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: 2017-11-21
Institutions: Directorate-General for Trade and Economic Security, European Commission
Subjects: dual-use good, export (EU), export licence, export monitoring, intra-EU trade, trade restriction, transit

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 21.11.2017  COM(2017) 679 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  with  inputs  from  Member  States'  in  the  DUCG1,  provides  information  on  the 
implementation  of  the  Regulation  in  2016,  and  includes  aggregated  export  control  data  for 
2015. 

2. 

EVOLUTION OF THE POLICY & REGULATORY FRAMEWORK 

2.1. 

Export control policy review 

Further  to  the  adoption  of  Communication  (COM(2014)244)  of  24  April  2014,  the 
Commission conducted an impact assessment in 2015 with a view to evaluating the costs and 
benefits  associated  with  the  various  review  options  and  identifying  the  most  suitable 
regulatory  and  non-regulatory  actions.  The  impact  assessment  report2  was  presented  to  the 
Regulatory  Scrutiny  Board  (RSB)  in  March  2016  and  received  a  positive  opinion  with 
comments3.  A  legislative  proposal  was  prepared  in  light  of  the  conclusions  of  the  impact 
assessment  and  the  Commission  adopted  on  28  September  2016  a  proposal  for  a  regulation 
COM(2016)616 providing for a modernisation of EU export controls4. The proposal aims at 
enhancing the effectiveness of controls and adjusting them to evolving security threats, rapid 
technological and economic developments, and, at the same time, enhancing their  efficiency 
by  simplifying  the  administration  of  controls  and  reducing  the  administrative  burden  for 
exporters and competent authorities of the Member States. The overall objectives are thus to 
enhance  security  –  including  the  protection  of  human  rights  –  and  to  ensure  the 
competitiveness of EU exporters. 

The 

1 Some MS competent authorities also publicly report on trade in dual-use items. 
2 
is 
report 
http://trade.ec.europa.eu/doclib/docs/2016/october/tradoc_155008.pdf 
3 The RSB opinion is available at http://ec.europa.eu/smart-regulation/impact/iab/iab_en.htm. 
4 
regulation 
content/EN/TXT/?qid=1476175365847&uri=CELEX:52016PC0616 

Assessment 

available 

proposal 

Impact 

The 

for 

at 

is 

a 

available 

at 

http://eur-lex.europa.eu/legal-

2 

 
 
 
 
 
 
 
                                                 
The proposal provides for adjustments for controls to operate effectively and efficiently in a 
globalised economy and consists essentially in: 

  a  "system  upgrade"  which  aims  at  improving  current  control  regulations  and  make 

them more efficient and more effective; 

 

the introduction of a new "human security" dimension, on the other, to respond to the 
challenge  posed  by  the  emergence  of  new  cyber-surveillance  technologies  and  their 
impact on human rights and the EU's security. 

The  Commission  regularly  consulted  the  Council's  Dual-Use  Working  Party,  providing  in 
particular  updates  on  the  impact  assessment  and  preparation  of  the  proposal.  The  export 
control  policy  review  was  also  on  the  agenda  of  the  European  Parliament  on  several 
occasions,  and  the  proposal  was  presented  at  the  Parliament  at  a  technical  briefing  on  20 
October 2016. 

The  Commission  conducted  targeted  consultations  and  outreach  to  key  stakeholders  and 
presented the proposal to industry and civil society organisations on the occasion of a Civil 
Society Dialogue on 3 October 2016. Moreover, an Export Control Forum was organised on 
12  December  2016,  jointly  with  the  Slovak  Presidency  of  the  EU,  to  exchange  views  with 
industry and civil society stakeholders5.  

