or by a binding resolution of the Security Council of the United Nations;

(c) considerations of national foreign and security policy, including those covered by the European Union Code of Conduct on arms exports;

(d) considerations about intended end-use and the risk of diversion.

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2. In addition to the criteria set in paragraph 1, when assessing an application for a global export authorisation or for an authorisation for the provision of intermediation services, Member States shall take into consideration the application by the exporter of proportionate, adequate means and procedures to ensure compliance with the provisions and objectives of this Regulation and with the terms and conditions of the authorisation.

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Article 9

1. Exporters shall supply the competent authorities with all relevant information required for their applications for export authorisation ð and for authorisation for the provision of intermediation services including any relevant information collected from third parties so as to provide complete information to the national competent authorities in particular on the end-user, the country of destination, the end-uses of the item exported. ï

2. The competent authorities, acting in accordance with this Regulation, may refuse to grant an export authorisation ð or an authorisation for the provision of intermediation services ï and may annul, suspend, modify or revoke an export authorisation ð or an authorisation for the provision of intermediation services ï which they have already granted. Where they refuse, annul, suspend, substantially limit or revoke an ð export ï authorisation ð or an authorisation for the provision of intermediation services, or when they have determined that the export of dual-use item or the provision of intermediation is not to be authorised, ï they shall inform notify the competent authorities of the other Member States and the Commission thereof and exchange share the relevant information with them the other Member States and the Commission, while complying with the provisions of Article 15(3) concerning the confidentiality of such information.

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Those notifications will be made via secure electronic means for the exchange of sensitive information available to Member States and the Commission, including via a secure system that may be set up in accordance with Article 15.4 . Member States shall review denials of authorisations notified under this paragraph within three years of their notification and revoke them, amend them or renew them. Denials which are not revoked shall remain valid.

When Member States suspend an export authorisation or an authorisation for the provision of intermediation services, they shall inform the other Member States and the Commission thereof and share the relevant information with them while complying with the provisions of article 15 (3) concerning the confidentiality of such information. At the end of the period of suspension, the final assessment shall be communicated to the Member States and the Commission. If the authorisation is revoked, this shall be considered as a notification under the second sub-paragraph.

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3. Before any a Member State grants an export authorisation ð or an authorisation for the provision of intermediation service ï which has been denied by another Member State or States for an essentially identical transaction ð (meaning an essentially identical end use or an item with essentially identical parameters or technical characteristics to the same end user/consignee or wider entity encompassing the same end user) and for which the denial is still valid ï within the previous three years, it will shall first consult the Member State or States which issued the ð valid ï denial(s) ð as provided for in paragraph 2 as well as notifications under the fourth sub-paragraph thereof, and will inform the Commission of the launching of those consultations ï. If following ð such ï consultations, the Member State nevertheless decides intends to grant an authorisation, it shall inform the other Member States and the Commission, providing all relevant information to explain the decision intention .

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4. The competent authorities of the Member States shall notify the Member States and the Commission of the denials of items in transit that they have taken possession of in application of Article 3.

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Article 10

1. All individual and global export authorisations ð and authorisations for the provision of intermediation services ï shall be issued on forms consistent with ð containing at least all the elements and in the order of ï the model set out in Annex IIIa. ð Measures destined to harmonise the forms of authorisations can be adopted in accordance with the procedure referred to in Article 19. ï

2. At the request of exporters, global export authorisations that contain quantitative limitations shall be split.

3. National General export authorisations granted under Article 6(3)(2) shall be published in accordance with national laws and practices. They shall be issued in accordance with the indications set out in Annex IIIb IV ð and communicated to the Commission ï.

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4. Member States may issue their export authorisations in an electronic form. For the purposes of enabling the customs and other relevant authorities to check the existence of an export authorisation, the information contained in the export authorisation may be made available using a secure system that may be set up for this purpose. A decision to implement this provision and the modalities of its application may be adopted in accordance with the procedures referred to in Article 19.

