EU export controls
and sanctions
update : further
compliance
challenges
Laurent Ruessmann
Crowell & Moring LLP
29 May 2012
Compliance challenges of export controls
» Export controls have always posed challenges to
companies and their desire to expand export sales
– Need to classify company products , to identify customers and
end uses
– Need to obtain authorisations and follow up
– Need to get management buy-in!
» Top management buy-in, internal procedures and
manuals, personnel training, etc, are critical to achieving
compliance
» This presentation will take a look at recent developments
and how they affect compliance challenges
– EU dual use controls
– EU economic sanctions
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EU dual-use export controls update
» New Annex I to the EU Dual Use Regulation
(Regulation 428/2009)
» New EU General Export Authorisations (« EU GEAs »)
» Legislative proposal based on Green Paper and public
consultation
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New Annex I of EU Dual Use Regulation
Regulation 388/2012 amended Annex I of EU Dual Use Regulation
- Reflects decisions taken in 2009 and 2010 by international export control regimes
(the Australia group, the Nuclear Suppliers Group, the Missile Technology Control
Regime and the Wassenaar Arrangement)
- Entry into force : 15 June 2012
(including EU candidate countries – Turkey, Croatia and FYROM – and eventually
other countries that use the EU list as a reference)
- 2011 (and later) changes?
(e.g., Wassenaar 2011 :
http://www.wassenaar.org/controllists/2011/Summary%20of%20Changes%20to%20
Control%20Lists%202011.pdf)
Best Practice Guidelines on ICPs : adopted by 2011 Wassenaar plenary
(available at http://www.wassenaar.org/guidelines/docs/2%20-
%20Internal%20Compliance%20Programmes.pdf)
Link to Regulation 388/2012
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2012:129:0012:0280:EN:PDF
Link to the Proposal for amending Annex I to EU Dual Use Regulation, COM (2010) 509,
containing a list of modifications
http://trade.ec.europa.eu/doclib/docs/2010/november/tradoc_146861.pdf
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New EU GEAs
Regulation 1232/2011 revised rules on exports of dual use items and
introduced five new EU General Export Authorisations (EU GEAs)
Since January 2012, there are now six EU GEAs in place:
EU001 – exports to Australia, Canada, Japan, New Zealand, Norway, Switzerland
(including Liechtenstein) and United States of America
EU002 – export of certain dual-use items to six additional destinations
EU003 – export after repair/replacement
EU004 – temporary export for exhibition or fair
EU005 – certain telecommunications
EU006 – certain chemicals
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New EU GEAs - continued
Key features of the GEAs
- available to any exporter established in the EU
- precise geographic scope, precise items scope
- subject to a specific set of conditions of use
-competent authorities may now prohibit an EU exporter from using an EU
GEA under certain conditions.
Link to Regulation 1232/2011: http://eur-
lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2011:326:0026:0044:EN:PDF
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Proposal for further changes
- Commission Green Paper in June 2011 launched broad public
consultation concerning the functioning of the EU dual-use export
control system with view to legislative proposal
- Concerns : security vs international competitiveness, and internal EU
harmonisation
- Divided into three parts
- Overall context of export controls
- Specific issues under the current Dual Use Regulation
- Mid-to long-term vision of export controls in the EU
- Further changes require greater Member State transparency (to
know what is happening) : first publication of additional Member
State measures, implementing new requirements of Regulation
428/2009, occurred in March 2012, and is available at http://eur-
lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2012:067:0001:0063:EN:PDF
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Proposal for further changes - continued
- Main proposals for changes to EU dual use export
control regime suggested in Green Paper
- Common risk assessment
(cf Council Common Position 2008/944/CFSP)
- Better exchange of information
- New EU GEAs (esp. low value shipments, export for repair,
export after fair), catch-all controls (EU catch-all?)