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  2016/19696  of  12  September  2016  updated  the 
EU Control List in Annex I to the Regulation, and incorporated modifications agreed at the 
multilateral  export  control  regimes  in  2015.  The  2016  EU  control  list  thus  incorporates 
approx.  200  amendments,  most  of  which  stem  from  the  Wassenaar  Arrangement  and  the 
Missile Technology Control Regime. These amendments concern, in particular updates to the 
control  of  laser  measuring  system,  new  controls  for  electronic  equipment  for  high-speed 
analogue-to-digital conversions, software for the operation and maintenance of guidance sets, 
gel propellant rocket motors, as well as structural changes to Category 5 Part 2 - “Information 
Security”.  The  chemical  diethylamine  and  two new  viruses  -  SARS-related  coronavirus  and 
Reconstructed 1918 influenza virus - were added to the control list. The update also provides 
for  the  removal  of  several  controls,  including  those  on  aerospace/missile  seals,  some 
hydraulic fluids and underwater cameras.  A "Comprehensive Change Note" was published as 
guidance  providing  an  overview  of  all  technical  changes  to  the  2016  EU  Dual-Use  Control 
List7. 

Annexes  II  and  IV  of  the  Dual-Use  Regulation  were  also  updated  in  line  with  the  Annex  I 
amendments.  The  new  updated  and  consolidated  EU  Control  List  became  applicable  on  16 
November  2016,  thereby  allowing  the  EU  to  adhere  to  its  international  commitments  with 
regard to export controls and helping EU exporters where control parameters were relaxed. 

The 

report 

5 
http://trade.ec.europa.eu/doclib/docs/2016/december/tradoc_155125.pdf. 
6 OJ L 307, 15.11.2016.  
7 The Summary Note is available at: http://trade.ec.europa.eu/doclib/docs/2016/october/tradoc_155058.pdf. 

available 

Forum 

the 

of 

is 

at: 

3 

 
 
 
 
                                                 
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  20 
August  20168,  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  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 held 6 meetings over the reporting period, thus 
providing  a  forum  for  consultations  on  a  number  of  topical  issues  concerning  the 
implementation of the Regulation.  

3.1. 

Consultations on implementation issues 

The  DUCG  held  technical  exchanges  of  information  on  specific  control  issues  such  as  the 
application  of  the  cryptography  note  (Cat.  5  Part  2  of  the  EU  control  list)  and  the 
interpretation  of  controls  of  encrypted  technology  transfers,  the  application  of  controls  on 
frequency  changers  (inverters),  the  definition  of  "exporter"  under  Article  2.3  of  Regulation 
(EC) 428/2009 and its application in specific situations when exports involve a reseller, and  
the application of controls on export of dual-use items that may be misused for terrorist end-
uses.  The  DUCG  also  discussed  the  use  of  digital  equivalents  of  End-User  Certificates 
(EUCs)  in  connection  with  export  licence  applications,  and  the  use  of  electronic  signatures 
and the requirement for hard copy licences. 

The  DUCG  conducted  a  general  exchange  of  information  regarding  the  implementation  of 
national  measures,  and  prepared  an  updated  Information  Note  on  national  measures  for 
publication in the Official Journal on 20 August 2016. 

The  DUCG  reviewed  the  methodology  and  approach  for  data  exchange,  and  conducted  a 
comprehensive  licensing  data  collection  exercise  (on  2015  data)  in  order  to  enhance 
information exchange between MS and to increase public transparency on EU dual-use export 
controls.  The  DUCG  also  contributed  to  the  preparation,  by  the  Commission,  of  an  impact 
assessement in the context of the export control policy review. 

In light of the recommendations prepared by the "AEO-ICP Technical Expert Group" - a joint 
(with  customs)  technical  sub-group  examining  the  potential  convergence  of  customs' 

8 OJ C304/03, 20.08.2016. 

4 

 
 
                                                 
"Authorised  Economic  Operators"  (AEO)  programmes  with  export  control  "internal 
compliance programmes" (ICP) – the DUCG supported information exchange regarding MS 
follow-up  on  the  recommendations  and  prepared  terms  of  reference  for  a  Technical  Expert 
Group dedicated to the development of ICP Guidelines. 