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CHAPTER IV

UPDATING OF LIST OF DUAL-USE ITEMS

ARTICLE 11

The lists of dual-use items set out in Annex I and Annex IV shall be updated ð , in accordance with the procedure referred to in Article 19.2, ï in conformity with the relevant obligations and commitments, and any modification thereof, that each Member State ð States ï has ð have ï accepted as a member ð members ï of the international non-proliferation regimes and export control arrangements, or by ratification of relevant international treaties.

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CHAPTER V

CUSTOMS PROCEDURES

Article 12

1. When completing the formalities for the export of dual-use items at the customs office responsible for handling the export declaration, the exporter shall furnish proof that any necessary export authorisation has been obtained.

2. A translation of any documents furnished as proof into an official language of the Member State where the export declaration is presented may be required of the exporter.

3. Without prejudice to any powers conferred on it under, and pursuant to, the Community Customs Code, a Member State may also, for a period not exceeding the periods referred to in paragraph 4, suspend the process of export from its territory, or, if necessary, otherwise prevent the dual-use items listed in Annex I which are covered by a valid export authorisation from leaving the Community via its territory, where it has grounds for suspicion that:

(a) relevant information was not taken into account when the authorisation was granted, or

(b) circumstances have materially changed since the grant of the authorisation.

4. In the case referred to in paragraph 3, the competent authorities of the Member State which granted the export authorisation shall be consulted forthwith in order that they may take action pursuant to Article 9(2). If such competent authorities decide to maintain the authorisation, they shall reply within 10 working days, which, at their request, may be extended to 30 working days in exceptional circumstances. In such case, or if no reply is received within 10 or 30 days, as the case may be, the dual-use items shall be released immediately. The Member State which granted the authorisation shall inform the other Member States and the Commission.

Article 13

1. Member States may provide that customs formalities for the export of dual-use items may be completed only at customs offices empowered to that end.

2. Member States availing themselves of the option set out in paragraph 1 shall inform the Commission of the duly empowered customs offices. The Commission shall publish the information in the C series of the Official Journal of the European Communities Union .

Article 14

The provisions of Articles 843 and 912a to 912g of Regulation (EEC) No 2454/93 shall apply to the restrictions relating to the exportation, reexportation and exit from the customs territory of dual-use items for the export of which an authorisation is required under this Regulation.

CHAPTER VI

ADMINISTRATIVE COOPERATION

ARTICLE 15

1. Acting in liaison with the Commission, Member States shall take all appropriate measures to establish direct cooperation and exchange of information between competent authorities, in particular to eliminate the risk that possible disparities in the application of export controls to dual-use items may lead to a deflection of trade, which could create difficulties for one or more Member States.

2. Member States shall take all appropriate measures to establish direct cooperation and exchange of information between competent authorities on sensitive end-users with a view to providing a consistent level of guidance to exporters concerned by this Regulation. ð Such information shall cover: ï

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(a) convictions for criminal export-related offences;

(b) other intelligence, as appropriate, data on sensitive intermediaries, routes taken and consignees

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3. Council Regulation (EC) No 515/97 of 13 March 1997 on mutual assistance between the administrative authorities of the Member States and cooperation between the latter and the Commission to ensure the correct application of the law on customs and agricultural matters[9], and in particular the provisions on the confidentiality of information, shall apply mutatis mutandis , without prejudice to Article 18 of this Regulation.

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4. A secure and encrypted system for the exchange of information among Member States and whenever appropriate the Commission may be set up under the terms to be determined in accordance with the procedures referred to in paragraph 3 of Article 19.

5. Measures necessary to facilitate the cooperation established in this paragraphs 1 to 4 of this Article may be taken in accordance with the procedures referred to in Article 19.

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CHAPTER VII

CONTROL MEASURES

ARTICLE 16

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1. Exporters of items listed in Annex I and natural and legal persons or partnership wishing to provide intermediation services for those dual-use items in third countries as well as natural or legal persons intending to ship dual–use items listed in Annex V within the Community shall notify their intention to export such items or provide such services to the national competent authorities defined in Article 6. The Member States receiving these registrations will share them with other Member States and the Commission.

