UK/USA/EU Export Controls Customs Advisor











UK Export Control Act - (An Overview)


Softly, softly seems to have been the Governmentís approach to the most far reaching changes in Export Control legislation since 1939. As a result many High Tech and Defence Exporters will underestimate its effects and be caught unawares. Because of the need for surveillance to counter Terrorism all hardware, software and technical data or script to do with  Encryption are particularly sensitive and must be classified under the Strategic List and  closely controlled. UN, US, UK and EU Sanctions. Legislation is constantly changing and is subject to severe penalties and criminal prosecution if breached 
Export Controls now extend to technical data, documents, research and all forms of communication including those over the Internet and oral disclosures, if they are in any way related to controlled technology or prohibited end uses. Essentially this is an enabling Act which gives the Secretary of State power to present a series of orders which will control the export of goods and technology from the UK and extraterritorially where they are under the control of a "UK person". This puts a UK Company in much the same situation in UK law, as a US Corporation and its subsidiaries abroad under the US Export Administration Regulations and any one anywhere in the world using technology controlled under the US ITAR (International Traffic in Arms Regulations).
To put the Act in context one has to cast ones mind back to the Iraqi Super Gun Affair and Sir Richard Scottís Report on the Export of Defence and Dual Use equipment to Iraq in February 1996. The Parliamentary debate on this report almost brought about the collapse of John Majorís government. The issue was "Who armed Saddam Hussein?". In 1998 the Government published a White Paper on "Strategic Export Controls" which set out proposals for new primary export control legislation, taking account of Scottís recommendations. This Act is the direct result and it also updates the old 1939 act by subjecting the Statutory Instruments that will eventually be issued to parliamentary scrutiny. In so doing HM Government is honouring promises to create "Transparency " and to explain the purpose for which an order imposing export controls or transfer controls is made. Some aspects of the Official Secrets Act also seem to have been embodied in the Act.
The Act imposes controls on "Technical Assistance Overseas" which is defined as "services used or capable of use or provided, in connection with developing or using controlled goods or technology". The Act also controls exports from the UK and the transfer of technology from the UK of certain technologies (and by UK persons anywhere by any means other than by export). The acquisition or disposal of goods that are themselves subject to export control or activities which facilitate such acquisitions or disposals are often referred to as trafficking and brokering . Any persons engaged in brokering will need a licence before they can act as facilitators or middle-men in arranging for arms or military related goods to be supplied between other countries. Where exporters deal in products which embed Encryption controls tantamount to those on Military List products should be applied internally unless and until the Encryption Algorithm has been ruled "Uncontrolled or NLR ( No License Required) by a definitive classification by BIS or "Mass Market" by close technical analysis in house . To export without having made and recorded such rulings or analyses could be construed as an offence subject to Criminal prosecution and penalties by the UK Border Force and the  regulations subordinate to this law". Companies must also inform their freight forwarders of controlled products, Conversely if a freight forwarder slips up he too may be subjected to investigation and penalties
The Act also gives the Secretary of State powers to require information, in addition to existing requirements. The Act also provides for the Secretary of State to introduce controls agreed in the EU or the United Nations relatively simply including an EU Joint Action agreed in June 2000 on the transfer by any means of technology or information where the provider knows or is informed by Government that the technology or info is intended for use in a WMD or related missile programme. The list of countries subject to some form of Sanctions is extensive and constantly changing in response to the turmoil in the Middle East, parts of Africa, Iraq and Iran as well as North Korea and Russia. Most difficult of all is the issue of indirect supply though agents and distributors to Military or Paramilitary other Government agencies or individuals, companies and countries subject to sanction. In come cases the prohibitions extend even all forms of contact.
The Trade Controls should be viewed as a response to Dealers, Brokers and Traffickers who moved arms from the trouble spots of Europe to the trouble spots of Africa. The extension of the Transfer Controls on Technology however, is a clear reflection of the dangers in todayís world of Proliferation, particularly by Terrorists and Rogue Nations. Almost anything except foodstuffs and medicines may be controlled by reasons of military use or use in manufacture, research or deployment of Weapons of Mass Destruction. The Act provides for maximum penalties of up to 10 years imprisonment in the event of a serious breach.
All those involved in exporting including staff, senior managers and directors can only protect themselves against human error and ignorance of the law by Training as part of a compliance Programme and by exercising tight control. They must train and vet key technical personnel and closely assess any dealers in third countries with whom they share technology. Not to have taken Compliance measures is at best legally "reckless" and may leave members of the Board of any Public or Private sector Institution open to prosecution, with minimal legal grounds of defence if technology gets into the wrong hands.




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