The DUCG supervised 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.  The  STEG  monitored  relevant  technology  and 
policy developments, reviewed licensing and denials trends and provided expertise in support 
of  the  Commission's  impact  assessment  and  preparation  of  a  legislative  proposal  for  the 
modernisation of EU export controls.  

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  prepared  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. As a result, Guidance 
notes 1/2016 and 2/2016 were published on 25 October 20169. 

3.4. 

Exchange of information between competent authorities 

The DUCG continued to support the further development of the Dual-use e-System (DUeS), a 
secure  and  encrypted  electronic  system  hosted  by  the  Commission,  to  support  enhanced 
exchange of information between export control authorities and the Commission.  

In  the  course  of  2016,  the  DUCG  agreed  on  specific  improvements  to  DUeS,  in  particular 
regarding  the  efficiency  and  security  of  user  management.  The  DUCG  also  supported  and 
steered the development of new functionalities of the DUeS, in particular: 

-  a  new  functionality  to  support  information  exchange  on  Iran  dual-use  sanctions, 
specifically  regarding  authorisations  for  export,  brokering  and  technical  assistance 
concerning certain dual-use items listed in Annex II of Regulation (EU) 267/2012;  

-  a  new  functionality  to  provide  'web-services'  allowing  the  interconnection  of 
national electronic licensing systems with the DUeS, in order to provide easy access, 
through a web-based interface, to DUeS information.  

9 http://trade.ec.europa.eu/doclib/cfm/doclib_section.cfm?sec=192 

5 

 
 
 
 
 
 
 
 
 
                                                 
The DUCG also continued discussions regarding the development of an "electronic licensing" 
platform to  be used by competent authorities on a voluntary basis, and  supported consistent 
and efficient  approaches to  the development of  electronic information  platforms on security 
trade controls throughout the EU. 

3.5.  Transparency and dialogue with industry and academia  

The DUCG supported the organisation of an "Export Control Forum" on 12 December 2016 
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 review10. 

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 Regulation (EU) No 1969/201611. Also, as indicated above, Guidance notes 1/2016 
and 2/2016 were published to support industry implementation of controls. 

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 2016, the Commission released a new version of 
the  'correlation  table'12  linking  customs  codes  with  dual-use  classifications  and  continued 
inclusion of export control parameters into the EU's online customs tariff database (TARIC).  

3.7.  EU Dual-use Pool of Experts 

In 2016, the EU Dual-use Pool of Experts operated by Commission’s Joint Research Centre 
(JRC) and experts made available by Member States continued to provide support to Member 
States  export control authorities requesting  advice in  relation to  concrete licensing cases.  In 
total,  5  technical  advices  on  commodity  classification  were  provided  to  6  competent 
authorities over the reporting period.  

3.8.  Capacity building 

In  2016,  the  Commission’s  JRC  continued  the  series  of  technical  seminars  in  collaboration 
with  the  US  Department  of  Energy,  and  held  the  9th  seminar  on  16-17  June  2016  in  Ispra, 
Italy. The event was attended by licensing officers and technical experts from export control 
authorities, as well as exporters, academia and research organisations. 

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  specific 

10 http://trade.ec.europa.eu/doclib/docs/2016/december/tradoc_155193.pdf 
11 http://trade.ec.europa.eu/doclib/docs/2016/october/tradoc_155058.pdf 
12 http://trade.ec.europa.eu/doclib/docs/2016/february/tradoc_154240.pdf 

6 

 
 
                                                 
licensing  data  collected  by  competent  authorities  and,  on  the  other  hand,  on  statistics  for 
customs commodities which include dual-use goods. 2015 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  

In 2016, the Regulation primarily applied to the export of about 1892 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 commodities, 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.  

Figure 1: Number of dual-use items listed in Categories of Annex I further to the adoption of Regulation (EU) 
2016/1969, compared to Regulation (EU) No 2015/2420. 