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-1. 2. (i) Exporters ð of tangible dual-use items ï shall keep detailed registers or records of their exports, in accordance with the practice in force in the respective Member States. Such registers or records shall include in particular commercial documents such as invoices, manifests and transport and other dispatch documents containing sufficient information to allow the following to be identified:

(a) the description of the dual-use items;

(b) the quantity of the dual-use items;

(c) the name and address of the exporter and of the consignee;

(d) where known, the end-use and end-user of the dual-use items.

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(ii) Suppliers of Annex V dual-use items transferring them in the single market shall keep detailed registers or records of their shipments in accordance with the practice in force in the respective Member States. Such registers or records shall include in particular commercial documents such as invoices, manifests and transport, other dispatch documents and the information contained in the pre-transfer notifications defined in part II of Annex V.

(iii) For exports as defined in Article 2biii) and for the provision of intermediation services, exporters/intermediary shall keep registers or records so as to be able to prove, on request, the nature of the dual-use items, technology or software that were transferred/subject of provision of intermediation services, the period during which the items were transferred/subject of provision of intermediation services and the destination of the transfers.

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2. 3. The registers or records and the documents referred to in paragraph ð paragraphs ï 1 ð and 2 ï shall be kept for at least three years from the end of the calendar year in which the export ð /transfer or provision of intermediation services ï took place. They shall be produced to the competent authorities of the Member State in which the exporter ð /supplier or intermediary ï is established on request.

Article 17

In order to ensure that this Regulation is properly applied, each Member State shall take whatever measures are needed to permit its competent authorities:

(a) to gather information on any order or transaction involving dual-use items;

(b) to establish that the export control measures are being properly applied, which may include in particular the power to enter the premises of persons with an interest in an export transaction.

CHAPTER VIII

GENERAL AND FINAL OTHER PROVISIONS AND INTERNATIONAL COOPERATION

ARTICLE 18

1. A ð Dual-use ï Coordinating Coordination Group chaired by a representative of the Commission shall be set up. Each Member State shall appoint a representative to the Coordinating this Group.

The Coordinating Group It shall examine any question concerning the application of this Regulation which may be raised either by the chairman or by a representative of a Member State and, inter alia in particular :

(a) the measures which should be taken by Member States to inform exporters ð /other relevant stakeholders ï of their obligations under this Regulation;

(b) guidance concerning export authorisation forms. ð best practices and administrative procedures for the implementation and enforcement of the Regulation; ï

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(c) technical considerations on options for legislative amendments to address problems of implementation;

(d) common guidelines for making available in a user-friendly manner for exporters the relevant information concerning the Community dual-use export control regime and its application by the Member States.

It shall report to the Council on the outcomes of its meetings.

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2. The ð Chair of the Dual-use ï Coordinating Coordination Group may ð shall ï , whenever it considers it to be necessary, consult organisations representative of exporters ð and other relevant stakeholders ï concerned by this Regulation.

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Article 19

The Dual-use committee

1. The Commission shall be assisted by a committee (hereinafter referred to as the 'Dual Use Committee').

2. The procedure referred to in paragraph 3 of this Article shall apply for the adoption of measures that may be necessary for the implementation of this Regulation other than in areas covered by Article 21 and 23, and for the adoption of amendments to the Annexes of this Regulation.

3. Where reference is made to this paragraph, Articles 5 and 7 of Decision 1999/468/EC shall apply.

The period laid down in Article 5(6) of Decision 1999/468/EC shall be set at two months.

4. The Dual-use Committee shall adopt its rules of procedure.

Article 20

The chair of the Dual-use Committee may, on his own initiative or at the request of one of the Member States representatives, consult the dual-use Committee about any other matter relating to the operation or application of this Regulation.

