Documents considered by the Committee on 30 January 2019 Contents

5Control of Exports of Dual-Use Items

Committee’s assessment

Politically important

Committee’s decision

(a) Not cleared from scrutiny; further information requested; drawn to the attention of the International Trade Committee, the Committees on Arms Export Controls and the Joint Committee on Human Rights

(b) Cleared from scrutiny; drawn to the attention of the International Trade Committee, the Committees on Arms Export Controls and the Joint Committee on Human Rights

Document details

(a) Proposal for a Regulation setting up a Union regime for the control of exports, transfer, brokering, technical assistance and transit of dual-use items

(b) Proposal for a Regulation amending Council Regulation (EC) No 428/2009 by granting a Union General Export Authorisation for the export of certain

dual-use items from the Union to the United Kingdom of Great Britain and Northern Ireland

Legal base

(a) Article 207(2) TFEU; ordinary legislative procedure; QMV

(b) Article 207(2) TFEU; ordinary legislative procedure; QMV

Department

International Trade

Document Number

(a) (38114), 12785/16 + ADDs 1–3, COM(16) 616; (b) (40296), 15848/18, COM(18) 891

Summary and Committee’s conclusions

Proposal to update the existing dual-use Regulation to reflect technological and other changes (the proposed recast Regulation)

5.1The first proposal (document (a))—presented by the Commission in September 2016—aims to modernise and strengthen the existing Dual-Use Regulation25 on the export of dual-use items26 in light of geo-political developments and technological changes. This includes measures to help prevent human rights violations associated with certain cyber-surveillance technologies, through the proposed introduction of: an autonomous list of EU-specific cyber-surveillance technologies of concern; a complementary, targeted ‘catch-all’ measure that enables the control of non-listed goods in defined situations where there is evidence that they may be misused; and associated changes to the definition of dual-use items.

5.2At its meeting on 31 October 2018, the Committee noted the Government’s assessment that the Council remains divided on key aspects of the proposed recast Regulation, including the proposed introduction of an autonomous EU-specific list of dual-use cyber-surveillance technologies of concern, which would depart from the established practice to date of deriving control lists from the various multilateral export control regimes. The Committee asked to be kept updated on negotiations, and to be provided with an updated assessment of the expected shape of the UK’s post-Brexit dual-use export control regime, focusing on the administrative and financial costs to UK competent authorities and traders of dual-use items: in the event of ‘no-deal’ (leaving the EU without an agreement and therefore no transition period); during any transition period; and post-exit/transition period.

5.3In his letter of 17 December 2018, the Minister for Investment (Graham Stuart MP) provides an update on the progress of negotiations within the Council, noting that the Austrian Presidency were keen to secure agreement of an informal mandate before the end of its Presidency (on 31 December 2018), but that the compromise text was “pulled” from the Committee of Permanent Representatives (COREPER) meetings in early December. The Minister states that the UK, along with several other Member States, could not support the compromise text prepared by the Austrian Presidency on Article 8a and Annex V in relation to the autonomous EU control list of dual-use items and human rights end use control.

Proposal to update the existing dual-use Regulation in the event of a no-deal scenario

5.4The second proposal (document (b))—put forward by the Commission on 20 December 2018—forms part of the EU’s wider preparations for a ‘no deal’. It proposes including the UK as a permitted destination in the EU’s existing General Export Authorisation (GEA 001), which is a simplified export licence permitting the export of most dual-use items (specified in Annex I of Regulation 428/2009) to specified low risk third countries. It is intended to minimise the burden on EU exporters who export dual-use items to the UK if the UK leaves the EU without an agreement.

5.5In his Explanatory Memorandum of 16 January 2018, the Minister fully supports the Commission’s proposal for including the UK in the EU’s GEA 001, stating that it is a “welcome operational contingency action in the event of a no deal scenario”. He notes that there is no timetable for its adoption as “it will only be required if the UK leaves without an agreement”.

Brexit implications of both proposals

5.6In his letter of 19 December 2018, the Minister provides an updated assessment of the implications for the UK dual-use export control regime and future cooperation with the EU on dual-use export controls post-exit. His Explanatory Memorandum of 16 January 2019 further expands on planning for the no-deal scenario.

