REPORT FROM THE COMMISSION TO THE COUNCIL AND THE EUROPEAN PARLIAMENT on the implementation of Regulation (EC) No 428/2009 setting up a Community regime for the control of exports, transfer, brokering and transit of dual-use items
Date: 2013-10-16
Institutions: European Commission
Subjects: dual-use good, export (EU), export monitoring, trade restriction, transit













EUR-Lex - 52013DC0710 - EN











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52013DC0710

REPORT FROM THE COMMISSION TO THE COUNCIL AND THE EUROPEAN PARLIAMENT on the implementation of Regulation (EC) No 428/2009 setting up a Community regime for the control of exports, transfer, brokering and transit of dual-use items /* COM/2013/0710 final */









TABLE OF CONTENTS
1........... Introduction.................................................................................................................... 3
2........... Evolution of the regulatory
framework............................................................................. 4
2.1........ Amendments to Regulation (EC) No
428/2009............................................................... 4
2.2........ National implementing measures...................................................................................... 5
2.3........ Report on the introduction of EU
General Export Authorisations...................................... 5
3........... Implementation of the regulation
– the state of play.......................................................... 6
3.1........ Activities of the Dual-Use
Coordination Group................................................................ 6
3.2........ EU Guidelines on Dual-Use Export
Controls................................................................... 6
3.3........ Peer Visits...................................................................................................................... 7
3.4........ Exchange
of information and introduction of a secure and encrypted electronic system...... 7
3.5........ Transparency and dialogue with
industry and academia.................................................... 8
3.6........ Export control monitoring and
enforcement...................................................................... 8
4........... EU export controls – Key Data....................................................................................... 9
4.1........ EU dual-use trade: items and
destinations........................................................................ 9
4.2........ Applications, licences, denials....................................................................................... 10
5........... EU export controls– impact on
security and trade.......................................................... 12
5.1........ Export controls: a key instrument to promote security in a
globalised multipolar world..... 12
5.2........ The elusive 'dual-use sector': a key to European innovation and
competitiveness............. 13
5.3........ The EU export control system: greater than the sum of its parts...................................... 13
5.4........ Export control and competitiveness: distortions of competition and
opportunities for a global level-playing field 14
6........... EU export controls in a changing
world – the export control policy review...................... 15
6.1........ Public consultations on export controls.......................................................................... 15
6.2........ Prospects for an evolution of the
EU export control regime............................................ 15
6.3........ The EU export control policy
review: next steps............................................................ 16
Annex I – List of acronyms......................................................................................................... 17
REPORT FROM THE COMMISSION TO THE
COUNCIL AND THE EUROPEAN PARLIAMENT
on the
implementation of Regulation (EC) No 428/2009 setting up a Community regime for
the control of exports, transfer, brokering and transit of dual-use items
1.           Introduction
Controls of exports of dual-use items and
technology play a key role in the fight against the proliferation of Weapons of
Mass Destruction (WMD) and conventional weapons and significantly contribute to
regional and international security and stability. Regulation (EC) No 428/2009
setting up a Community regime for the control of exports, transfer, brokering
and transit of dual-use items (hereunder 'the Regulation') implements
international commitments under United Nations Security Council Resolution (UNSCR)
1540 (2004), international agreements such as the Chemical Weapons Convention
(CWC) and the Nuclear Non-Proliferation Treaty (NPT), and multilateral export
control regimes such as the Wassenaar Arrangement, the Nuclear Suppliers Group
(NSG), the Australia Group and the Missile Technology Control Regime (MTCR). 
The EU export control system was set up in
the 1990s under Regulation (EC) No 3381/94 and Decision
94/942/CFSP, and was considerably strengthened with the adoption of Regulation (EC) No 1334/2000. Regulation (EC) No 428/2009 introduced
significant improvements to the EU export control regime, in particular in
response to the EU Strategy against WMD proliferation of December 2003 and in
light of reports from exporters and industry. The Regulation provides for the
free circulation of dual-use items – with some exceptions – inside the EU and
lays down basic
principles and common rules for the control of the
export, brokering, transit and transfer of dual-use items, in the framework of
the common commercial policy. It also provides for administrative cooperation and harmonised policies and tools for implementation and enforcement.