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Article 1921

Each Member State shall take appropriate measures to ensure proper enforcement of all the provisions of this Regulation. In particular, it shall lay down the penalties applicable to infringements of the provisions of this Regulation or of those adopted for its implementation. Those penalties must be effective, proportionate and dissuasive. ð They shall include criminal penalties at least for serious infringements of the provisions of this Regulation, such as an intentional export intended for use in a programme for the development or manufacture of chemical, biological, nuclear weapons or of missiles capable of their delivery without the authorisation required under this Regulation, or the falsification or omission of information with a view to obtaining an authorisation that would otherwise have been denied. ï

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Article 22

International cooperation

Without prejudice to the provisions on mutual administrative assistance agreements or protocols in customs matters concluded between the Community and third countries, the Commission may negotiate with third countries agreements providing for the mutual recognition of export controls of dual-use items covered by this Regulation and in particular to eliminate authorisation requirements for re-exports within the territory of the European Community. These shall be conducted in accordance with the procedures established in Article 133 (3) of the Treaty establishing the European Community and the Treaty establishing the European Atomic Energy Community, as appropriate.

Article 23

When appropriate and when projects financed by the Community are at stake, the Commission can make proposals, in the relevant legislative frameworks of the European Union or in the arrangements with third countries, so that an ad hoc committee involving all competent authorities of the Member States can be set up and be entitled to decide on the granting of the necessary export authorisations to ensure the proper functioning of those projects involving dual-us items or technologies.

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Article 2024

Each Member State shall inform the Commission of the laws, regulations and administrative provisions adopted in implementation of this Regulation, including the measures referred to in Article 1921. The Commission shall forward the information to the other Member States. Every three years the Commission shall ð review the implementation of this Regulation and ï present a report to the European Parliament and the Council on the its application of this Regulation ð , which shall include as appropriate proposals for its amendment ï . Member States shall provide to the Commission all appropriate information for the preparation of the report ð , such as the number of exporters using the authorisations available in each Member State, the number of different authorisations granted to exporters, the registers of companies using the Community General Export Authorisation, or the number of bilateral consultations carried out under different Articles of this Regulation ï .

Article 2125

1. An authorisation shall be required for intra-Community transfers of dual-use items listed in Annex IV. Items listed in Part 2 of Annex IV shall not be covered by a general authorisation.

2. (a) A Member State may impose an authorisation requirement for the transfer of other dual-use items from its territory to another Member State in cases where at the time of transfer:

- the operator knows that the final destination of the items concerned is outside the Community,

- export of those items to that final destination is subject to an authorisation requirement pursuant to Article 3, 4 or 5 in the Member State from which the items are to be transferred, and such export directly from its territory is not authorised by a general authorisation or a global authorisation,

- no processing or working as defined in Article 24 of the Community Customs Code is to be performed on the items in the Member State to which they are to be transferred.

(b) The transfer authorisation must be applied for in the Member State from which the dual-use items are to be transferred.

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1. A transfer to another Member State of a dual-use item listed in Annex V must be notified in advance by the supplier to the national competent authorities of the Member State where the item is located 8 working days prior to the shipment date, who will inform the Member State where the supplier is established.

2. The pre-transfer notification must contain the information listed in part II of Annex V.

3. The national competent authorities of the Member States concerned can suspend the transfer when:

(a) the supplier has not registered to national authorities of the Member State where it is established or has not fully provided the information required under part II of Annex V

(b) they have serious reasons to consider that the transfer would be contrary to essential security interests of the EU or of a Member State.

In this case, the national competent authority notified of the transfer enters into consultation with the Member States concerned. If the examination of the case leads to the Member State maintaining its initial decision to suspend the transfer, the Member States concerned may refer to the Commission and the other Member States for larger consultations. The final decision will be communicated to Member States and Commission with justification.

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(c) ð The national competent authorities cannot suspend the transfer ï Iin cases where the subsequent export of the dual-use items has already been accepted, in the consultation procedures set out in Article 7, by the Member State from which the items are to be transferred, the transfer authorisation shall be issued to the operator immediately, unless the circumstances have substantially changed.

(d) A Member State which adopts legislation imposing such a requirement shall inform the Commission and the other Member States of the measures it has taken. The Commission shall publish this information in the C series of the Official Journal of the European Communities .

