Dual-use IT equipment refers to software, technology or products that can be used for civilian and military purposes. They include components, materials, or systems used in the development of weapons of mass destruction and military goods.
The EU regulates brokering, transit, export and technical assistance of dual-use goods to control increasing production of Weapons of Mass Destruction (WMD) and contribute to international peace and security.
When exporting IT equipment from the EU, exporters must be aware of the restrictions and regulations to comply with for a successful transaction. However, exporters can also work with an experienced importer of record to ensure compliance.
But is ensuring compliance the only way an IOR can help exporters? How can the importer of record ensure compliance? What are these dual-use regulations the IOR must comply with? And how else can exporters benefit from an importer of record?
This article answers the above questions, detailing ways the importer of record can assist when exporting dual-use equipment from the EU.
EU Dual-Use Export Control Restrictions
The EU has established licensing requirements for the cross-border movement of IT technology and software with potentially adverse effects for non-compliance.
The controls include local restrictions by the EU Member States and EU-wide restrictions by the EU Legislation.
Due to emerging technologies and evolving cyber security needs, the EU developed the Dual-Use Regulation (EU Regulation 2021/821), replacing the Council Regulation (EC) No. 428/2009.
The replacement was after the European Commission submitted a proposal to revise the European Export Control System in 2016.
The revised regulation was adopted in May, 2021 and aligns with international commitments and rules made by the following authorities:
- Missile Technology Control Regime
- Australia Group
- Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies
- Nuclear Suppliers Group
- Chemical Weapons Convention
The regulation caters to five types of authorisations applicable when exporting dual-use goods from the EU:
- Individual global export authorisation: Granted by the Member State authority where the exporter resides to allow shipment of one or more dual-use items to one end user in a non-EU country.
- Global export authorisation: issued to allow the shipment of multiple dual-use items to multiple countries and end users.
- EU General Export Authorisation (EUGEAs): Issued to allow the exportation of specific dual-use items under specific conditions.
- National general export authorisations: May be issued by individual EU Member States provided they do not conflict with existing EUGEAs and do not cover the export of dual-use software and technology to certain countries.
- Large Project Authorisation: An individual or global authorisation, issued to a specific exporter, to export a specific dual-use item, to one or more specific end users, in specified non-EU destinations, for a specific large-scale project.
Criteria for Assessing Dual-use IT Equipment Controls
Before initiating any export transaction for IT equipment, exporters and importers of record are required to assess the export restrictions applying to the transaction. Here are the criteria exporters use to determine the rules applying to their shipment:
1. Classification
Exporters must understand the classification entry of their shipment to assess if it lies within any relevant EU export control and the specific rules applying to the shipment.
The analysis requires exporters or importers of record to understand the export control lists and the technical requirements of their shipment.
2. End Use
The exporter must determine if the shipment contains any evidence suggesting that the products would be used for a controlled end use.
If there are any red flags of the goods causing suspicion of controlled end use, the exporter or importer of record is required to apply for an export licence.
3. Exporter
The entity of the exporter determines the possibility of exporting the item. The entity could be based on the exporter’s authority or origin. For instance, the export controls of a transaction within the EU Member States may vary from those outside the EU.
Also, a licensed importer of record may have fewer requirements to fulfill when obtaining an export licence than a first-time international exporter. In any case, the exporter bears all possible penalties in the event of a breach of the export control rules.
4. Destination and End User
Some destinations and end users may be subject to restrictive EU sanctions at the time of the export transaction.
Knowing where and who the goods are exported to determines the type of licence required, its availability, and the possibility of the relevant authority granting the licence.
It also helps in avoiding export compliance diversion so that goods reach the intended destination and end users.
5. Licensing
From registration to end-use declaration and record keeping, the exporter must determine the licensing required and the conditions for obtaining the licence. The analysis includes determining the scope each licence covers to avoid future fines.