The Regulation is directly applicable to 'exporters' but requires some
additional implementing measures by the EU Member States under a 'hybrid'
system, whereby national competent authorities are in particular responsible
for licensing decisions.
Article 25 of Regulation (EC) 428/2009, as
amended by Regulation (EU) No 1232/2011, calls for the Commission to present, every
three years a “comprehensive implementation and impact assessment report” to
the Council and Parliament including, as appropriate, proposals for amendments.
Article 25(3) stipulates that special sections of the report shall deal with
the activities of the Dual-Use Coordination Group (DUCG), the introduction of a
secure and encrypted system for the exchange of information between Member
States and the Commission, as well as implementation of Article 15(1) and (2)
regarding updates to the control lists and Article 24 regarding national
penalties in case of infringement to the Regulation. Furthermore, Article 25(4)
requests that the Commission reports, no later than 31 December 2013, on the
introduction of general export authorisations under Regulation (EU) No
1232/2011. Article 25 indicates that Member States shall provide to the
Commission all appropriate information for the preparation of the report. This
report provides information on the implementation and impact of the Regulation
since its adoption until the beginning of 2013 and thus essentially covers
activities in 2010, 2011 and 2012.
2.           Evolution
of the regulatory framework
Council Regulation (EC) No 428/2009 was
adopted on 5 May 2009 and entered into force on 27 August 2009. It repealed
Regulation (EC) No 1334/2000. With the entry into force of the Treaty of
Lisbon, and in accordance with Article 207(2) of the Treaty on the Functioning
of the European Union (TFEU), the procedure for amending the Regulation
changed, and the ordinary legislative procedure became applicable.
2.1.        Amendments
to Regulation (EC) No 428/2009
Over the reporting period, the Regulation was
amended twice:
–                        
Regulation (EU) No 1232/2011 of the European
Parliament and the Council of 16 November 2011 introduced 5 new EU General Export
Authorisations (EUGEAs) for the export of certain dual-use items to certain
destinations, in a bid to enhance the industry’s competitiveness and establish
a level-playing field for EU exporters. With due consideration to the related
risks, the new EUGEAs thus facilitate export of telecommunication equipment and
chemicals to certain destinations, and the export of certain items after
repair/replacement and for temporary exhibitions of fairs. Regulation (EU) No
1232/2011 also amended Article 25 of the Regulation and introduced reinforced
provisions for reporting and transparency.
–                        
Regulation (EU) No 388/2012 of the European
Parliament and of the Council of 19 April 2012[1]
updated the EU Control List in Annex I to the Regulation, and incorporated
modifications agreed within the multilateral export control regimes in 2009 and
2010. The modifications include de-control of certain items and amendments to
goods description and definitions. The new updated and consolidated EU Control
List became applicable on 15 June 2012, thereby allowing the EU to adhere to
its international commitments with regard to export controls and helping EU
exporters where control parameters were relaxed.
Furthermore, in light of Article 15 of the
Regulation stipulating that the EU Control List should be regularly updated in
conformity with changes agreed within the multilateral regimes, the Commission
adopted on 7 November 2011 a proposal for amending the Regulation and
delegating the competence to update the EU Control List to the Commission
(“delegated acts”)[2].
The proposal also introduced a delegation of competence to the Commission to amend
Annex II of the Regulation in response to changing circumstances, and remove
certain destinations and/or items from the scope of EUGEAs. The European
Parliament adopted its position at first reading in October 2012, but this
legislative proposal remains under discussion, with a view to its conclusion
before April 2014. 
Further evolution of the regulatory
framework remains open for examination. Thus, upon adoption of the Regulation,
the Council and Commission stated that the list of items for which a licence is
required for intra-EU transfers would be assessed, bearing in mind the
principles of Title II, Chapter 9 of the Euratom Treaty (The Nuclear Common
Market) and Article 36 of the TFEU. Later, upon adoption of Regulation (EU) No
1232/2011, the Commission announced its intention to review the possibility of
introducing an EUGEA for low-value shipments by the end of 2013[3]. These issues are currently being
considered as part of the on-going export control policy review, and an
informal working group was set up at the beginning of 2013 to examine the list
of items subject to transfer controls and the control modalities.
