EXPLANATORY NOTE 4: CLARIFICATION OF THE
DEFINITIONS SURROUNDING THE RECEIPT OF FEES OR COMMISSIONS
ATTACHMENT 4: ARTICLES 21(7) AND 22 (3) AND ARTICLE
3 (INTERPRETATION):
The Further Response concluded that "there
is not a case for removing the provision, and that there are risks
associated with doing so. However, given that there does appear
to be some uncertainty over exactly what constitutes "commission
or other consideration", we will amend the wording of the
legislation to clarify this".
Articles 21(7) below (in respect of Category B goods)
and 22 (3) (in respect of Category C goods) are designed to achieve
this by describing the relevant activities as "contract promotion
activity" in Article 3 (Interpretation). Parts (a) and (b)
of Articles 21(7) and 22 (3) set out the circumstances in which
"contract promotion activity" is not controlled.
The exception no longer depends on whether the activity
was carried out "in return for a fee, commission or other
consideration", but whether it was carried out "for
payment". We have made this change firstly, because the term
"consideration" was not well understood, and secondly,
because the previous formulation of legislation did not specifically
cite the situation in which a person might be paid periodic fees
or a retainer not related to any one act. In this new draft, "payment"
is therefore defined very broadly in Article 3 ("a payment
in money or money's worth or in kind whether referable to a particular
act or made from time to time by way of retainer or otherwise").
If "payment", in this broad sense, has been received,
then the control applies. The control will (as now) not apply
to various activities where no "payment" changes hands,
such as where a UK business which cannot supply the requested
goods passes on details of potential suppliers to the person making
the enquiry; or—in the context of transport—where
a UK provider who is approached to move goods between two overseas
countries simply redirects the enquirer to another overseas provider
who, for logistical reasons, is better placed to pick up the business.
The second test, set out under Articles 21(7)(b)
and 22(3)(b), exempts contract promotion activity carried out
"in the course of employment". This is a necessary balance
to the broad definition of payment as explained above. Since the
new definition includes payments made "from time to time",
it would have arguably encompassed salaries paid to UK employees
carrying out various inconsequential acts which ultimately contribute
to a movement between two overseas countries (eg preparing invoices,
loading vehicles, putting customers in touch with suppliers and
so on) without this compensating text.
ATTACHMENT 4: EXCERPT OF 1ST DRAFT OF LEGISLATION
ON TRADECONTROLS
PART 5
TRADE CONTROLS
Category B goods
21—(1) This article applies to—(a)persons
carrying out activities in the United Kingdom; and
(b)United Kingdom persons.
(2) Subject to paragraphs (3), (4) and (7)
and to articles [24] and [251*, no person to whom this article
applies shall directly or indirectly—
(a)supply or deliver;
(b)agree to supply or deliver; or
(c)do any act calculated to promote the supply or
delivery of any category B goods, where that person knows or has
reason to believe that such action or actions will, or may, result
in the removal of those goods from one third country to another
third country.
(3) Nothing in this article shall be taken
to prohibit the provision of—
(a)financing or financial services;
(b)insurance or reinsurance services; or
(c)general advertising or promotion services
by a person whose only involvement in the activities
described in paragraph (2) is to provide or agree to provide such
services.
(4) A person ("the transporter")
whose only involvement in the activities described in paragraph
(2) is to provide or agree to provide transportation services
in relation to category B goods ("the relevant goods")
only contravenes the prohibition in this article if paragraph
(5) or (6) applies.
(5) This paragraph applies if the transporter
arranges, otherwise than in the course of employment, the removal
of the relevant goods from one third country to another third
country.
(6) This paragraph applies if the transporter
otherwise than—
(a)in the course of providing services to another
person—
(ii)to whom this article applies; and
(iii)who has agreed to provide transportation services
in relation to the relevant goods; or
(d)in the course of employment removes or agrees
to remove the relevant goods from one third country to another
third country.
(7) Nothing in this article shall be taken
to prohibit any contract promotion activity that is carried out—
(a)otherwise than for payment; or
(b)in the course of employment.
*Article 25 is not reproduced here, but deals
with licensing
Category C goods
22—(1) Subject to paragraphs (2) and
(3) and to articles [23, 24] and [25], no person shall directly
or indirectly—(a)agree to supply or deliver; or
(b)do any act calculated to promote the supply or
delivery of any category C goods, where that person knows or has
reason to believe that such action or actions will, or may, result
in the removal of those goods from one third country to another
third country.
(2) Nothing in this article shall be taken
to prohibit the provision of—
(a)transportation services;
(b)financing or financial services;
(c)insurance or reinsurance services; or
(d)general advertising or promotion services by a
person whose only involvement in the activities described in paragraph
(1) is to provide or agree to provide such services.
