Malcolm Budd BSc (Law) MCIPS Senior Export Control Manager (Corporate) Rolls-Royce plc 16 th August 2011
Why have Export Controls? Structure and Incorporation Penalties for Non-Compliance Military & Dual-Use Control Lists Overview of UK Export Control Regulations Overview of US Export Control Regulations Other Significant Regimes How Export Controls Impact Purchasing Question & Answer Session Summary
Christopher Tappin, 64, of Orpington, Kent Accused of conspiring to sell parts for Iranian missiles, and is fighting extradition to the USA Mr Tappin said he believed he was exporting batteries for the car industry in the Netherlands. If convicted, he faces 35 years in prison.
The Iraqi Supergun and Matrix-Churchill Arms-to-Iraq affair concerned the uncovering of the government-endorsed sale of arms by British companies to Iraq.. Four directors of the British machine tools manufacturer Matrix Churchill were put on trial for supplying equipment and knowledge to Iraq. In 1992 the trial collapsed, as it was revealed that the company had been advised by the government on how to sell arms to Iraq. Several of the directors were eventually paid compensation As one of the other directors claimed to have been working for the British intelligence services, the Ministry of Defence advised Matrix Churchill on how to apply for export licences of materials that could be used to make munitions in such a way that would not attract attention.
Tools used by NATO and ‘friendly’ countries to ensure trade is conducted securely i.e. to prevent certain equipment and technology ending up in the wrong hands ◦ and contributing to acts of aggression, cruelty or proliferation of WMD The means by which governments control the movement of strategic goods and technology between countries and people which affect the security interests of national or international objectives of the country All products and technologies are subject to: National export controls of the countries in which you operate; AND ◦ ‘Extra - territorial’ Export Controls of the USA. ◦ Controls apply to: Conventional Arms & Weapons; and ◦ Vehicles & components that carry them; and ◦ Other equipment that could have Military use; and ◦ Otherwise ‘civil’ items in relation to specified End Users; and ◦ The flow of money ◦ Rolls-Royce data-strictly private
It is the Law ! Penalties for non-compliance are extremely serious: Loss of licences or ability to use Open Licences ◦ Hardware seized ◦ Unfavourable press & damage to reputation; ◦ US Denied Parties list – company, company director and ◦ individual Financial – fines ◦ Loss of trade impact on profit margins; Personal imprisonment. ◦ Rolls-Royce data-strictly private
• WHAT is being exported? • WHERE it is being exported between? • WHO it is being exported between? • WHY it is being exported? • HOW it is being exported? • WHEN and FOR WHAT it is being exported? • HOW MUCH/MANY is being exported?
International Agreements govern lists of Military & Dual Use items subject to Control: e.g. ◦ Wassanaar Arrangement ◦ Australia Group (Chemical Weapons) ◦ Nuclear Weapons Group ◦ Missile Technology Control Regime ◦ Chemical Weapons Convention EU and National Governments incorporate these into law ◦ Military Lists ◦ Dual Use Control Lists ◦ End Use Controls National variations in application of Regulations National variations in perception of different destination countries Company policy may enforce additional restrictions
Governments produce lists ◦ Lists of controlled goods and technology ◦ Lists of countries ◦ Lists of companies and individuals ◦ Lists of controlled purposes ◦ Lists of export processes Exports that meet certain combinations of these lists must be authorised by the regulatory bodies prior to the export taking place Exports that require approval are illegal if there is no approval or if they do not comply with the approval.