2.2.        National
implementing measures
The Regulation is binding in its entirety
and directly applicable in all Member States, but, nevertheless, foresees that
Member States should take measures in implementation of certain provisions, and
that information on those measures should be published in the Official Journal
of the European Union. Notices from Member States were published on 6 March
2012[4], and provide an overview of
measures taken by Member States regarding e.g. the extension of brokering
controls, the application of transit controls, the extension of controls to
non-listed items for reasons of public security and human rights consideration,
the introduction of national general export authorisations, the application of
intra-EU transfer controls for non-listed items, as well as information
relating to national export control authorities. Furthermore, a notice
published on 19 September 2012[5]
informs that Italy has notified the imposition of a specific
national authorisation requirement on the export to Syria of certain
telecommunication items not listed in Annex I for reasons of public security
and human rights considerations. National implementing measures concerning the
conditions and requirements chosen by Member States for the use of the EUGEAs are
also subject to publication of an information notice. 
2.3.        Report
on the introduction of EU General Export Authorisations            
In light of Regulation (EU) No
1232/2011, and with due regard to Article 25(4) of the Regulation, as amended, the
Dual-Use Coordination Group undertook
to evaluate the implementation of the newly introduced EUGEAs. As indicated
above, information about conditions and requirements for use was gathered for
publication in the Official Journal. Furthermore, consultations with competent
authorities led to the following conclusions:
·                        
As regards conditions and requirements for use,
most Member States have introduced registration requirements and also require a
posteriori notification after first use although some Member States require
prior notification. Most Member States require exporter information, item
description & category, value & volume of transactions, destination and
end-user information. Some Member States also make use of relevant customs
data. Furthermore, most Member States have introduced regular reporting
requirements, though the frequency varies, and some also have record-keeping and
auditing obligations in place.
·                        
In total, over 4000 notifications of use of
EUGEAs have been received by competent authorities, and it is estimated that
approximately 3500 companies use EUGEAs. All EUGEAs are being used by economic
operators, though EUGEA 001 is the one most in use. Economic operators use
EUGEAs in virtually all Member States, but economic operators in a few Member
States have not yet used the new EUGEAs introduced in 2011.
·                        
Virtually all categories of dual-use items are
exported under EUGEAs, across a variety of sectors, including 'traditional'
dual-use sectors such as aerospace, software and electronics, but also in other
sectors such as the food or pulp and paper industry.
·                        
Exports under EUGEAs are largely destined to the
US and other 'EU001 countries' (Australia, Canada, Japan, Switzerland, Norway,
New Zealand), but other destinations also benefit from EUGEAs, such as Brazil,
China, South Korea, Russian Federation, South Africa and Turkey.
3.           Implementation
of the regulation – the state of play
3.1.        Activities
of the Dual-Use Coordination Group
Article 23 of the Regulation sets up a
Dual-Use Coordination Group (DUCG) bringing together experts from the
Commission and Member States to examine any issue concerning the application of
export controls with a view to practically improving their consistency and
effectiveness throughout the EU. The DUCG provides a unique forum for exchange
of best practices and information between export control officials and forms
the basis of an ‘EU network’ of export control agencies. Over the reporting
period, the DUCG has met regularly. Since the entry into force of the
Regulation 16 meetings were held. The DUCG held discussions on a number of
topical issues concerning the implementation of the Regulation, such as Member State approaches to EU and National General Export Authorisations (NGEAs), export
controls for the research sector etc. The DUCG also provided a forum for
consultations on specific instances of application of controls including on issues
reported by industry e.g. export of gas turbines to certain destinations,
export of graphite and carbon components etc.
The DUCG regularly holds joint meetings with stakeholders, and in particular
held two joint meetings with customs officials in October 2010 and September
2011, focusing on information exchange between licensing and customs
authorities in order to avoid diversion and illicit exports. The DUCG also
occasionally holds joint meetings with industry representatives and e.g. a
joint seminar with the European Nuclear Energy Forum in February 2013 to
discuss nuclear export controls and examine industry concerns regarding
associated compliance costs, distortions of competition and intra-EU transfers
of nuclear goods and technology.
