COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT Report on the EU Export Control Policy Review Accompanying the document Proposal for a Regulation of the European Parliament and of the Council setting up a Union regime for the control of exports, transfer, brokering, technical assistance and transit of dual-use items (recast)
Date: 2016-09-28
Institutions: Directorate-General for Trade and Economic Security, European Commission
Subjects: customs regulations, dual-use good, export (EU), export monitoring, intra-EU trade, technical cooperation, trade restriction, transit

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   EUROPEAN COMMISSION  Brussels, 28.9.2016  SWD(2016) 314 final   COMMISSION STAFF WORKING DOCUMENT  EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT  Report on the EU Export Control Policy Review Accompanying the document Proposal for a Regulation of the European Parliament and of the Council setting up a Union regime for the control of exports, transfer, brokering, technical assistance and transit of dual-use items (recast)   {COM(2016) 616 final} {SWD(2016) 315 final}  
 
 
Executive Summary Sheet 

Impact assessment on EU Export Control Policy Review 

A. Need for action 

Why? What is the problem being addressed? 
The  current  EU  export  control  system  is  not  fully  adapted  to  keep  up  with  today's  evolving  and  new  security 
risks,  rapid  technological  and  scientific  developments  as  well  as  transformations  in  trade  and  economic 
processes. Moreover, the current system does not clearly take into consideration the emerging trade in cyber-
surveillance technology and the risks it creates for international security and human rights. From an economic 
perspective, the system imposes heavy administrative burden on industry and authorities alike, and sometimes 
lacks  legal clarity.  What  is  more,  divergences  in  interpretation and  application among  Member  States  result  in 
asymmetrical implementation and create competitive distortions within the Single Market. The problem affects a 
variety of economic operators across numerous industries, including SMEs, while the security and human rights 
aspects are relevant for specific categories such as dissidents or activists in third countries, as well as the EU 
population as a whole. 

What is this initiative expected to achieve? 
The EU export control policy review aims at supporting the overall policy objectives of the Union, as stipulated in 
Art.  3  TEU,  i.e.  "contribute  to  peace  and  security,  as  well  as  free  and  fair  trade  and  the  protection  of  human 
rights".  The  specific  policy  objectives  are:  adjusting  to  evolving  security  risks  and  threats;  adapting  to  rapid 
technological and scientific developments; preventing the export of cyber-surveillance technology in violation of 
human  rights;  reducing  competitive  distortions  and  administrative  costs  within  the  Single  Market;  levelling  the 
global playing field; and ensuring the effective and consistent application of controls in the EU. 

What is the value added of action at the EU level? 
Dual-use  export  controls  form  part  of  the  Common  Commercial  Policy.  The  EU  therefore  has  the  right  to  act, 
based  on  exclusive  competence  under  Article  207  of  TFEU.  The  objectives  can  only  be  achieved  through  EU 
action ensuring that competent authorities act in close collaboration and apply controls in a consistent way. EU 
intervention is also necessary to iron out competitive distortions within the Single Market, and promote dialogue 
with key trade partners to level the global playing field. EU action is furthermore needed to protect fundamental 
rights enshrined in the Charter of Fundamental rights. The identified review options comply with the principles of 
proportionality in that they are limited to what is necessary to achieve the objectives. 

B. Solutions 

What  legislative  and  non-legislative  policy  options  have  been  considered?  Is  there  a  preferred 
choice or not? Why? 
In  light  of  the  initiatives  envisaged  in  the  Commission  Communication  (2014)244,  five  options  have  been 
identified which range from a baseline scenario (no policy change) to a complete overhaul and full harmonisation 
of the export control system.  

A  thorough  analysis  was  conducted  to  assess  the  impact  of  the  different  review  options.  Options  2 
(Implementation  and  Enforcement  Support),  3  (EU  System  Upgrade)  and  4  (EU  System  Modernisation)  were 
compared to Option 1  – the baseline. The assessment was based on Commission services' own analysis and 
practical experience, on data and contributions provided by Member States, on the findings of an external data 
collection  study,  and  on  the  results  of  stakeholder  consultations.  A  fifth  option  (EU  System  Overhaul),  which 
would  radically  change  the  EU  approach  to  export  controls,  faced  strong  opposition  from  Member  States  and 
stakeholders and was therefore not further assessed.  

