Belfast Telegraph

Monday 21 April 2014

Facing the challenges of requiring a licence for security exports

Exporters in the North West and other parts of Northern Ireland face a new challenge from growing international security worries.

The challenge comes from a developing requirement, especially in the US, that products or services which could have military applications must be licensed. Security controls applied by many nations are becoming tighter and are being applied increasingly rigorously.

Local companies, therefore, must be aware that most items — and their components — that have been specially designed or modified for military use now require an export licence, not just for export outside the European Union, but also for export within the EU. Companies of all sizes and across most industries will need the skills and knowledge required to avoid running into serious difficulties.

The industries most likely to be affected by the rules include:

  • Aerospace (including but not limited to goods such as avionics, engine parts, high-tech materials and communications equipment)
  • Mining (including but not limited to drills, pumps and gas monitors)
  • Oil and petroleum Industries (including but not limited to piping, pumps, gas monitors and drilling positioning systems)
  • International finance (including but not limited to providing personal or corporate financial services to denied parties, whether knowingly or unknowingly)
  • Encryption software (for all applications, including communications, financial services and information storage)
  • Communications (including broadband, wireless internet, telecommunications.)

The list, not exhaustive, should give many local companies food for thought.

The requirement applies to so-called ‘dual-use’ items — both products and their components — that can be used for both civilian or military purposes. In addition, this covers associated technology and software. Any product judged to have potential military applications can be held at the docks.

Goods judged as being capable of being used or adapted for torture are also included. The requirements are far reaching and have implications for companies across a range of industrial sectors

As well as national security and foreign policy concerns, international legal obligations (treaties and agreements), concerns about human rights and internal repression or terrorism all influence what can exported from the UK and what many other nations will accept.

Export of strategic goods and technology from the UK is strictly controlled by the Export Control Organisation, part of the Department of Business, Innovation and Skills, and it is this agency which issues export licences to Northern Ireland companies.

I fear that many local exporters have not considered whether they need an export licence for their products and/or services. They simply take it for granted that they are compliant with all necessary regulations. They should be aware that the punishments for non-compliance are severe — a heavy fine or even 10 years in jail! They need to take a long and hard look at their products or services to see if they are capable of being adapted by another organisation, not necessarily their initial customer, for military uses.

Fundamentally, all exporters must check the “UK Strategic Export Control Lists” to determine if their products are subject to controls and require a licence.

A licence is required for all destinations (including the EU ) if the item is on the UK Military List or are the more sensitive items (in Annex IV) on the EU Dual-Use List. A licence for exports outside the EU is required if goods are less sensitive items on the EU Dual-Use List

If the goods are not listed on the control lists, an export licence may still be needed under so called End-Use Controls.

This applies if the goods are likely to be sent to an end user where there are concerns about the possible use of the goods in a Weapons of Mass Destruction (WMD) programme.

Finally, goods will require a licence under the ‘Catch-All’ clause if UK national authorities believe that the export of an item would contravene UK export controls.

Exporters also need to ensure they have solid export control systems in place in terms of records, training and lines of responsibility. Furthermore, all exporters in the United Kingdom will be subject to regular compliance visits.

Bill McGinnis, who is from Magherafelt, is Northern Ireland Adviser on Employment and Skills, the Northern Ireland Commissioner on the UK Commission for Employment and Skills and Chairman of the Northern Ireland Exporters Association

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