No-deal:

5.7At its meeting of 31 October 2018, the Committee noted that the UK Government’s no deal guidance of 23 August 201827 states that UK and EU operators will require a licence to trade dual-use items if the UK leaves the EU without a deal on 29 March 2019, and that existing export licences for dual use goods issued in the UK will no longer be valid for UK companies exporting from the EU27 (and vice versa for EU27 companies exporting from the UK using an EU27-issued licence). We asked the Minister to explain what assessment, if any, the Government had conducted on: the expected costs to the UK authorities of implementing and enforcing new licensing requirements; the expected costs to UK exporters/traders (in particular SMEs) of complying with these new licensing requirements; the expected impact on trade flows; and the risks of UK/EU Member State competent authorities not having sufficient time/resource to effectively enforce them.

5.8In his correspondence of 17 December 2018 and 16 January 2019, the Minister explains that in a no-deal scenario:

During any implementation/transition period:

5.9In response to the Committee’s question on the expected financial and administrative costs to the UK authorities and to UK operators of applying the recast Regulation if it is adopted and enters into force during the scheduled transition period, the Minister states there would be no significant, if any, additional costs beyond the existing running costs if the recast Regulation is adopted during the implementation period” on the basis that it “brings a small number of additional goods under control” and the costs to exporters of applying for an export licence “will not be significant”.

Post-exit/transition period:

5.10In response to the Committee’s question on what criteria the Government will use to assess the costs and benefits of UK convergence or divergence from the EU regime (relative to supporting a ‘multilateral approach’ through the four established export control regimes), the Minister states that:

5.11In response to the Committee’s question on what indication the EU has given that it would agree to continued cooperation with the UK in the field of export controls after UK exit (including: the sharing of information on denied export licence applications and related consultation procedures; cooperation on annual updates to the control lists (Annexes l and IV of the Dual-Use Regulation); and simplified procedures for exports of controlled items between the EU and the UK (such as reciprocal open general licences and mutual recognition of licences granted before UK exit/end of the scheduled transition period), the Minister simply rehearses his previous statements, namely that:

5.12We note that the Government remains opposed to key aspects of the compromise text for the proposed recast Regulation, including the introduction of an EU autonomous list of dual-use items and ‘catch all’ human rights end clause, and that the Austrian Presidency were not successful in securing an informal mandate in COREPER to start trilogue negotiations before the end of its Presidency. We ask the Minister to update us on the progress of negotiations under the Romanian Presidency.

5.13Further to our request for an updated assessment of the expected shape of the UK’s post-Brexit dual-use export control regime in all foreseeable Brexit scenarios, we note that:

5.14We are content to clear document (b) from scrutiny, but retain document (a) under scrutiny pending a further update on the negotiations and its implications for the UK post-exit. We draw the Minister’s update and our conclusions to the attention of the International Trade Committee, the Committees on Arms Export Controls and the Joint Committee on Human Rights.

Full details of the documents

(a) Proposal for a Regulation setting up a Union regime for the control of exports, transfer, brokering, technical assistance and transit of dual-use items: (38114), 12785/16 + ADDs 1–3, COM(16) 616; (b) Proposal for a Regulation amending Council Regulation (EC) No 428/2009 by granting a Union General Export Authorisation for the export of certain dual-use items from the Union to the United Kingdom of Great Britain and Northern Ireland: (40296), 15848/18, COM(18) 891.

Background

5.15The full details of the proposal and the Government’s position on it, is set out in the Government’s Explanatory Memorandum of 17 October 2016, and the Committee’s previous Report chapters listed below.

Previous Committee Reports

(a) Forty-third Report HC 301–xlii (2018–19), chapter 3 (31 October 2018), Twenty-sixth Report HC 71–xxiv (2016–17), chapter 5 (18 January 2017); (b) None.


25 See Council Regulation (EC) 428/2009 (the Dual-Use Regulation).

26 Dual use items are goods, including software and technology, which have both civil and military applications.




Published: 5 February 2019