Posted: 31 Aug. 2018 5 min. read

Brexit and export controls: the ‘no deal’ scenario

The Export Control Joint Unit (ECJU) of the Government of the United Kingdom has released a guidance document detailing the effect of exporting controlled goods in a ‘no deal’ Brexit scenario. 

Whilst the UK Government states that negotiations with the EU are progressing well and that a ‘no-deal scenario’ is highly unlikely, the document also notes that it is the responsibility of Government to prepare for ‘all eventualities’ in the lead up to March 2019. The areas predominantly affected relate to the export of dual-use items, goods usable for torture or capital punishment, and firearms.

Military items

In the event of a no deal, there would be no changes to controls on the export of military items from the UK (other than minor legislative fixes), as EU regulations do not apply in this area.

Dual-use items

The export of dual-use items from the UK to EU Member States would require an export licence, in the same way as for non-EU destinations. In other words, exports to EU countries would be treated under the same framework as exports to non-EU destinations are treated now.

In a ‘no deal’ scenario, exporters of dual-use items would have the opportunity to register to use an Open General Export Licence (OGEL) designed specifically for exports to EU countries. This licence would remove a requirement for exporters to apply for individual licences and would be instantly valid following a registration process. ECJU would publish the OGEL in advance of Brexit, along with licence registration guidance. However, no date has been set on when such guidance would be released. Exporters requiring individual licences will be able to apply for these licences in advance of the exit date.

Additionally, any dual use licences currently being used by UK companies to export goods from other EU Member States would no longer be valid, and a new licence would be required from the applicable Member State. For example, if you are using a UK export licence to export goods from a warehouse in Germany, in the event of a no deal, you would need to replace this with a German export licence. This may require additional local resources to take responsibility and accountability for export licence management.

Goods usable for torture or capital punishment

Similarly to the export of dual-use items, exports to EU Member States of goods usable for torture or capital punishment would be treated as exports to non-EU countries. Consequently, exporting or providing brokering, training, or advertising services relating to items controlled under Annex II (Council Regulation 2016/2134) to EU Member States would be prohibited; exporting items controlled under Annexes III & IIIA (Council Regulation 2016/2134) to EU Member States would require a licence.

Firearms

The owner of a European Firearms Pass is currently permitted to take personal firearms from one EU Member State to another. After a ‘no deal’ Brexit, this pass would no longer be available for UK persons taking personal firearms to the EU. The exemption that currently permits the temporary export of firearms (as personal effects) to non-EU destinations would be extended to cover the EU.

To further understand how Brexit may affect your business, please contact our Deloitte team.

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Julia Bell

Julia Bell

Director

Julia leads Deloitte’s Global Export Controls & Sanctions team in London. She has led compliance-enhancing projects for a number of years in a variety of industries, including financial services, consumer products, oil and gas, aerospace & defence, manufacturing and the technology, media and telecommunications industries. She is a specialist in US, EU, UK, French, German and other EU Member State military, dual-use and sanctions regulations. Julia has a thorough understanding of the export control challenges faced by companies involved in international trade activities. More broadly, Julia supports her clients in developing integrated compliance programmes to manage their regulatory compliance requirements (including export controls, ABAC and data privacy), with a focus on lean business requirements to manage regulatory obligations. Julia has also been involved in the development of a number of different technology solutions to manage export compliance requirements, and has supported clients to develop and implement their digital strategies for effective compliance management.