Option  3  appears  as  the  most  efficient  and  effective  option  in  light  of  economic  and  security  impact  criteria. 
However, option 4 appears indispensable to achieve the objective to prevent human rights violation caused by 
the lack of appropriate controls of cyber-surveillance technology. Hence a combination of options 3 and 4 are the 
'preferred option'. 

Who supports which option? 
Member  States,  the  European  Parliament,  industry  and  civil  society  have  recognised  the  need  for  a 
modernisation of the export control system as, broadly, presented in options 2 and 3, though their position may 
vary on specific issues. 

The European Parliament and civil society have advocated for strong EU action to control the export of cyber-
surveillance technology (Option 4). The Commission and the Council have recognised the need for EU action in 
this respect. 

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C. Impacts of the preferred option 

What are the benefits of the preferred option (if any, otherwise main ones)? 
Since there are no official statistics on dual-use production and trade and relevant quantitative data essentially 
concerns value and volume of licensing, an assessment of impacts relating to specific actions was based largely 
on qualitative analysis. 

Option 3 focuses on the modernisation of existing regulatory provisions. It contributes to most specific objectives 
and  is  most  apt  to  achieve  significant  progress  on  the  general  objectives  except  for  the  one  related  to  the 
protection  of  human  rights.  It  would  result  in  a  reduction  of  the  administrative  burden  for  exporters  and 
authorities, while enhancing the clarity of key legal provisions. It would also increase the effectiveness and EU-
wide consistency of controls and thus enhance security, and promote a better level playing field with competitors 
globally. 

Option  4  would  respond  to  the  proliferation  of  cyber-surveillance  technologies  whose  misuse  poses  a  risk  to 
international  security  and  human  rights.  It  would  provide  for  robust  and  flexible  control  mechanisms  of  these 
technologies and can be expected to have a significantly positive impact on security and human rights. 

What are the costs of the preferred option (if any, otherwise main ones)? 
Option 3 would entail some additional transitional administrative costs for Member States authorities in the short 
run, which will, however, be recovered through efficiency gains and reduction of administrative costs once new 
provisions are put in practice. For operators, option 3 should result in reduction of administrative costs. 

Option  4  could  result  in  a  higher  administrative  burden  for  operators  and  authorities,  both  at  national  and  EU 
level,  since  a  new  layer  of  control  would  be  added.  It  could  also  give  rise  to  new  distortions  of  competition  at 
global level, as it cannot be ensured that other key technology suppliers (e.g. China, US) would introduce similar 
controls.  However,  to  the  extent  that  Option  4  would  focus  on  very  specific  technologies,  negative  economic 
impact would be limited to a specialised industry with a small trade volume.  

How will businesses, SMEs and micro-enterprises be affected? 
Dual-use  export  controls  concern  a  variety  of  firms  across  different  sectors,  including  exporters  and 
manufacturers,  inter  alia,  in  the  energy,  aerospace,  defence  and  security,  transport  and  navigation, 
telecommunications,  chemical,  electronics,  semiconductor  and  computing  industries.  A  number  of  SMEs  are 
active in the sector. As an illustration, in the defence industry (that also produces dual-use items), in 2012, firms 
with less than 10 employees represented 76.7% of the total number of firms. 

The majority of respondents to the public consultation  agree that the export control policy review would "likely 
facilitate  dual-use  exports  by  SMEs.  Importantly,  industry  stakeholders  will  be  affected  by  changes  to  export 
controls only to the extent that they apply to the type of dual-use items they trade.  

Will there be significant impacts on national budgets and administrations? 
Option 3 is expected to result in a reduction of administrative burden for Member States licensing authorities. On 
the  other  hand,  the  introduction  of  new  export  controls  on  cyber-surveillance  technology  under  Option  4  will 
require administrative resources from competent authorities of Member States.  

Will there be other significant impacts? 
Positive impact is expected in terms of prevention of human rights abuses, reduction of distortion of competition 
within the Single Market, levelling the global playing field and security.  

D. Follow up 

When will the policy be reviewed? 
Monitoring of implementation will be carried out in cooperation with Member States. Annual reporting and data 
collection will provide a basis for monitoring and evaluation of the implementation, and to inform the Parliament 
and Council.  

The Commission will undertake an evaluation of this new initiative within five years of its entry into force in order 
to assess the actual impact and evaluate its efficiency and effectiveness. 

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