The DUCG has also discussed options for
strengthening technical capabilities and expertise, as a key element of the
licensing process and enforcement at borders. Various national export control
training initiatives exist, and technical seminars for export control licensing
officers and technical experts have also been organised by the Commission’s
Joint Research Centre in collaboration with national experts from the EU and
US. In this context, the DUCG held pilot training sessions to prepare for a possible future structured “in-reach” EU export control
training programme that should be aimed primarily at licensing, customs and
technical experts as well as at other relevant government officials (foreign
affairs, defence, intelligence).
3.2.        EU
Guidelines on Dual-Use Export Controls
The DUCG has developed "EU
Guidelines on Dual-Use Export Controls" to support the practical
implementation of export control measures and in particular clarify the various
consultation and information-sharing procedures provided for under the
Regulation. The EU Guidelines are currently intended for official use by the
export control authorities of the Member States; they are not legally binding
and are not for public release. The EU Guidelines constitute a living document
that will be updated and expanded on a regular basis in order to respond to
evolving needs and changing circumstances. 
After the Commission conducted a survey in
2010, the DUCG prepared Guidelines to set up a 'Pool of Experts'[6] i.e. a structured mechanism mutualising
the expertise available in various Member States for the benefit of all, in
support of consistent control decisions. The Guidelines establish standardised
templates and procedures for the provision, on a voluntary basis, of
non-binding advice to competent authorities on such highly technical issues as
goods ratings and classification. 
Figure 1: EU
Dual-Use Pool of Experts concept
3.3.        Peer
Visits
Peer visits, organised jointly by the
Commission and the EU Presidency, represent another key element of the EU
export control network and provide an opportunity for extensive exchange of
information focusing on a specific export control issue. A total of 6 peer
visits were thus organised over the reporting period and were devoted to e.g.
intra-EU transfer controls, application of catch-all controls, intangible
technology transfers, control of information and communication equipment. 
3.4.        Exchange of information and introduction of
a secure and encrypted electronic system 
The Dual-use e-System (DUeS), a secure
electronic system hosted by the Commission for exchanging information among
Member States was launched in January 2011 and became fully operational in June
2012, with all Member States having access to and actively
using the system. Since then, new
versions have been developed, introducing additional functions and
improvements, including, inter alia, the possibility to enter
information concerning denials on dual-use items,
to exchange documents in a library or to perform full data exports. The DUCG
continuously works on further development of the DUeS to enable effective
exchange of information between export control authorities and the Commission
e.g. to include functions as required by the adoption of new legislation such
as Regulation (EU) No 1232/2011 or restrictive measures (sanctions) on trade in
dual-use items. Discussions have also been initiated regarding the possible
extension of the DUeS to arms exports denials under Council Common Position 2008/944
and to the export of items denied under Regulation (EU) No 1236/2005 concerning trade in certain goods which could be used for capital
punishment, torture or other cruel, inhuman or degrading treatment or
punishment.
In addition to the DUeS, competent authorities
also establish direct cooperation on specific cases on an ad hoc basis,
using the contact points of the EU export control network, and some have taken specific measures as per Article
19(1) and (2) for exchange of information including,
for example,, details of transactions.
The DUCG discussed and promoted the
introduction of electronic licensing systems by competent authorities, as these systems simplify the licensing process and shorten
processing times, while allowing for better oversight over licensing procedures
and improved coordination within an administration. A total of 8 Member States
now have e-systems in place, while 6 Member States are working on deploying
such systems in 2012-2013, and three are taking preparatory steps.
3.5.        Transparency
and dialogue with industry and academia 
In light of Article 23(2), the Commission
has organised regular meetings with industry. The Commission held an industry
forum in 2010 and organised an Exporters Conference in 2011, bringing together
over 200 participants from industry, academia, public authorities and EU
institutions in order to raise awareness about the new EUGEAs and the launching
of a Green Paper public consultation. In 2013, further to the adoption of the
Commission Staff Working Document (SWD (2013)7) drawing the conclusions from
the public debate organised in the wake of the Green Paper, the Commission
organises, jointly with the Irish Presidency, a 'Strategic Export Control
Conference' to provide a forum to discuss priorities for the review of the EU
export control system. 
