Thanks to Gianmarco Casciotta for collaborating on this article
On September 1, 2022, the European Commission published its report[1] on the implementation of Regulation (EU) 2021/821 on dual-use goods and technologies. The report provides information on the implementation of EU export controls for dual-use items in 2021 and aggregated export control data for 2020. It does not cover aspects of the controls and restrictive measures adopted in response to Russia’s war with Ukraine.
In 2021, a new export control regulation was adopted, marking an important milestone in the development of EU export control policy.[2] The regulation is binding in its entirety and directly applicable in all Member States. It provides that Member States may use certain measures for the implementation of specific provisions. The European Commission published an informational memo that provides an updated overview of measures used by Member States.
The report was prepared by the European Commission with input from Member States in the Dual Use Coordination Group (“DUCG”). The DUCG brings together expert groups[3] to examine issues concerning application of the regulation.
In 2021, the regulation primarily applied to the export of an estimated 1,884 dual-use items, classified into 10 categories. These dual-use items relate to approximately 1,000 “commodities” from the “customs nomenclature,” including chemicals, metals and non-metallic mineral products, computers, electronic and optical products, and electrical equipment. Dual-use exports represent about 2.7% of total EU exports. This would put the value of dual-use trade at EUR 128 billion in 2020.
In 2020, the total value of applications was EUR 38.4 billion and controlled dual-use exports thus represented 2.3% of total extra-EU exports. Authorized dual-use trade amounted to EUR 31 billion, representing 1.9% of total extra-EU27 exports, with a majority of transactions authorized under individual licenses (an estimated 19,412 individual licenses issued in 2020) and global licenses (by their value).
Only a small portion of exports were denied: 559 denials were issued in 2020, representing about 1.4% of the value of controlled dual-use exports in that year.[4] The main destinations for export licenses outside of the EU were China, the United States, Taiwan, South Korea, and Russia. For intra-EU transfers, the main destinations were France, Sweden, Finland, Germany, Spain, and Belgium. It should be noted, however, that the information provided above represents estimates of aggregate quantities and values based on data made available by Member States.
The goals of the EU and Member States are clear: to modernize, simplify, and oversee the system. ELicensing allows the relevant authorities and exporters to administer controls online more efficiently and reduce the administrative burden associated with such oversight.
Interestingly, 2021 marked the first year of operation of the dual-use eLicensing system, which was launched in two Member States, Latvia and Romania. The development of the eLicensing system continued in 2021 with other authorities joining the pilot project. (Italy and Belgium‘s Wallonia region are going live in 2022, and Slovenia is expected to do the same in early 2023.)
The eLicensing project is also developing in new directions to make controls more effective—for example by linking the eLicensing system with national customs systems. This will make it easier to access information across borders and customs authorities, reducing the regulatory burden on operators and enabling automatic management of license quantities. This will be done through the Certification Exchange, or CERTEX, platform managed by DG TAXUD.
[1] The report is available at URL: https://data.consilium.europa.eu/doc/document/ST-12045-2022-INIT/en/pdf.
[2] We discussed the main changes to the regulation in a previous article, available at URL: https://portolano.it/en/newsletter/portolano-cavallo-inform-compliance/european-union-adopts-new-regulation-no-2021821-on-dual-use.
[3] For example, they include a surveillance Technology Expert Group (STEG) and a technical Expert Group on the development of guidelines for dual use research (TEGDUR).
[4] Differences in data that indicate a decline in comparison to the figures for previous years are due to Brexit and the fact that the UK had not provided data since 2019.