(11) Nothing in this article shall be taken
to prohibit any contract promotion activity that is carried out—
(a)otherwise than for payment; or
(b)in the course of employment.
EXCERPT FROM 1ST DRAFT LEGISLATION—LISTING
OF DEFINED TERMS IN THE INTERPRETATION SECTION
STATUTORY INSTRUMENTS
2009 No. 0000
CUSTOMS
The Export Control Order 2009
Made ................... 00th January 2009
Laid before Parliament 00th January 2009
Coming into force .................. 6th April 2009
The Secretary of State is a Minister designated
for the purposes of section 2(2) of the European Communities Act
1972[1]
in relation to—(c)measures relating to trade in dual-use
items, including the transmission of software or technology in
intangible form;[2]
and
(d)matters relating to trade in certain goods, including
technical assistance, which could be used for capital punishment,
torture or other cruel, inhuman or degrading treatment or punishment.[3]
It appears to the Secretary of State that it
is expedient for the references to Council Regulation (EC) No
1334/2000,[4]
Council Regulation (EC) No 1236/2005[5]
and Article 3 of Council Regulation (EEC) No 2913/92[6]
to be construed as references to those instruments and that provision
as amended from time to time.
[To the extent that this Order regulates the
communication of information in the ordinary course of scientific
research, the Secretary of State, having considered the reasons
for the relevant controls and the need to respect the freedom
to carry on the relevant activities, has determined that such
regulation is necessary.]
The Secretary of State, in exercise of the powers
conferred by section 2(2) of the European Communities Act 1972,
by paragraph 1A of Schedule 2 to that Act[7]
and by sections 1, 2, 3, 4, 5 and 7 of the Export Control Act
2002,[8]
makes the following Order:
PART 6
INTRODUCTORY
Citation and commencement
19. This Order may be cited as the Export
Control Order 2009 and shall come into force on 6th April 2009.
Interpretation
20.—(1) In this Order, the following
expressions have the meanings given below, save where an expression
is also defined in a Schedule where it has, for the purposes of
that Schedule, that meaning—"acquire" means buy,
hire, borrow or accept as a gift and cognate expressions shall
be construed accordingly;
"aircraft" means a fixed wing, swivel wing,
rotary wing, tilt rotor or tilt wing vehicle or helicopter*;
"category A goods" means goods specified
in Part I of Schedule I that are outside the United Kingdom and
the Isle of Man [or are in transit];
"category B goods" means goods specified
in Part 2 of Schedule 1 that are outside the United Kingdom and
the Isle of Man [or are in transit];
"category C goods" means—
(a)military goods other than goods specified in Schedule
1; and
(b)portable devices for the purpose of riot control
or self-protection by the administration or dissemination of an
incapacitating chemical substance
that are outside the United Kingdom and the Isle
of Man [or are in transit];
"CEMA" means the Customs and Excise Management
Act 1979[9]*;
"the Commissioners" means the Commissioners
for Her Majesty's Revenue and Customs;
"the Community General Export Authorisation"
means the authorisation constituted by Article 6(1) of and Annex
II to the dual-use Regulation*;
"competent authority" [definition outstanding.]*;
"contract promotion activity" means any
act calculated to promote the arrangement or negotiation of a
contract for the acquisition, disposal or movement of goods or
any agreement to do such an act;
"country" [includes territory];
"customs and excise Acts" has the same
meaning as in section 1 of CEMA;
"the customs territory" means the customs
territory described in Article 3 of Council Regulation (EEC) No
2913/92 as amended from time to time*;
"dispose of' means sell, let on hire, lend or
give as a gift and cognate expressions shall be construed accordingly;
"dual-use" in relation to goods, software
or technology, means usable for both civil and military purposes*;
"the dual-use Regulation" means Council
Regulation (EC) No 1334/2000 as amended from time to time*;
"embargoed destination" means a country
listed in Part I or 2 of Schedule 4;
"exportation" shall be construed as follows—
(c)unless the context otherwise requires, it only
includes removal from the United Kingdom to a destination outside
the United Kingdom and the Isle of Man;
(d)it includes shipment as stores;
(e)in relation to a vessel, vehicle, submersible
vehicle or aircraft, it includes taking it out of the United Kingdom,
notwithstanding that it is conveying goods or passengers and whether
or not it is moving under its own power
and cognate expressions shall be construed accordingly*;
"financial services" includes financing;
"general advertising services" includes
general promotion services;
"goods" means tangible goods[, both used
and unused,] and, [except in the definitions of category A goods,
category B goods and category C goods, includes otherwise uncontrolled
goods on which software or technology is recorded.];
"goods subject to trade controls" means
category A goods, category B goods and category C goods.