Competent authorities conduct significant
industry outreach activities and provide as much information as possible to
economic, academic and other stakeholders in the pre-licensing phase, so as to
raise awareness for a responsible trade of dual-use items. Competent
authorities mostly provide information on their website and occasionally by
newsletter, and also typically maintain direct contact with operators and
regularly organise either general information sessions – 'Export Control Day' -
or specific seminars for operators. Some authorities release specific guidance
documents in the sense of Article 19(5) e.g. leaflets concerning Internal
Compliance Programmes (ICP), Intangible Transfers of Technology, brokering, and
some make available a 'Handbook' of Export Control. 
Some competent authorities report on trade
in dual-use items to national parliaments and, in some Member States, that
information is publicly available.
3.6.        Export
control monitoring and enforcement
The Commission promotes effective
enforcement of export controls within the EU through various support actions
such as the preparation of a 'correlation table' linking customs codes with
dual-use classifications, inclusion of export control parameters into the EU's
online customs tariff database, TARIC, and customs risk assessments, as well as
export control awareness modules in training delivered
by the Commission's Joint Research Centre, e.g. for border guards.
For their part, according to the
Regulation, Member States must determine effective, proportionate and
dissuasive penalties applicable to export control violations. They have
introduced a range of diverse national administrative and criminal sanctions,
typically including fines and confiscation of goods as well as imprisonment. 
National authorities are primarily
responsible for the enforcement of export controls. Over the reporting period,
a few violations were reported e.g. for unlicenced export of items, resulting
in the imposition of fines and/or seizure of the items, while a few cases were referred to courts.
4.           EU
export controls – Key Data 
It is difficult to get reliable information
on dual-use exports as there is no correspondingly defined economic sector, nor has a
specific methodology been developed thus far for recording data and calculating
statistics on the trade of dual-use items. However the
Commission and Member States do collect data that allow
for approximate estimates of exports of dual-use goods based,
on the one hand, on customs commodities identified by the correlation table
which include dual-use goods and, on the other hand, on specific data
collected by competent authorities. To be noted, estimates of exports presented
hereafter do not cover services and intangible technology
transfers associated with the trade in dual-use goods. 
4.1.        EU
dual-use trade: items and destinations 
The Regulation primarily applies to the
export of about 1600 dual-use items listed in Annex I – the EU Control list, as
updated in 2012 – and classified in 10 categories (Figure 2). 
Figure 2: Number of dual-use items listed in Categories of Annex I.
These dual-use items relate to circa 1000
customs commodities[7],
including chemicals, metals and non-metallic mineral products, computers,
electronic and optical products, electrical equipment, machinery, vehicles and
transport equipment etc. and typically fall at the high–tech end of this large,
mixed commodity area. It is estimated that, while the value of controlled dual-use
export represents approximately 2% of total exports, controls indirectly affect
an 'export domain' representing approximately 20% of total exports (Figure 3).
Figure 3: Estimated
value of dual-use exports compared to the 'dual-use export domain' and total
exports
A large part of the dual-use export domain
concerns intra-EU trade or exports towards 'E001 countries' benefiting from
general export authorisations. This reflects the EU export market structure in
the relevant commodities as well as trade facilitation under EUGEAs (Figure 4).

Figure 4: Destination countries for EU dual-use export
domain in 2012. 
4.2.        Applications,
licences, denials 
The DUCG has exchanged information and
collected data on trade in controlled items, in order to improve the
understanding of export controls and their economic effect. Some data collected
for the reporting period is reported below; it should be noted however that not
all Member States collect all data. The information provided below thus represents
approximate estimates of aggregate quantities and value within the limits of
the data made available by the time this report was being drawn up.
Figure 5: Number of authorisations and denials for
2010, 2011 and 2012[8]
Figure 6: Value of authorisations and
denials for 2010-2011 and 2012 (mln EUR) 

Figure 7: Comparative number of licences
and authorisations per category (2011 data)
In total, applications now tend to exceed
30 bn EUR per year and represent approx. 2.5 % of EU external trade, while the
approx. 3500 active denials represent about 0.01% of total EU external trade[9]. Nevertheless, data estimates
point to a marked increase of controlled trade over the last years. By
contrast, the number of denials appears to be decreasing over the period[10]. 