3.4. The measures pursuant to paragraphs 1 and 2 shall not involve the application of internal frontier controls within the Community, but solely controls which are performed as part of the normal control procedures applied in a non-discriminatory fashion throughout the territory of the Community.

4.5. Application of the measures pursuant to paragraphs 1 and 2 ð and 3 ï may in no case result in transfers from one Member State to another being subject to more restrictive conditions than those imposed for exports of the same items to non-Member States.

5. Documents and records of intra-Community transfers of dual-use items listed in Annex I shall be kept for at least three years from the end of the calendar year in which a transfer took place and shall be produced to the competent authorities of the Member State from which these items were transferred on request.

6. A Member State may, by national legislation, require that, for any intra-Community transfers from that Member State of items listed in Category 5, Part 2 of Annex I which are not listed in Annex IV V, additional information concerning those items shall be provided to the competent authorities of that Member State.

7. The relevant commercial documents relating to intra-Community transfers of dual-use items listed in Annex I shall indicate clearly that those items are subject to controls if exported from the Community. Relevant commercial documents include, in particular, any sales contract, order confirmation, invoice or dispatch note.

Article 2226

This Regulation does not affect:

- the application of Article 296 of the Treaty establishing the European Community,

- the application of the Treaty establishing the European Atomic Energy Community.

Article 2327

Regulation (EC) No 3381/94 1334/2000 is hereby repealed with effect from [...] .

However, for export authorisation applications made before the date of entry into force of this Regulation, the relevant provisions of Regulation (EC) No 3381/94 1334/2000 shall continue to apply.

ò new

References to the repealed Regulation shall be construed as references to this Regulation and shall be read in accordance with the correlation table in Annex […].

1334/2000 (new)

Article 2428

This Regulation shall enter into force 90 days after the date of its publication in the Official Journal of the European Communities Union .

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Luxembourg, 22 June 2000 in Brussels,

For the Council

The President

394/2006 Art. 1 and Annex (adapted)

ANNEX I

LIST OF DUAL-USE ITEMS AND TECHNOLOGY

(referred to in Article 3 of Regulation (EC) No 1334/2000)

This list implements internationally agreed dual-use controls including the Wassenaar Arrangement, the Missile Technology Control Regime (MTCR), the Nuclear Suppliers' Group (NSG), the Australia Group and the Chemical Weapons Convention (CWC). No account has been taken of any items that Member States wish to place on an exclusion list. No account has been taken of any national controls (non-regime origin controls) that may be maintained by Member States.

GENERAL NOTES TO ANNEX I

1. For control of goods which are designed or modified for military use, see the relevant list(s) of controls on military goods maintained by individual Member States. References in this Annex that state «SEE ALSO MILITARY GOODS CONTROLS» refer to the same lists.

2. The object of the controls contained in this Annex should not be defeated by the export of any non-controlled goods (including plant) containing one or more controlled components when the controlled component or components are the principal element of the goods and can feasibly be removed or used for other purposes.

N.B.: In judging whether the controlled component or components are to be considered the principal element, it is necessary to weigh the factors of quantity, value and technological know-how involved and other special circumstances which might establish the controlled component or components as the principal element of the goods being procured.

3. Goods specified in this Annex include both new and used goods.

NUCLEAR TECHNOLOGY NOTE (NTN)

(To be read in conjunction with section E of Category 0)

The «technology» directly associated with any goods controlled in Category 0 is controlled according to the provisions of Category 0.

«Technology» for the «development», «production» or «use» of goods under control remains under control even when applicable to non-controlled goods.

The approval of goods for export also authorises the export to the same end-user of the minimum «technology» required for the installation, operation, maintenance and repair of the goods.

Controls on «technology» transfer do not apply to information «in the public domain» or to «basic scientific research».

GENERAL TECHNOLOGY NOTE (GTN)

(To be read in conjunction with section E of Categories 1 to 9)

The export of «technology» which is «required» for the «development», «production» or «use» of goods controlled in Categories 1 to 9, is controlled according to the provisions of Categories 1 to 9.

«Technology»«required» for the «development», «production» or «use» of goods under control remains under control even when applicable to non-controlled goods.

