BUSINESS FOCUS ON ENFORCEMENT The Export Control Organisation’s response to the techUK review of compliance and enforcement activity related to export control for electronic systems, assemblies and components MARCH 2015 ECO response to a techUK review of regulation of export control for electronic systems, assemblies and components Contents Contents Contents BUSINESS FOCUS ON ENFORCEMENT ...................................................................................... 3 Introduction ................................................................................................................................... 3 Regulatory Background ............................................................................................................... 3 INTERIM RESPONSE .................................................................................................................... 4 Finding 1 ........................................................................................................................................ 4 Finding 2 ........................................................................................................................................ 5 Finding 3 ........................................................................................................................................ 5 FINAL RESPONSE AND KEY ACTIONS ....................................................................................... 6 2 ECO response to a techUK review of regulation of export control for electronic systems, assemblies and components BUSINESS FOCUS ON ENFORCEMENT Interim response of the Export Control Organisation to techUK’s Review of compliance and enforcement activity related to export control for electronic systems, assemblies and components. Introduction The Business Focus on Enforcement programme enables business groups to collect and present evidence directly to Ministers and Regulators. As part of the review of compliance and enforcement activity related to export controls for electronic systems, assemblies and components, techUK examined perceptions of businesses in the electronics sector that: (i) other countries apply less demanding export controls to electronic products and that common standards would help create a level playing field for UK firms; and (ii) comparatively lengthy UK timeframes for obtaining export licences could be leading to the unnecessary loss of valuable contracts and the cancellation of orders for UK firms. techUK presented their report and findings to Ministers and the Regulator - The Export Control Organisation (ECO) - and this document sets-out the ECO’s response. Regulatory Background The ECO in BIS is responsible for the UK Strategic Export Control legislation and for the assessment of export licences falling within the scope of strategic export controls. HM Revenue & Customs are responsible for the enforcement of the controls. UK Strategic Export Controls cover the following broad areas: Military equipment, software and technology Dual-use equipment, software and technology End-Use controls on items for weapons of mass destruction (WMD) and imlitary programmes of concern Trade sanctions, Arms Embargoes, EU Restrictive Measures against Terrorists Goods for torture and capital punishment The techUK review focused on the impact of strategic export controls on the UK electronics sector. The main legislation affecting the electronics sector is The Export Control Order 2008 (S.I. 2008/3231), which sets out controls on primarily military goods, and the EU Council Regulation (EC) No. 428/2009, (the ‘Dual-Use Regulation), which controls so called ‘dual-use’ items – those that have uses in military and civil applications. 3 ECO response to a techUK review of regulation of export control for electronic systems, assemblies and components The ECO welcomes techUK’s report and commits to work further with techUK to understand and, so far as we can, address its concerns. INTERIM RESPONSE Finding 1 The report identified UK electronics companies (principally in the Printed Circuit Board (PCB) industry) that appear to be at a competitive disadvantage to their international competitors because of the way export controls are implemented in the UK. In particular it is claimed that the controls relating to “specially designed components” of control items is being more strictly applied in the UK. To address these concerns: The ECO will make clear that it is prepared to reconsider the classification of specific items where there is evidence that a particular assessment is open to question. ECO will work with techUK, and, where possible, the companies concerned to investigate the circumstances in detail and take appropriate action where possible. The ECO is keen for further reforms – building on those introduced for “near massmarket” electronic products in 2014 – to ensure that UK export controls reflect the fast changing nature of technology and does not place UK-based exporters at a disadvantage over their competitors in other countries. These reforms may include some decontrols where these can be agreed internationally and the expansion of light touch, “open” licensing solutions. The ECO will discuss with EU partners the interpretation of “specially designed” as used in the EU Dual-Use Regulation and in the Military List controls. A proposal for reform in this area is already under consideration and the UK will continue to be proactively engaged in pursuing an outcome that benefits both business and regulators. The ECO will conduct a review of the current requirements for End User Undertakings (EUUs). EUUs are an important element of a robust licensing system but there may be scope for reducing the burden this can place on exporters. The review will consider the use of undertakings by EU partners and the United States to ensure, where possible, that UK-based exporters are not at an unnecessary disadvantage. 4 ECO response to a techUK review of regulation of export control for electronic systems, assemblies and components Finding 2 The report raised concerns about the impact on UK exporters of lead-times for obtaining export licences. In response: The ECO is currently meeting its performance targets for processing export licences as agreed by Ministers, and based on current IT systems and available resources. To assist exporters, the ECO regularly publishes data about licensing performance for key markets in order to provide useful information for exporters on the likely timescales for licensing decisions. Exports to certain destinations and end users do present risks from an export control perspective and processing times in these instances will be longer, although decisions continue to be delivered to target. The ECO will continue to work on a number of initiatives to provide exporters with more flexible licensing solutions to reduce the need for repeat applications. An improved five year Open Individual Export Licensing (OIEL) process was launched at the end of February 2015, and further improvements will come on stream in the autumn of 2015. These reforms are aimed at increasing take-up of more flexible licences and reducing the number of licences in circulation. In 2015/16, the ECO will undertake a review of its ‘off-the-shelf’ Open General Export Licensing (OGEL) offer. The aims will be to increase the scope of exports covered by OGELs, which are available for immediate use, and to make them easier to understand and comply with. This expansion will inevitably need to be balanced alongside maintaining effective strategic export controls. Finding 3 The report is critical of the advice and guidance available for the classification of items, from both ECO and UKTI recommended consultants. In response: The ECO’s Control List Classification (CLC) advice service – enabling exporters to determine whether their goods are subject to control - was suspended in June 2014 because of a drop in performance resulting from the introduction of a new IT system in BIS. Although the CLC service remains suspended because of resource constraints, the ECO recognises it is desirable that it is reinstated. The ECO will bring forward proposals for its reintroduction in the new financial year, possibly on a charged for basis. 5 ECO response to a techUK review of regulation of export control for electronic systems, assemblies and components The ECO continues to provide an End-User advice service to support exporters who know their goods are not on the control lists, but wish to understand whether there and any concerns with the end-user. The ECO provides an extensive suite of training programmes for exporters; from basic through to intermediate and advanced levels. These include programmes aimed at helping exporters “rate” their goods against the export control lists, and are supplemented by online tools and guidance. The ECO will work with techUK and the electronics sector to investigate the provision of bespoke training or learning opportunities to supplement the sectorbased training it already offers. A forthcoming example is a seminar aimed at the “Cyber” sector which is taking place in early March. The ECO already works with trade bodies, such as ADS and other parts of techUK, to raise awareness and improve understanding of export controls. The ECO will aim to work more closely with techUK, for example through its Joint Electronics Telecoms Security Export Control Committee (JETSECC), to improve the advice and guidance available to the UK electronics and related sectors. FINAL RESPONSE AND KEY ACTIONS The ECO will continue to work with techUK to further develop the measures detailed in this interim response. The aim will be to finalise and agree key actions to take forward to address the issues raised by the electronics sector in the report, whilst ensuring that the UK’s effective strategic export controls for military and dual-use items is not compromised. 6 © Crown copyright 2015 You may re-use this information (not including logos) free of charge in any format or medium, under the terms of the Open Government Licence. Visit www.nationalarchives.gov.uk/doc/open-government-licence, write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: [email protected]. This publication available from www.gov.uk/bis Any enquiries regarding this publication should be sent to: Department for Business, Innovation and Skills 1 Victoria Street London SW1H 0ET Tel: 020 7215 5000 If you require this publication in an alternative format, email [email protected], or call 020 7215 5000.
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