REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL 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: 2016-08-24
Institutions: Directorate-General for Trade and Economic Security, European Commission
Subjects: arms control, dual-use good, export (EU), export licence, export monitoring, trade restriction

EN 

   EN 

   EUROPEAN COMMISSION  Brussels, 24.8.2016  COM(2016) 521 final   REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL 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  
 
 
REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND 
THE COUNCIL 

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 

Article 23(3) of Regulation (EC) No 428/2009 calls for the Commission to submit an annual 
report  to  the  European  Parliament  on  the  activities,  examinations  and  consultations  of  the 
Dual-Use  Coordination  Group  (DUCG).  Furthermore,  the  Commission  Communication 
(COM(2014)244)  recognises  that  the  publication  of  reports  and  non-sensitive  control 
information  could  be  critical  steps  to  enhance  transparency  and  improve  operators' 
compliance  and  their  capacity  to  implement  controls.  This  report,  prepared  by  the 
Commission  and  the  DUCG  with  inputs  from  Member  States,1  provides  information  on  the 
implementation  of  the  Regulation  in  2015,  and  includes  aggregated  export  control  data  for 
2014. 

2. 

EVOLUTION OF THE POLICY AND REGULATORY FRAMEWORK 

2.1. 

Export control policy review 

actions 

Further  to  the  adoption  of  Communication  (COM(2014)244)  of  24  April  2014,  the 
Commission launched an impact assessment with a view to evaluating the costs and benefits 
associated  with  the  various  review  options  and  identifying  the  most  suitable  regulatory  and 
(http://ec.europa.eu/smartregulation/ 
non-regulatory 
impact/planned_ia/docs/2013_trade_015_duxc_en.pdf).  The  Commission  contracted  an 
external  consultant2  to  conduct,  from  December  2014  to  October  2015,  a  data-collection 
project in order to support the impact assessment through the development of a methodology 
for the collection and analysis of data and information regarding the dual-use industry and the 
economic and social impacts of controls, related problems and corresponding review actions. 
In  parallel,  the  Commission  conducted,  from  15  July  to  15  October  2015,  an  online  public 
consultation  to  collect  stakeholders'  and  public's  input  regarding  the  review  objectives  and 
options  and  their  likely  impact  on  the  EU's  export  control  policy.  The  results  of  the 
consultation 
at 
http://trade.ec.europa.eu/doclib/docs/2015/november/tradoc_154003.pdf.   

summarised 

are 

Furthermore,  the  Commission  conducted  targeted  consultations  and  outreach  to  key 
stakeholders.  The  Commission  consulted  the  Council's  Dual-Use  Working  Party,  providing 

1 Some competent authorities also publicly report on trade in dual-use items. 
2 The Stockholm International Peace Research Institute (SIPRI) implemented the project jointly with Ecorys. 

2 

 
 
 
 
 
 
 
 
 
 
                                                 
updates  on  the  data  collection  project  as  well  as  on  the  ongoing  impact  assessment.  The 
export  control  policy  review was also on the agenda of the European Parliament on several 
occasions, e.g. a joint DROI-INTA Committee on 23 April 2015, focussing on the impact of 
intrusion  and  surveillance  systems  on  human  rights  in  third  countries,  and  a  workshop  on 
dual-use  export  controls  organized  by  the  INTA  and  SEDE  Committees  on  15  June  2015. 
Export  controls  were  also  the  subject  of  a  number  of  parliamentary  questions  in  the  INTA 
Committee as well as in plenary session on 5 October 2015. Lastly, an Export Control Forum 
was organised on 7 December 2015, jointly with the Luxembourg  Presidency  of the EU, to 
exchange  views  with  industry  and  civil  society  stakeholders.  The  report  of  the  Forum  is 
available at: http://trade.ec.europa.eu/doclib/docs/2015/december/tradoc_154041.pdf.  

2.2. 