Controls do not apply to that «technology» which is the minimum necessary for the installation, operation, maintenance (checking) and repair of those goods which are not controlled or whose export has been authorised.

N.B.: This does not release such «technology» specified in 1E002.e., 1E002.f., 8E002.a. and 8E002.b.

Controls on «technology» transfer do not apply to information «in the public domain», to «basic scientific research» or to the minimum necessary information for patent applications.

GENERAL SOFTWARE NOTE (GSN)

(This note overrides any control within section D of Categories 0 to 9)

Categories 0 to 9 of this list do not control «software» which is either:

a. Generally available to the public by being:

1. Sold from stock at retail selling points, without restriction, by means of:

a. Over-the-counter transactions;

b. Mail order transactions;

c. Electronic transactions; or

d. Telephone order transactions; and

2. Designed for installation by the user without further substantial support by the supplier; or

N.B.: Entry a. of the General Software Note does not release «software» specified in Category 5 — Part 2 («Information Security»).

b.«In the public domain».

EDITORIAL PRACTICES

In accordance with the rules set out in paragraph 101 on page 86 of the Interinstitutional Style Guide (1997 edition), for texts in English published in the Official Journal of the European Communities Union :

- a comma is used to separate the whole number from the decimals,

- whole numbers are presented in series of three, each series being separated by a thin space.

DEFINITIONS OF TERMS USED IN THIS ANNEX

Definitions of terms between «single quotation marks» are given in a Technical Note to the relevant item.

Definitions of terms between «double quotation marks» are as follows:

N.B.: Category references are given in brackets after the defined term.

«Accuracy» (2 6), usually measured in terms of inaccuracy, means the maximum deviation, positive or negative, of an indicated value from an accepted standard or true value.

«Active flight control systems» (7) are systems that function to prevent undesirable «aircraft» and missile motions or structural loads by autonomously processing outputs from multiple sensors and then providing necessary preventive commands to effect automatic control.

«Active pixel» (6 8) is a minimum (single) element of the solid state array which has a photoelectric transfer function when exposed to light (electromagnetic) radiation.

«Adapted for use in war» (1) means any modification or selection (such as altering purity, shelf life, virulence, dissemination characteristics, or resistence to UV radiation) designed to increase the effectiveness in producing casualties in humans or animals, degrading equipment or damaging crops or the environment.

«Aircraft» (1 7 9) means a fixed wing, swivel wing, rotary wing (helicopter), tilt rotor or tilt-wing airborne vehicle.

N.B.: See also «civil aircraft».

«All compensations available» (2) means after all feasible measures available to the manufacturer to minimise all systematic positioning errors for the particular machine-tool model are considered.

«Allocated by the ITU» (3 5) means the allocation of frequency bands according to the current edition of the ITU Radio Regulations for primary, permitted and secondary services.

N.B.: Additional and alternative allocations are not included.

«Angular position deviation» (2) means the maximum difference between angular position and the actual, very accurately measured angular position after the workpiece mount of the table has been turned out of its initial position (ref. VDI/VDE 2617, Draft: «Rotary tables on coordinate measuring machines»).

«Asymmetric algorithm» (5) means a cryptographic algorithm using different, mathematically-related keys for encryption and decryption.

N.B.: A common use of «asymmetric algorithms» is key management.

«Automatic target tracking» (6) means a processing technique that automatically determines and provides as output an extrapolated value of the most probable position of the target in real time.

«Basic gate propagation delay time» (3) means the propagation delay time value corresponding to the basic gate used in a «monolithic integrated circuit». For a «family» of «monolithic integrated circuits», this may be specified either as the propagation delay time per typical gate within the given «family» or as the typical propagation delay time per gate within the given «family».

N.B. 1:«Basic gate propagation delay time» is not to be confused with the input/output delay time of a complex «monolithic integrated circuit».

N.B. 2:«Family» consists of all integrated circuits to which all of the following are applied as their manufacturing methodology and specifications except their respective functions:

a.The common hardware and software architecture;

b.The common design and process technology; and

c.The common basic characteristics .