Statistical estimates of the relative importance of dual-use trade indicate that dual-use exports 
represent about 2.6% of EU total exports (intra and extra-EU), within a broad ‘dual-use export 
domain’13 of customs commodities (Figure 2). 

13 The statistical methodology developed by the Commission's Joint Research Centre makes use of a correlation 
table, developed by DG TAXUD,  between dual-use classification numbers and customs codes and of Eurostat’s 
COMEXT  data,  as  well  as  of  licensing  data.  The  notion  of  dual-use  export  domain  refers  to  a  large  mixed 
commodity area which includes dual-use items. Trade in 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 really 
dual-use.  

7 

 
 
 
                                                 
 
Figure 2: Statistical estimates of dual-use intra and extra-EU exports. 

Statistical estimates also show the main dual-use export destinations and indicate that a large 
part of the these exports are directed towards 'EU001 countries' benefiting from union general 
export  authorisations  (EUGEAs).  The  destination  countries  reflect  the  EU  export  market 
structure in the relevant commodities as well as trade facilitation under EUGEAs (Figure 2, 3 
and 4)14.  

Figure 3: EU dual-use export extimates: top 25 export destination countries and their sub-regions in 2015.  

14 "Stores and provisions extra" are defined as delivery of ships' and aircraft's stores. ”Miscellaneous –countries 
not  specified  extra”  includes  countries  and  territories  not  specified  within  the  framework  of  trade  with  third 
countries (i.e., these codes are usually used for goods delivered for offshore installations). 

8 

 
 
 
 
 
                                                 
Figure 4: EU dual-use export extimates: destination countries by world regions and sub-regions in 2015. 

4.2. 

Applications, licences, denials  

The DUCG has collected and exchanged information and 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 
collect  all  data.  The  information  provided  below  thus  represents  approximate  estimates  of 
aggregate  quantities  and  values  within  the  limits  of  the  data  made  available  by  Member 
States. 

9 

05000100001500020000250003000035000400004500050000201020112012201320142015NrControlled Export Volume_____Applications(with Notifications)AuthorisationsDenials 
 
 
 
 
 Figure 5: Volume (number) of authorisations and denials in 2010-201515. 

Figure 6: Value (mln EUR) of authorisations and denials in 2010-2015.  

Figure 7: Volume (number) of authorisations per category in 2015. 

15  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",  i.e.  the  value  of  extra-EU 
exports subject to an authorisation process. In cases where no application data is available, the charts make 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 

010,00020,00030,00040,00050,00060,00070,00080,00090,000201020112012201320142015Mln €Controlled Export Value____Applications(with Notifications)AuthorisationsDenials 
 
 
 
 
 
                                                 
Figure 8: Value (mln EUR) of authorisations per type in 2015. 

The  total  value16  of  applications  reached  EUR  44  bn  and  controlled  dual-use  exports  thus 
represented 2.5% of total extra-EU exports. Authorised dual-use trade amounted to EUR 33.7 
bn,  representing  1.9%  of  total  extra-EU  exports,  with  a  majority  of  transactions  authorised 
under individual licenses (approx. 25.000 single licenses issued in 2015) and global licenses 
(by  their  value).  Only  a  small  portion  of  exports  were  actually  denied:  approx.  640  denials 
were  issued in  2015, representing about  4.5% of the value of controlled dual-use exports in 
that year, and 0.1% of total extra- EU exports.  

16 This figure includes value for licence applications and notifications under General Export Authorisations. 

11 

46%37%3%1%~0%7.5~0%4%9%05,00010,00015,00020,000Individual license (Annex I)Global license (Annex I)Intra-EU transfer licenseLicense for non-listed itemsLicense under a national control measureTransit authorisationBrokering authorisationNational General Export AuthorisationEU General Export AuthorisationAuthorised Export Value by License Type in 2015