An export control licence is required to export many items including certain hardware, technology, software containing encryption and chemicals among others. Implications for exporters are more significant than it may initially appear.
In the past, export controls applied largely to the domain of aerospace and defence companies and the export of military products. Now, many countries have implemented controls for 'dual-use' items which, despite their civil application, can also be used for military purposes. Export control is now relevant to many common export transactions, including the export of certain hardware, technology, software containing encryption, chemicals, biologics, capital equipment and other perceived ‘sensitive items’.
Such exports of military and dual-use items are controlled by means of licences issued by the authorities in the exporting country. These requirements are not limited to physical exports of goods but also include exports of software and technology (including transfers in intangible formats e.g. email, upload or download from a server, certain technical assistance etc.). Approximately 10% of all exports are potentially “dual-use” controlled and subject to licensing.*
In addition to the export of military and dual-use items, further precautions are required to avoid unauthorised supplies of products, services and financial payments to embargoed or sanctioned countries or restricted ‘black listed’ parties.
The implications for exporters are more significant than it may initially appear. Recent developments are increasingly placing the onus on exporters to know their customers’ business and the intended 'end-use' of their products.
Have you considered if any of the items that you are currently exporting are subject to export licensing? Do you know the 'end-user' and the 'end-use' of your products? Do you know where your products are being exported and if any trade restrictions apply to your export markets or parties involved in the export transactions?
Unauthorised exports may result in significant penalties and suspend your right to export licensable goods, software or technology. Companies involved in exporting should have processes and procedures in place to reduce the risk of non-compliance.