«Basic scientific research» (GTN NTN) means experimental or theoretical work undertaken principally to acquire new knowledge of the fundamental principles of phenomena or observable facts, not primarily directed towards a specific practical aim or objective.

«Bias» (accelerometer) (7) means an accelerometer output when no acceleration is applied.

«Camming» (2) means axial displacement in one revolution of the main spindle measured in a plane perpendicular to the spindle faceplate, at a point next to the circumference of the spindle faceplate (Reference: ISO 230/1 1986, paragraph 5.63).

«Carbon fibre preforms» (1) means an ordered arrangement of uncoated or coated fibres intended to constitute a framework of a part before the «matrix» is introduced to form a «composite».

«CE» is equivalent to «computing element».

«CEP» (circle of equal probability) (7) is a measure of accuracy; the radius of the circle centred at the target, at a specific range, in which 50 % of the payloads impact.

«Chemical laser» (6) means a «laser» in which the excited species is produced by the output energy from a chemical reaction.

«Chemical mixture» (1) means a solid, liquid or gaseous product made up of two or more components which do not react together under the conditions under which the mixture is stored.

«Circulation-controlled anti-torque or circulation controlled direction control systems» (7) are systems that use air blown over aerodynamic surfaces to increase or control the forces generated by the surfaces.

«Civil aircraft» (1 7 9) means those «aircraft» listed by designation in published airworthiness certification lists by the civil aviation authorities to fly commercial civil internal and external routes or for legitimate civil, private or business use.

N.B.: See also «aircraft».

«Commingled» (1) means filament to filament blending of thermoplastic fibres and reinforcement fibres in order to produce a fibre reinforcement «matrix» mix in total fibre form.

«Comminution» (1) means a process to reduce a material to particles by crushing or grinding.

«Common channel signalling» (5) is a signalling method in which a single channel between exchanges conveys, by means of labelled messages, signalling information relating to a multiplicity of circuits or calls and other information such as that used for network management.

«Communications channel controller» (4) means the physical interface which controls the flow of synchronous or asynchronous digital information. It is an assembly that can be integrated into computer or telecommunications equipment to provide communications access.

«Composite» (1 2 6 8 9) means a «matrix» and an additional phase or additional phases consisting of particles, whiskers, fibres or any combination thereof, present for a specific purpose or purposes.

«Composite theoretical performance» («CTP») (3 4) is a measure of computational performance given in millions of theoretical operations per second (Mtops), calculated using the aggregation of «computing elements» («CE»).

N.B.: See Category 4, Technical Note.

«Compound rotary table» (2) means a table allowing the workpiece to rotate and tilt about two non-parallel axes, which can be coordinated simultaneously for «contouring control».

«Computing element» («CE») (4) means the smallest computational unit that produces an arithmetic or logic result.

«Contouring control» (2) means two or more «numerically controlled» motions operating in accordance with instructions that specify the next required position and the required feed rates to that position. These feed rates are varied in relation to each other so that a desired contour is generated (ref. ISO/DIS 2806 - 1980).

«Critical temperature» (1 3 6) (sometimes referred to as the transition temperature) of a specific «superconductive» material means the temperature at which the material loses all resistance to the flow of direct electrical current.

«Cryptography» (5) means the discipline which embodies principles, means and methods for the transformation of data in order to hide its information content, prevent its undetected modification or prevent its unauthorised use. «Cryptography» is limited to the transformation of information using one or more «secret parameters» (e.g., crypto variables) or associated key management.

N.B.:«Secret parameter»: a constant or key kept from the knowledge of others or shared only within a group.

«CTP» is equivalent to «composite theoretical performance».

«Data-Based Referenced Navigation» («DBRN») (7) Systems means systems which use various sources of previously measured geo-mapping data integrated to provide accurate navigation information under dynamic conditions. Data sources include bathymetric maps, stellar maps, gravity maps, magnetic maps or 3-D digital terrain maps.