Amendments to Regulation (EC) No 428/2009 

Council  Regulation  (EC)  No  428/2009  was  amended  once  over  the  reporting  period. 
Commission Delegated Regulation (EU) No 2420/20153 of 12 October 2015 updated the EU 
Control  List  in  Annex  I  to  the  Regulation,  and  incorporated  modifications  agreed  at  the 
multilateral export control regimes in 2014. The 2015 EU control list thus incorporates over 
100  amendments,  most  of  which  stem  from  the  Wassenaar  Arrangement  and  the  Missile 
Technology  Control  Regime.  These  amendments  concern,  in  particular,  the  control  of 
machine  tools,  avionics technology and  aircraft wing-folding  systems,  spacecraft  equipment 
and  civil  Unmanned  Aerial  Vehicles  as  well  as  the  removal  from  the  control  list  of  certain 
encrypted  information  security  products.  Annexes  II  and  IV  of  the  Regulation  were  also 
updated in line with the Annex I amendments. The new updated and consolidated EU Control 
List  became  applicable  on  25  December  2015,  thereby  allowing  the  EU  to  adhere  to  its 
international  commitments  with  regard  to  export  controls  and  helping  EU  exporters  where 
control parameters were relaxed.4 

2.3. 

National implementing measures 

The  Regulation  is  binding  in  its  entirety  and  directly  applicable  in  all  Member  States,  but 
foresees  that  Member  States  should  take  measures  for  the  implementation  of  certain 
provisions, and that information on those measures should be published in the Official Journal 
of  the  European  Union.  An  Information  Note  was  published  in  the  Official  Journal  of 
13 February  20155,  providing  an  overview  of  measures  taken  by  Member  States  including, 
inter  alia,  the  extension  of  brokering  and  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,  the  enforcement  of  controls,  as  well  as  information  relating  to  national  export 
control authorities. 

3. 

ACTIVITIES OF THE DUAL-USE COORDINATION GROUP 

Article 23 of the Regulation sets up a 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. 

3 OJ L 340, 24.12.2015, p. 1. 
4 A corrigendum to Regulation 2015/2420 was published in OJ L 60, 5.3.2016, p. 93 (http://eur-
lex.europa.eu/legal-content/EN/TXT/PDF/?uri=OJ:JOL_2016_060_R_0012&from=EN).  
5 OJ C 51, 13.2.2015, p. 8. 

3 

 
 
                                                 
3.1. 

Consultations on implementation issues 

Over  the  reporting  period,  the  DUCG  provided  a  forum  for  consultations  on  a  number  of 
topical  issues  concerning  the  implementation  of  the  Regulation.  The  DUCG  held  seven 
meetings,  and  discussed  specific  control  issues  such  as  the  interpretation  of  the  clause 
"specially designed component", the requirement for T5 certificates at the customs office of 
exit of exported items, the control of inverters, the application of the definition of "exporter" 
to "resellers", the application of transit controls under the dual-use regulation, and the control 
of dual-use research. 

The DUCG conducted a technical exchange of information regarding the implementation of 
national  measures,  and  prepared  an  updated  Information  Note  on  national  measures  for 
publication in the Official Journal (see above). 

The  DUCG  reviewed  the  methodology  and  approach  for  data  exchange,  and  conducted  a 
comprehensive  licensing  data  collection  exercise  (on  2014  data)  in  order  to  increase 
information  exchange  between  Member  States  and  public  transparency  about  EU  dual-use 
export controls. The DUCG also collaborated to the "data collection project" implemented by 
Stockholm  International  Peace  Research  Institute  (SIPRI)  and  Ecorys  to  support  the  impact 
assessement for the export control policy review. 

The  DUCG  monitored  the  activity  of  a  joint  (with  customs)  technical  sub-group  examining 
the  potential  convergence  of  customs'  "Authorised  Economic  Operators"  programmes  with 
export  control  "internal  compliance  programmes".  The  DUCG  endorsed  the  conclusions  of 
the  technical  sub-group,  in  particular  as  regards  the  development  of  common  guidelines  for 
EU-wide  standards  for  Internal  Compliance  Programme  (ICP)  and  to  enhance  cooperation 
between customs and export control authorities. 