5.           EU
export controls– impact on security and trade
In light of the call in Article 25(2) of
Regulation (EC) No 428/2009, as amended, for the Commission to present a "comprehensive
implementation and impact assessment" the report on the public
consultation presented in SWD (2013)7 of January 2013 provides considerable
inputs from stakeholders regarding the effects of export controls on both
security and trade. The stakeholders input in this respect is summarised below.
5.1.        Export controls: a key instrument to promote security in a
globalised multipolar world 
Stakeholders recognise that export
controls, as a security-related trade instrument, remain, more than ever, at
the forefront of international non-proliferation efforts, and need to adjust to
the evolution of security risks and threats – including the various forms of
terrorism and the efforts by some States and non-state actors to acquire
weapons of mass destruction and corresponding carrier technology and armaments.
Some stakeholders also argue that export controls need to adjust to political
challenges and shifting EU foreign policy objectives, e.g. in relation to the
Arab Spring and a rapidly changing geo-political landscape, or in terms of
preventing human rights abuses caused in oppressive regimes through state
control of information and communications technology. 
Stakeholders identify a variety of
challenges for export control policy. These concern the growing innovation and
production capacities of emerging economies and resulting foreign availability
of sensitive products, multinational companies and industrial processes within
worldwide production networks and supply chains, and the globalisation and
increasing volumes of trade. The rapid spread of technological and scientific
developments and the mobility of knowledge, the emergence of new and advanced transformational
technologies – such as cloud computing, cyber-tools, dual-use research in life
sciences – also add to the complexity of export controls. 
5.2.        The
elusive 'dual-use sector': a key to European innovation and competitiveness
Stakeholders generally agree that dual-use
exports have a greater importance for the EU economy than the percentage of controlled transactions seems to
indicate, as they significantly impact key sectors of the EU economy. In fact,
controls of dual-use items affect research and
development (R&D), production and trade across a wide-range of civil
industries – e.g. energy (nuclear, oil and gas) aerospace, defence
and security, lasers and
navigation, telecommunications, life sciences, chemical and pharmaceutical
industries, material-processing equipment, electronics,
semiconductor and computing industries, medical,
automotive - and controlled products enter into the
international value chain on a broad base. Crucially,
stakeholders emphasise that dual-use items often
represent high-tech, advanced products in which EU companies have established
themselves as leaders so that many cutting-edge
technologies are affected in whole or in part by dual-use export controls. 
Stakeholders
stress that the EU's extensive 'dual-use-related industries' bring together
thousands of small, medium and large companies
providing high value-added jobs and know-how - including
significant R&D work - across a wide range of key
sectors of the EU economy. It supports a large portion
of EU trade with strategic partners so that effective controls are crucial to the EU's drive towards innovation and competitiveness. 
5.3.        The EU export control system: greater than the sum of its parts
Most stakeholders are
satisfied that the current EU export control regime provides a robust yet
flexible framework and note that its construction is
unique, in that it provides a uniform legal basis, with common rules,
definitions, criteria for authorisations and a common control list, but
combines EU-wide principles and regulations with national rules and decisions. Stakeholders
recognise that the primary benefit of EU regulation
derives from the free movement of dual-use items within the internal market. They also appreciate its relative simplicity (e.g. one single
control list). Furthermore, many stakeholders emphasise the considerable – and
positive - development of EU export controls over the last few years, thanks to
important initiatives such as the adoption of Regulation (EC) No 428/2009, the
introduction of new EUGEAs, the setting up of the DUeS, as well as proposals to
ensure that the EU control list is regularly updated.
