export compliance management seminar 29 may 2012: eu export controls and sanctions update: further...

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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http://www.wassenaar.org/guidelines/docs/2 - Internal Compliance Programmes.pdf







http://trade.ec.europa.eu/doclib/docs/2010/november/tradoc_146861.pdf

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



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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



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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-


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-


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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.


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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






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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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