«Deformable mirrors» (6) (also known as adaptive optic mirrors) means mirrors having:

a. A single continuous optical reflecting surface which is dynamically deformed by the application of individual torques or forces to compensate for distortions in the optical waveform incident upon the mirror; or

b. Multiple optical reflecting elements that can be individually and dynamically repositioned by the application of torques or forces to compensate for distortions in the optical waveform incident upon the mirror.

«Depleted uranium» (0) means uranium depleted in the isotope 235 below that occurring in nature.

«Development» (GTN NTN All) is related to all phases prior to serial production, such as: design, design research, design analyses, design concepts, assembly and testing of prototypes, pilot production schemes, design data, process of transforming design data into a product, configuration design, integration design, layouts.

«Diffusion bonding» (1 2 9) means a solid state molecular joining of at least two separate metals into a single piece with a joint strength equivalent to that of the weakest material.

«Digital computer» (4 5) means equipment which can, in the form of one or more discrete variables, perform all of the following:

a. Accept data;

b. Store data or instructions in fixed or alterable (writable) storage devices;

c. Process data by means of a stored sequence of instructions which is modifiable; and

d. Provide output of data.

N.B.: Modifications of a stored sequence of instructions include replacement of fixed storage devices, but not a physical change in wiring or interconnections.

«Digital transfer rate» means the total bit rate of the information that is directly transferred on any type of medium.

N.B.: See also «total digital transfer rate».

«Direct-acting hydraulic pressing» (2) means a deformation process which uses a fluid-filled flexible bladder in direct contact with the workpiece.

«Drift rate» (gyro) (7) means the time rate of output deviation from the desired output. It consists of random and systematic components and is expressed as an equivalent input angular displacement per unit time with respect to inertial space.

«Dynamic adaptive routing» (5) means automatic rerouting of traffic based on sensing and analysis of current actual network conditions.

N.B.: This does not include cases of routing decisions taken on predefined information.

«Dynamic signal analysers» (3) means «signal analysers» which use digital sampling and transformation techniques to form a Fourier spectrum display of the given waveform including amplitude and phase information.

N.B.: See also «signal analysers».

«Effective gramme» (0 1) of «special fissile material» means:

a. For plutonium isotopes and uranium-233, the isotope weight in grammes;

b. For uranium enriched 1 per cent or greater in the isotope uranium-235, the element weight in grammes multiplied by the square of its enrichment expressed as a decimal weight fraction;

c. For uranium enriched below 1 per cent in the isotope uranium-235, the element weight in grammes multiplied by 0,0001;

«Electronic assembly» (2 3 4 5) means a number of electronic components (i.e., «circuit elements», «discrete components», integrated circuits, etc.) connected together to perform (a) specific function(s), replaceable as an entity and normally capable of being disassembled.

N.B. 1:«Circuit element»: a single active or passive functional part of an electronic circuit, such as one diode, one transistor, one resistor, one capacitor, etc.

N.B. 2:«Discrete component»: a separately packaged «circuit element» with its own external connections.

«Electronically steerable phased array antenna» (5 6) means an antenna which forms a beam by means of phase coupling, i.e., the beam direction is controlled by the complex excitation coefficients of the radiating elements and the direction of that beam can be varied in azimuth or in elevation, or both, by application, both in transmission and reception, of an electrical signal.

«End-effectors» (2) means grippers, «active tooling units» and any other tooling that is attached to the baseplate on the end of a «robot» manipulator arm.

N.B.:«Active tooling unit» means a device for applying motive power, process energy or sensing to the workpiece.

«Equivalent Density» (6) means the mass of an optic per unit optical area projected onto the optical surface.

«Expert systems» (7) mean systems providing results by application of rules to data which are stored independently of the «programme» and capable of any of the following:

a. Modifying automatically the «source code» introduced by the user;

b. Providing knowledge linked to a class of problems in quasi-natural language; or

c. Acquiring the knowledge required for their development (symbolic training).

«FADEC» is equivalent to «full authority digital engine control».

«Fault tolerance» (4) is the capability of a computer system, after any malfunction of any of its hardware or «software» components, to continue to operate without human intervention, at a