Some stakeholders, however, consider that
the EU export control system still impedes competitiveness especially as political,
regulatory and operational differences incorporated in the EU system may result
in significant variations in terms of processing time for export licences and diverging interpretations
of EU rules. They claim that the 'asymmetrical
implementation' of EU export controls creates distortions
of trade and sometimes results in a fragmented market affecting
the equal treatment of European companies. They
consider that EU export controls do not sufficiently address differentiated
levels of risk, while enforcement remains sometimes fragmented for lack of
systemic cooperation between relevant national authorities. From a security perspective, some stakeholders take the view that varying
levels of control increase the risk
of exposing 'weak links' in the export control chain and might compromise the overall effectiveness of EU export controls.
Furthermore, the projection of the EU
export control system at the multilateral and international levels remains
imperfect, as neither all Member States nor the EU participate in all
multilateral export control regimes[11].
In spite of this, throughout the period, the EU developed relations with key partners
to discuss export control issues of common interest e.g. with US, Japan, China. In particular, the Commission and Member States closely follow the reform of US export controls and, since the introduction of the Strategic Trade Authorisation (STA)
in 2011, have highlighted the need to extend it to all Member States. 
5.4.        Export control and competitiveness: distortions of competition and
opportunities for a global level-playing field
Most stakeholders recognise that sound export controls are crucial to industry's reputation, but emphasise
the high compliance costs associated with the management
of export control procedures that represent a real administrative burden for certain industries.
They generally consider that export controls have thus become a significant competitive factor as a result of interconnected supply chains and international collaboration in research and innovation. They stress
that the combination of the foreign availability of certain dual-use items with
the asymmetric implementation of international obligations through
differentiated export control policies affect the competitiveness of certain EU
economic operators. They suggest that distortions of
competition may result from differences in laws and
regulations including different exclusions and exemptions and other
facilitation arrangements, from an outdated EU control
list, from delays to delivery
caused by licence application regimes that certain
competitors do not have to contend. Less stringent or simpler export controls
in third countries that do not participate in the multilateral export control
regimes represent a particular issue. Companies
operating on the global market demand a more level playing-field for EU industries to compete on equal terms and
encourage more exchange of information and regulatory collaboration between
major trade partners.
At the same time, stakeholders recognise
that globalisation presents opportunities for a more level playing-field, since
UNSCR 1540 requires all countries to have effective export controls and
multilateral export control regimes conduct significant outreach to emerging
suppliers of sensitive items. As a result, third countries
outside the multilateral regimes are increasingly developing domestic export
control systems in all regions of the world. Moreover,
EU cooperation and outreach programmes, as well as the approximation of
regulations in candidate countries through the enlargement process, promote
international convergence, and it can be noted that the EU system has developed
into an international benchmark. 
6.           EU
export controls in a changing world – the export control policy review
Over the reporting period, in addition to
the legislative amendments reported above, the Commission has also initiated a
wide-ranging export control policy review. 
6.1.        Public
consultations on export
controls
The Commission regularly holds public
consultations, asking stakeholders views regarding export controls. In April
2011, the Commission conducted a technical consultation concerning the EU
control list to gather information about the foreign availability of items
subject to controls. 
In light of the requirements of Article 25,
the Commission issued in June 2011 a Green Paper[12] highlighting the development
of the EU export control system over the last decade and launching a broad
public debate concerning its functioning and future strategic options. The
Green Paper marked the first step toward preparing the review required under Article
25 of the Regulation. As such, the Green Paper contained questions concerning
the application of Regulation (EC) No 428/2009, but also more strategic
questions designed to help establish in which direction the EU export control
system should be evolving. 
In January 2013, the Commission Staff
Working Document[13]
“Strategic export controls: ensuring security and competitiveness in a changing
world" reviewed over 100 contributions received and identified the main
issues raised by stakeholders (Member States, including national parliaments
and political parties, members of the European Parliament, industry
associations and economic operators, civil society organisations and academia
during the public consultation) who also laid out their views as regards the
strengths and weaknesses of the EU export control system.
6.2.        Prospects
for an evolution of the EU export control regime.