The DUCG monitored the activity of the "Surveillance technology expert group" ("STEG"), 
bringing together experts from Member States and the Commission to discuss issues related to 
the  control  of  cyber-surveillance  technology  and  exchange  information  on  relevant 
developments.  The  STEG  reviewed  developments  regarding  the  implementation  and  
technical  parameters  of  controls,  and  exchanged  views  on  the  national,  European  and 
multilateral approaches to controls as  well as on their potential impact on human rights and 
the security of the EU and its citizens. The STEG also held sessions with stakeholders from 
industry, academia and other civil society organizations.  

3.2. 

Technical support to the preparation of updates to the EU control list 

The  DUCG  held  technical  consultations  in  support  of  the  preparation  of  a  Commission 
Delegated  Regulation  updating  the  EU  Control  List.  National  experts  shared  technical 
expertise and training with competent authorities highlighting the most important changes to 
the control list on the occasion of a special session of the DUCG. 

3.3. 

EU Guidelines on Dual-Use Export Controls 

The  DUCG  initiated  preparations  for  EU  Guidelines  supporting  structured  exchange  of 
information  and  consultations  between  Member  States  with  respect  to  the  application  of 
note 3 to Category 5 Part 2 of Annex I to Regulation (EC) No 428/2009 – the "cryptography 
note" – and regarding the definition of "exporter" in situations in which a reseller is involved. 

4 

 
 
 
 
 
3.4. 

Exchange of information between competent authorities 

The DUCG continued to suport the further development of the Dual-use e-System (DUeS), a 
secure  and  encrypted  electronic  system  hosted  by  the  Commission,  to  enable  effective 
exchange of information between export control authorities and the Commission. The DUCG 
introduced  new  functionalities  and  improvements  into  DUeS,  in  particular  to  support 
enhanced exchange of information regarding, inter alia, denials issued on the basis of Articles 
2 and 2a of Regulation (EU) No 833/20146 (EU sanctions to Russian Federation), intangible 
technology  transfers.  Also,  in  December  2015,  a  new,  more  secure  function  for  user  access 
and  management  was  introduced.  Importantly,  a  new  section  was  created  in  the  DUeS  in 
October 2015 to support the exchange of information on denials issued under Regulation (EC) 
No 1236/20057 concerning trade in certain goods which could be used for capital punishment, 
torture  or  other  cruel,  inhuman  or  degrading  treatment  or  punishment  (the  "Anti-torture" 
regulation),  and  in  line  with  the  Commission's  approach  to  enhance  the  synergies  between 
various security export control instruments. 

3.5.  Transparency and dialogue with industry and academia  

The DUCG held a "DUCG-Industry Forum" on 7 December 2015 in Brussels with industry 
associations, dual-use companies and civil society organisations to discuss review options and 
the findings of the online public consultation in the context of the export control policy review 
(http://ec.europa.eu/trade/import-and-export-rules/export-from-eu/dual-use-
controls/index_en.htm). 

The  DUCG  also  prepared  documentation  to  support  exporters'  implementation  of  the 
regulations.  In  particular,  a  "Comprehensive  Change  Note"  summarises,  for  information 
purposes,  the  control  text  changes  to  the  EU  control  list  introduced  under  Commission 
Delegated 
2015/2420 
(http://trade.ec.europa.eu/doclib/docs/2015/october/tradoc_153892.pdf).  

Regulation 

(EU) 

3.6. 

Export control monitoring and enforcement 

The  Commission  promotes  effective  monitoring  and  enforcement  of  export  controls  within 
the EU through various support actions. In 2015, the Commission released an updated version 
of  the  'correlation  table'  linking  customs  codes  with  dual-use  classifications  and  continued 
inclusion  of  export  control  measures  into  the  EU's  online  customs  tariff  database  (TARIC) 
(http://trade.ec.europa.eu/doclib/docs/2016/february/tradoc_154240.pdf).  