- Abolition of intra-EU controls
- Improved enforcement
Example of Member State comments on Green Paper :
http://www.bis.gov.uk/assets/biscore/eco/docs/12-509-eco-response-eu-
green-paper-dual-use.pdf
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Proposal for further changes - continued
- Re Abolition of intra-EU controls
– Directive 2009/43/EC re intra-EU transfers of defence related products
aimed to ease trade barriers within the EU, stimulate common
production projects and make EU companies more competitive
http://eur-
lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2009:146:0001:0036
:EN:PDF
– Similar regime was proposed as part of recast of Dual Use Regulation
but not adopted in 2009
– Green Paper suggests using notification, post-shipment verification and
lists of certified end-users instead of license requirement on intra-EU
exports of dual-use goods
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Evolution of EU economic sanctions
- Iran
- Syria
- Burma/Myanmar
- Belarus
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EU Iran sanctions regulations
Council Regulation 267/2012 (March 2012) replaced Regulation 961/2010
New regulation maintains restrictions of Regulation 961/2010, implements additional
restrictions agreed in January 2012, and clarifies certain implementing provisions
Additional items introduced by Regulation 267/2012
- provisions targeting the transportation, insurance and reinsurance of Iranian crude oil,
petroleum products and petrochemicals
- restrictions and notification requirements for the transfers of funds and financial services
- ban of the supply of specialized financial messaging services to listed persons
- restrictions on gold, precious metals and diamonds
- restrictions with respect to Iranian banknotes and coinage
- provisions expanding assets freeze list and extending prohibited dual-use items list
- provisions introducing derogations from freezing of funds and economic resources
- amendments to the provisions regarding the diligence of EU financial and credit institutions
Link to Regulation 267/2012
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2012:088:0001:0112:EN:PDF
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EU Iran sanctions regulations - continued
Council Regulation 264/2012 (March 2012) revised Regulation 359/2011
Distinguish measures reflecting concern over
1) Iran’s nuclear programme (Regulation 267/2012) versus
2) deterioration of human rights situation in Iran (Regulation 359/2011)
Regulation 359/2011 imposed an asset freeze against persons complicit in or
responsible for directing or implementing grave human rights violations
Regulation 264/2012 adds to Regulation 359/2011 by
- expanding the list of persons subject to restrictive measures
- prohibiting the export of equipment which may be used for internal repression
- prohibiting the export of telecommunications monitoring equipment
- prohibiting related TA, brokering & financial assistance
Link to Regulation 264/2012
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2012:087:0026:0036:EN:PDF
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New EU sanctions on Syria
Council Regulation 36/2012 replaced Regulation 442/2011
Council Regulation 36/2012, adopted in January 2012, consolidates and expands all
existing EU measures against Syria
- It maintains the EU arms embargo and a ban on Syrian crude oil imports
- In addition, Council Regulation 36/2012 introduced prohibitions of
a) the transfer of telecommunications and internet monitoring equipment, technology and
software, without prior authorization, and
b) the transfer of oil and gas equipment and equipment used in the construction of
electricity generating power plants (with the possibility for the latter equipment of a
contractual exemption for certain exports)
Link to Regulation 36/2012: http://eur-
lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2012:016:0001:0032:EN:PDF
On 14 May 2012, the Council reinforced once more EU restrictive measures against the Syrian
regime (adding to the list of persons subject to restrictive measures) : http://eur-
lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2012:126:0003:0005:EN:PDF
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Partial and temporary suspension of EU sanctions
against Myanmar
In February 2012, the EU had already suspended a visa ban for
President Sein and other leaders of the Myanmar government
In April, in the context of the annual review (the sanctions against
Myanmar were set to expire on 30 April), the EU suspended for one
year all sanctions other than the arms embargo and the embargo on
equipment which may be used for internal repression
COUNCIL REGULATION (EU) No 409/2012 of 14 May 2012 suspending certain
restrictive measures laid down in Regulation (EC) No 194/2008 renewing and
strengthening the restrictive measures in respect of Burma/Myanmar.
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2012:126:0001:0002:EN:PDF
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Expanded EU sanctions on Belarus
Council Regulations 588/2011, 999/2011 and 114/2012 expanded the
sanctions which had been imposed in Regulation 765/2006 by
- expanding the list of persons subject to restrictive measures
- prohibiting the export of equipment which may be used for internal
repression
- imposing an arms embargo
- prohibiting related TA, brokering & financial assistance
Links to Council Regulations amending Council Regulation (EC) 765/2006
Council Regulation (EU) No 588/2011
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2011:161:0001:0006:EN:PDF
Council Regulation (EU) No 999/2011
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2011:265:0006:0007:EN:PDF
Council Regulation (EU) No 114/2012
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2012:038:0003:0005:EN:PDF
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Adding to the compliance challenges
» Dual use rules
– Keeping up with international changes
– Further EU-level changes : new CGEAs, new
proposal for further changes
– Greater transparency in MS variations
» Economic sanctions
– Quicker and far-reaching changes
– Greater impact on all payments
– Myanmar developments
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Thank you!
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