The Staff Working Document also reports on
stakeholders' views concerning possible improvements and evolutions towards a
more integrated EU export control regime "in the information age"
that would both ensure a level-playing field and "lift the common
denominator". Some stakeholders in particular call for EU export control
policy to be further harmonised and to take account of recent policy
developments such as the use of ICT interception and monitoring items or
'cybertools'. Some stakeholders also recommend adjustments to improve the
licensing framework, e.g. through an expanded and risk-based use of EUGEAs and a
review of national controls. They call for an optimisation of the catch-all
mechanism and a critical review of intra-EU transfers, in order to reduce
distortions of competition within the EU Single Market. Some make suggestions
to enhance brokering and transit controls and stress the importance for control
lists to be regularly updated in light of technological and commercial
developments. 
Stakeholders also devote considerable
attention to the effective implementation of controls and some promote ideas
concerning the development of an EU export control network with enhanced
infrastructure commonalities based e.g. on structured cooperation, pooling of
resources and exchange of information, common tools, criteria and risk
assessment, as well as training. They also call for more transparency and
dialogue with the private sector and academia in order to enhance both legal
certainty and the effectiveness of controls e.g. through the recognition of
Internal Compliance Programmes (ICPs) and the provision of guidelines. 
6.3.        The
EU export control policy review: next steps.
The Staff Working Document and the report
to the European Parliament and Council thus form part of a broader review of
the EU export control system. They open the way for the preparation of a
Commission Communication to be issued early 2014 which could outline a
long-term vision for EU strategic export controls and may announce concrete
policy initiatives for the modernisation of the EU the export control regime
and its adaptation to rapidly changing technological, economic and political
circumstances, as mandated under Article 25 of the export control Regulation.
Annex I – List of
acronyms
       AG ||       Australia Group 
 CWC   || Chemical Weapons Convention 
 DUCG || Dual-Use Coordination Group 
 DUeS || Dual-Use Electronic System 
 DUWP || Dual-Use Working Party 
 EU || European Union 
 EUGEA || EU General Export Authorisation 
 ICP MTCR || Internal Compliance Programme Missile Technology Control Regime 
 NPT NSG || Non-Proliferation Treaty Nuclear Suppliers Group 
 TARIC || Integrated Tariff of the European Communities 
 WMD || Weapons of Mass Destruction 
[1]               OJ L 129, 16.5.2012, p. 12.
[2]               COM(2011) 704 final.
[3]               Statement by the Commission and Statement by the
European Parliament, the Council and the Commission on low-value shipments attached
to Regulation (EU) No 1232/2011.
[4]               OJ C 67, 6.3.2012, p. 1.
[5]               OJ C 283, 19.9.2012, p. 4.
[6]               The Pool of experts was
initially created in response to a recommendation of the 2004 Peer Review, and
was later formalized and reinforced in consideration of increasing demand.
[7]               The notion of dual-use export domain refers to
the large, mixed commodity area which includes dual-use items. The trade of
dual-use items takes place within this commodity area, but is not
identical to it, since by far, not all of the commodities within the dual-use
export domain are export-controlled, and dual-use items typically fall at
the high–tech end of it. Measurements by the Commission's Joint Research
Centre, based on Eurostat’s COMEXT database, result in a stable estimate of a 'dual-use
export domain' representing about 20% of EU total exports (including
intra-EU trade). 
[8]               The 2012 applications decline (volume in Figure 5 and
value in Figure 6) is due to incomplete data, as not all 2012 data had been
gathered by the time of the report. It should also be noted that applications
are not necessarily the sum of authorisations and denials, as a number of
applications may be cancelled and some applications may not be finalised within
the same year. 
[9]               This figure refers to the total number of denials
still valid at the end of the reference period, including denials issued
earlier. By contrast, data in Figures 5 and 6 only refer to approximately 1700
denials issued over the reporting period.
[10]             Note that this may be attributed to different factors,
including better awareness of companies about critical cases, the introduction
of prohibition regimes (sanctions), etc.
[11]             The Commission – and, since the entry into force of the
Lisbon Treaty, the EU – is a member of the Australia Group and the Commission
is also an Observer in the NSG and actively takes part in the activities of
these multilateral export control regimes. The EU does not have a formal status
in the other export control regimes – the MTCR and the Wassenaar arrangement.
Eight Member States are not members of the MTCR and Cyprus is also not a member
of the Wassenaar Arrangement. 
[12]             COM (2011) 393 of 30.6.2011.
[13]             SWD (2013)7 of 17.1.2013.