3.7. 

Pool of Experts 

In  2015,  the  Pool  of  Experts  operated  by  Commission’s  Joint  Research  Centre  (JRC)  and 
experts made available by Member States continued to provide support to EU export control 
authorities  requesting  advice  in  relation  to  concrete  licensing  cases.  In  total,  seven  advices 
were provided to six Member States competent authorities over the reporting period. 

6  OJ  L  229,  31.7.2014,  p.  1.  Council  Regulation  (EU)  No  833/2014  of  31  July  2014  concerning  restrictive 
measures in view of Russia's actions destabilising the situation in Ukraine. 
7 OJ L 200, 30.7.2005, p.1. Council Regulation (EC) No 1236/2005 of 27 June 2005 concerning trade in certain 
goods  which  could  be  used  for  capital  punishment,  torture  or  other  cruel,  inhuman  or  degrading  treatment  or 
punishment. 

5 

 
 
                                                 
3.8.  Capacity building 

The DUCG supported the preparation of an export control pilot simulation exercise (SimEX 
2015)  for  customs  and  licensing  officers,  jointly  organised  by  DG  TAXUD  and  the  JRC, 
which took place on 17-19 March 2015. For its part, the JRC continued the series of technical 
seminars for licensing authorities in collaboration with the US Department of Energy. The 8th 
seminar  was  held  on  22-23  April  2015  in  Ispra,  Italy,  and  attended  by  over  100  licensing 
officers and technical experts from EU export control authorities. 

With  respect  to  third  countries,  the  "EU  P2P  Outreach  programme"  on  dual  use  items  in 
partner countries continued in 2015, making expertise available in 34 countries to strengthen 
export controls worldwide according to the needs and priorities of the countries concerned. 

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. However the Commission and Member States 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  licensing  data  collected  by  competent  authorities.  2014  export  data 
estimates  are  presented  below.  To  be  noted,  estimates  presented  hereafter  do  not  include 
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 1869 dual-use items listed in Annex I 
(the "EU Control List") and classified in 10 categories (Figure 1). These dual-use items relate 
to  circa  1000  customs  commodities8,  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.  

8  The  notion  of  dual-use  export  domain  refers  to  this  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.  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).  

6 

 
 
 
 
                                                 
Figure 1: Number of dual-use items listed in Categories of Annex I further to the adoption of Regulation (EU) 
2015/2420, compared to Regulation (EU) No 1382/2014. 

7 

 
 
 
Using the correlation between customs codes and dual-use classifications, it is estimated that 
controls apply to items included in an 'export domain' representing approximately 20% of EU 
total exports (Figure 2). 

Figure 2: Estimated value of the 'dual-use export domain' and total exports. 

A  large  part  of  the  dual-use  export  domain  concerns  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 3)9.  

9 "Stores and provisions extra" are defined as delivery of ships' and aircraft's stores. "N.det.Extra" includes 
countries and territories not specified within the framework of trade with third countries (these codes are usually 
used for goods delivered for offshore installations). 

8 

0B €500B €1,000B €1,500B €2,000B €2,500B €3,000B €3,500B €4,000B €4,500B €5,000B €2008200920102011201220132014EU TOTAL EXPORT100%DUAL-USEEXPORT DOMAIN20%SUBREGIONOTHER AFRICAN COUNTRIESNORTH AMERICACENTRAL AMERICA AND CARIBBEANSOUTH AMERICANEAR AND MIDDLE EASTERN COUNTRIESOTHER ASIAN COUNTRIESOTHER EUROPEAN COUNTRIESAUSTRALIA AND NEW ZEALANDMISCELLANEOUS -COUNTRIES NOT SPECIFIED EXTRA€0B€10B€20B€30B€40B€50B€60B€70BVALUE EUROUSAChinaRussiaSwitzerlandTurkeySouth KoreaNorwaySingaporeJapanBrazilU.A.EmiratesSaudi ArabiaIndiaStores and provisions extraTaiwanHong KongCanadaAustraliaMexicoMalaysiaSouth AfricaN.det.ExtraIsraelMoroccoAlgeria 
 
 
 
 
 
                                                 
Figure 3: Destination countries and sub-regions for EU dual-use export domain in 2014.  