"importation" in relation to a vessel,
vehicle, submersible vehicle or aircraft includes taking it out
of the United Kingdom, notwithstanding that it is conveying goods
or passengers and whether or not it is moving under its own power
and cognate expressions shall be construed accordingly;
"insurance services" includes reinsurance
services;
"licence" means a licence granted by the
Secretary of State;
"microprogramme" means a sequence of elementary
instructions, maintained in a special storage, the execution of
which is initiated by the introduction of its reference instruction
into an instruction register;
"military" in relation to goods, software
and technology, means listed in Schedule 2;
"normal commercial journey" means a journey
providing transport services in the ordinary course of business;
"payment" includes a payment in money or
money's worth or in kind whether referable to a particular act
or made from time to time by way of retainer or otherwise;
"prescribed sum" and "proper"
have the same meanings as in CEMA;
"programme" means a sequence of instructions
to carry out a process in, or convertible into, a form executable
by an electronic computer;
"in the public domain" means available
without restriction upon further dissemination (no account being
taken of restrictions arising solely from copyright);
"registered user" means [];
"scheduled journey" means one of a series
of journeys which are undertaken between the same two places and
which together amount to a systematic service operated in such
a manner that its benefits are available to members of the public
from time to time seeking to take advantage of it;
"shipment" (and cognate expressions) and
"stores" have the same meanings as in CEMA;
"software" means one or more programmes
or microprogrammes fixed in any tangible medium of expression;
"surface effect vehicle" means any air
cushion vehicle (whether side wall or skirted) and any vehicle
using the wing-in-ground effect for positive lift;
"technical assistance" means any technical
support related to repairs, development, manufacture, assembly,
testing, use, maintenance or any other technical service;
"technology" means information (including
but not limited to information comprised in software and documents
such as blueprints, manuals, diagrams and designs) that is capable
of use in connection with the development, production or use of
any goods;
"a third country" means any country that
is not the United Kingdom or the Isle of Man except that, for
the purposes of Part 4 of this Order, goods that are goods in
transit are considered to be located in a third country;
"the torture Regulation" means Council
Regulation (EC) No 1236/2005 as amended from time to time*;
"transfer", in relation to any software
or technology, means the transfer by electronic or non-electronic
means (or any combination of electronic and non-electronic means)
from a person or place within the United Kingdom, except in articles
[1 and [Ito the extent that those articles make provision in respect
of transfers other than from a person or place within the United
Kingdom, [and cognate expressions shall be construed accordingly]*;
"transfer by electronic means", in relation
to software or technology, means transmission by facsimile, telephone
or other electronic media (except that oral transmission of technology
by telephone is included only where the technology is contained
in a document the relevant part of which is read out over the
telephone, or is described over the telephone in such a way as
to achieve substantially the same result as if it had been so
read);
"transfer by non-electronic means", in
relation to any software or technology, means disclosure of software
or technology by any means (or combination of means), including
oral communication, other than as the exportation of goods or
the transfer by any electronic means; "in transit" [means
imported into the United Kingdom for transit or transhipment].
"transit or transhipment" means transit
through the United Kingdom or transhipment with a view to re-exportation
of the goods in question or transhipment of those goods for use
as stores;
"UK controlled" in relation to dual-use
goods, software and technology, means listed in relation to dual-use
goods, software and technology, means listed in Schedule 3;
"vehicle" includes a railway carriage;
"vessel" includes any ship, surface effect
vehicle, vessel of small waterplane area or hydrofoil, and the
hull or part of the hull of a vessel;
"WMD purposes" means use in connection
with the development, production, handling, operation, maintenance,
storage, detection, identification or dissemination of chemical,
biological or nuclear weapons or other nuclear explosive devices,
or the development, production, maintenance or storage of missiles
capable of delivering such weapons.
(2) Any reference in this Order to time
after an event is a reference to a period of that length of time
beginning on the day of that event.
1 1972 c. 68; section 2(2) was amended by the Legislative
and Regulatory Reform Act 2006 (c. SI), section 27(1). Back
2
S.I. 2000/1813. Back
3
SI. 2006/1461. Back
4
OJ No L 159, 30.6.2000, p1; relevant amending instruments are
Council Regulation (EC) No 2432/2001 (OJ No L 338, 20.12.2001,
p1) and Council Regulation (EC) No 1183/2007 (OJ No L 271, 22.10.2007,
p1). Back
5
OJ No L 200, 30.7.2005, p 1. Back
6
OJ No L 159, 30.6.2000, p 1. Back
7
Paragraph IA of Schedule 2 was inserted by the Legislative and
Regulatory Reform Act 2006, section 28. Back
8
2002 c. 28. Back
9
1979 c.2. Back
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