• Goods and technology designed or modified by fit, form or function for military applications • ML6 – Ground vehicles • ML7 – Chemical or biological toxic agents • ML9 – Vessels of War • ML10 – “Aircraft” & Aero-Engines • ML11 – Electronic Equipment • ML16 – Forgings, castings and other unfinished “goods”... • ML18 – Production equipment and components • ML20 – Cryogenic and “superconductive” equipment • ML21 – Software • ML22 – “Technology” ...which is required for the development, production or use of goods or software elsewhere in ML
Items designed originally for commercial use but which could have a military application (but not modified for military use) and as defined by specific performance criteria in the Control Lists Does not mean ‘goods that are used in both Civil and Military’ PLUS Any item or technology which you believe or know may be used for or associated with Weapons of Mass Destruction (WMD – chemical, biological or nuclear) purposes
‘DUAL - USE’ ITEMS – CON ONTR TROL OL ENTR TRY EXAMPLE MPLE Category Sub-Category 0 – Nuclear Materials, A – Systems, Equipment & Components Facilities & B – Test, Inspection & Production Equipment Equipment C – Materials 1 – Special Materials and D – Software Related Equipment E – Technology 2 – Materials Processing 3 – Electronics 4 – Computers 5 – Telecommunications Regime Origin & Information 0 – Wassenaar Arrangement Security 1 – Missile Technology Control Regime 6 – Sensors & Lasers 2 – Nuclear Suppliers Group 7 – Navigation & 3 – Australia Group Avionics 4 – Chemical Weapons Convention 8 – Marine 9 – Aerospace & Propulsion Item’s individual entry code 6A203a Mechanical rotating mirror cameras, as follows, and specially designed components therefor: 1. Framing cameras with recording rates greater than 225000 frames per second. 2. Streak cameras with writing speeds greater than 0.5 mm …..
Exports meeting criteria on Control Lists require authorisation through an Export Licence by the regulatory body prior to the export taking place Controlled exports are illegal if there is no Export Licence or if they do not comply with the terms of the Export Licence
Specific information necessary for the development, production or use of goods or software. This information takes the form of: ◦ ‘Technical Data’ ◦ ‘Technical Assistance’ So an RFQ with a Technical Specification for a component, (or a casting/forging for a component), is likely to contain technology and would therefore need to be rated and highlighted as such if ‘controlled’ US laws also control bill-of-material information
Examples amples of of Te Technica hnical l Data ta Blueprints Instructions Specifications CAD files Test data Software Operation / use manuals Maintenance manuals Plant tours Photographs Performance data Service bulletins Overhaul manuals Source code CDs – Data Disks
Export Control Organisation (ECO) in the Department for Business, Innovation and Skills (BIS) Advised by: ◦ Foreign and Commonwealth Office ◦ Ministry of Defence Further information is available on the ECO pages of ‘BusinessLink’
Due ue Dilige ligence nce It is the responsibility of the exporting party to ensure that all export regulations are followed. This includes: Controlled items are exported legally against a valid license, agreement, exemption or exception. The exporting party has performed reasonable care to ensure that the customer is legally entitled to receive the exported goods.
SIEL = Standard Individual Export Licence ◦ Nominated Recipient in One Nominated Country ◦ Capped by Value & Volume ◦ Valid for 2 years maximum ◦ Requires EUU revalidated annually OIEL = Open Individual Export Licence ◦ Multiple Recipients in Multiple Countries ◦ No cap on Value or Volume ◦ Valid for 5 years maximum ◦ Requires EUU revalidated annually
OGEL = Open General Export Licence ◦ Around 40 in circulation ◦ Used for Military Goods & Technology ◦ Each OGEL lists countries valid for export ◦ ‘Open’ – need to register not apply each time ◦ Subject to detailed annual audit by BIS ECO ◦ Mandatory Record Keeping Requirements ◦ Requires current EUU revalidated annually ◦ OGEL: Technology for Military Goods ◦ OGEL: Dual Use Goods ◦ Customs Free/Special Economic Zones
Exports of Dual Use Goods & Technology not licensable within EU Community General Export Authorisation EU001 ◦ Australia : Canada : Japan : New Zealand : Norway Switzerland : USA ‘Brokering’ ‘End Use’ Trade Controls Iran and other countries Licences may be amended, suspended or revoked by the UK Secretary of State or EU Commission at any time
Governments require EUU to support all Licence applications ◦ Renewable annually ◦ Mandatory Record-keeping ◦ Export Rating on all exports of Goods and Technology ◦ Goods: Logistics/Shipping responsibility? ◦ Technology: Personal responsibility? ◦ Corporate, team or personal record keeping systems Suppliers & Customers becoming more aware!
EXPORT PHYSICAL MOVEMENT OF GOODS EXPORT UK PHYSICAL MOVEMENT OF DATA EXPORT ELECTRONIC TRANSFER OF DATA
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