Figure 4: Destination countries by world regions and subregions, 2014. 

Figure 5: Top 50 extra-EU destinations by value in the dual-use export domain 201410. 

4.2. 

Applications, licences, denials  

The DUCG has exchanged information and collected licensing data, 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 

10 "Stores and provisions extra" are defined as delivery of ships' and aircraft's stores. "N.det.Extra" includes 
countries and territories not specified within the framework of trade with third countries. (These codes are 
usually used for goods delivered for offshore installations). 

9 

Top50extra-EUdestinations by value in the DUAL-USE EXPORT DOMAIN1. USA11. Brazil21. South Africa31.Ukraine41. Angola2. China12.Hong Kong22. N.det.Extra32. Tunisia42. Belarus3.Switzerland13. Saudi Arabia23. Algeria33. Gibraltar43. Iran4. Russia14. India24. Israel34. Nigeria44. Iraq5. U.A.Emirates15. Canada25. Thailand35.Kasakhstan45. Oman6. Turkey16. Taiwan26. Qatar36. Colombia46. Kuwait7. SouthKorea17. Malaysia27. Morocco37. Chile47. New Zealand8. Norway18. Stores, Provi. Extra28. Indonesia38. Argentina48. Pakistan9. Singapore19. Australia29. Philippines39. Serbia49. Azerbaijan10. Japan20.Mexico30.Egypt40. Vietnam50. Lebanon 
 
 
 
                                                 
 
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 Member States. 

Controlled Export Volume_____ 

r
N

50000
45000
40000
35000
30000
25000
20000
15000
10000
5000
0

Applications
(with Notifications)

Authorisations

Denials

2010

2011

2012

2013

2014

Figure 6: Volume (number) of authorisations and denials in 2010-201411. 

Controlled Export Value____         

€
n
M

l

90.000

80.000

70.000

60.000

50.000

40.000

30.000

20.000

10.000

0

Applications
(with Notifications)

Authorisations

Denials

2010

2011

2012

2013

2014

Figure 7: Value (mln EUR) of authorisations and denials in 2010-2014.  

11  In  Figure  6  and  Figure  7,  "Applications"  data  include  all  applications  for  licenses,  including  notifications 
under general authorisations, thus providing an indication of "controlled exports". In cases where no application 
data  is  available,  the  charts  makes  use  of  authorisation  data  as  estimate  for  application  data.  "Authorisations" 
data  refers  to  dual-use  exports  authorised  under  individual  and  global  licences.  It  should  be  noted  that 
applications do not necessarily correspond to 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. "Denial" refers to the volume 
and value of denied exports. 

10 

 
 
 
 
  
                                                 
 
 
 
Figure 8: Volume (number) of authorisations per category in 2014 data. 

Figure 9: Value (mln EUR) of authorisations per type in 2014. 

The total value12 of applications reached EUR 59 billion and controlled dual-use exports thus 
represented over 3.4% of total extra-EU exports. Authorised dual-use trade amounted to EUR 
41.5  billion,  representing  2.4%  of  total  extra-EU  exports,  with  a  majority  of  transactions 
authorised under individual licenses (approx. 25.000 single licenses issued in 2014). Only a 
small portion of exports were actually denied: approximately 472 denials were issued in 2014, 
representing about 11.5% of the value of controlled dual-use exports in that year, and 0.4% of 
total extra- EU exports13.  

12 This figure includes value for applications and notifications under General Export Authorisations. 
13 The value of denials in 2014 (EUR 6.8 billion) reflects exceptional circumstances, as denials values are 
generally much lower as shown in Figure 7. 

11