On 16 May 2012, the EU published the long awaited amendment to the EU Dual-use Regulation, Council Regulation (EC) No. 428/2009. The new legislation (Regulation (EU) No. 388/2012) amends the list of controlled "dual-use" goods contained in Annex I of the Dual-use Regulation and comes into effect from 15 June 2012. These new changes were introduced as a result of reviews carried out under the Wassenaar Arrangement, Missile Technology Control Regime, Australia Group and Nuclear Suppliers Group.
One of the most important changes for those dealing with encryption products is the introduction of Note 4 to Category 5 Part 2. This Note provides for additional exemptions for products containing encryption but whose primary function or set of functions is not any of the following:
There are certain criteria to be fulfilled in order to avail of this exemption and the Note should be reviewed carefully by exporters. At the time of writing this article, the EU Commission (or the EU national licensing authorities) has not issued guidance on the application of Note 4 and it’s unclear how it will be interpreted by the EU national licensing authorities. However, there is guidance provided on this exemption by the US Bureau for Information and Security (BIS).
In addition to the change referenced above, there are substantial changes in all 9 categories of Annex I, including the addition of controlled products, software and hardware, as well as the de-control of such types of products. The legislation also makes changes to the technical parameters of products currently controlled under existing legislation. Furthermore, the amended legislation also provides for amendments to definitions of terms and technical notes contained within certain controlled categories. The Irish Licensing Authorities (DJEI) has instructed exporters who are of the view that their products are no longer controlled to provide a technical explanation outlining the reasons and background for de-control.
This is another significant development in the area of export controls.
Please do not hesitate to contact us if you require any assistance in determining if your products are affected by these changes.