How an IOR Helps when Exporting IT Equipment from the EU
The criteria discussed are invaluable when exporting dual-use IT equipment from the EU. However, meeting the criteria can be challenging for new exporters without international trade experience, precisely experience handling IT equipment.
Thankfully, exporters can hire or collaborate with an importer of record to ensure a seamless experience when exporting equipment from the EU. Here are the five significant ways an IOR can be of help.
1. Accurate Classification
Classification is one of the criteria for determining the licensing requirements of a shipment. A common challenge with HS codes is that they can be complex, especially when classifying IT equipment.
Every component takes a specific HS code and a wrong code assignment translates to inaccurate licensing requirements, leading to non-compliance.
An experienced importer of record that specialises in the cross-border movement of IT equipment can help to accurately classify your shipment and avoid compliance issues.
N.B: We previously discussed the criteria and benefits of choosing the right IOR for your industry, where expertise and experience contribute to accurate classification.
2. Ensuring Export Licensing Compliance
Export control rules are frequently changing, making compliance a complex process. That is especially because exporters must stay ahead of changes made to the export licensing controls to remain compliant.
Established importers of record like Blackthorne offer expert export licensing services, ensuring your business remains compliant with every change in the export control requirements.
3. Customs Clearance
The main challenge facing exporters at the EU border is managing trade costs associated with the customs clearance procedures.
Obtaining required licences, settling customs duties and fees, and ensuring compliance involves a lot of paperwork and documentation.
Without the required authorisations and documentation, the exporter can be fined, and the shipment can be rejected, seized, or delayed till all requirements are met.
An experienced IOR can assess the requirements before initiating the transaction and meet them in time to facilitate the clearance.
Also, in case of any issues arising at the border, the IOR can help settle the case with the customs authorities without your involvement.
4. Logistics Management
Logistical challenges such as warehousing constraints, port congestion and fluctuating transportation costs can lead to delayed delivery or damage of IT equipment.
Technological developments such as route optimisation and product tracking help alleviate these issues. For instance, Blackthorne has established a network of Forward Stocking Locations (FSLs) with a calculator to help estimate your forward stocking tariffs.
Acquiring and managing such technologies can be costly. This is especially true if the cost of the technology outweighs the benefits of your exportation.
Hence, can contract an IOR with these technologies to ensure the safety of equipment and timely delivery at lower costs.
5. Management of Taxes, Duties and Fees
Hidden costs are among the leading expenses that can lower your profit margins when exporting IT equipment. These costs range from overpayment of taxes and duties to warehousing, storage, and transportation costs.
Other expenses include penalties and fines arising from unmet requirements and non-compliance.
For instance, when obtaining an authorisation from the EU, you are required to keep a detailed record of your exports for five years. This record includes commercial invoices and transportation details.
Failure to provide the records when required can lead to revocation of your licence and potential penalties.
An importer of record can help manage these expenses, including keeping your transaction records for the minimum required duration.
Export Seamlessly with Blackthorne
Undoubtedly, an importer of record is an invaluable asset when exporting IT equipment from the EU. This is especially if you are looking to eliminate export trade barriers and increase your profit margins.
Blackthorne is your dedicated importer of record, offering a suite of cross-border services to cater to all your exportation needs.
From our over 25 years of experience, we ensure accurate classification, manage logistics, ease customs clearance, and eliminate unnecessary costs so you can make the most of your IT equipment export.
Other ways Blackthorne helps make the most of your shipment include:
- Utilising free trade agreements (where applicable).
- Accurate valuation of goods when assessing tariffs and duties.
- Ensuring you remain compliant to avoid penalties.
- Utilising the most effective terms of service between your business and the receiver.
- Route optimisation and tracking for timely delivery.
- Utilising a streamlined supply chain management system for financial tracking.
Besides, we also offer best-practice IT equipment installation, maintenance and support, ensuring safety and compliance for all your equipment.
Hence, if you need help exporting IT equipment from the EU, we are only a call away to discuss your exportation needs and potential profits.
