Posted: 23 Feb. 2021 5 min. read

Brexit: what export controls impacts are we seeing so far and what can we expect?



1. Dual Use Goods

When the UK became a 'third country' according to European Union (‘EU’) law, licence-free movement of dual-use goods to and from the EU ceased to apply. The immediate impact was mitigated by the introduction of a number of new authorisations and the UK Export Control Joint Unit ('ECJU') has published extensive guidance on exporting controlled and dual-use items after Brexit.

Immediate issues were addressed through a series of new/updated authorisations, as follows:

  • The UK introduced an Open General Export Licence (OGEL) to authorise exports from the UK to the EU;
  • The EU updated the Union General Export Authorisations (UGEAs), to include the UK in its list of 'friendly' countries (alongside the likes of Australia, Canada and New Zealand); allowing for the export of all but the most sensitive items.
  • For exports from the UK to the UGEA countries, UK legislation recognised 'retained GEAs' (rGEA) as a new version of the UGEA (which resulted in the issuance of new licence registrations numbers, for the retained GEA licences). Retained GEAs permit exports from Great Britain and exporters from Great Britain should check their new licence registration number and ensure it is visible on any export documentation.

However, while these changes might be regarded as largely administrative, there is potential for divergence between the UK and EU Dual-Use Regulation, even in the short term. The EU intends to issue in the near future an update of the EU dual use regulation ( Council Regulation (EC) No 428/2009 of 5 May 2009 ), which has a number of changes.  

The most striking feature of the new EU Regulation is the strengthening of catch-all end use controls, to cover items not necessarily on the dual-use lists, used for cyber surveillance involved in internal repression or breaches of human rights law. Furthermore, end use controls for brokering and technical assistance will now cover, in addition to weapons of mass destruction items, items with a military end use in states subject to embargo. Efforts have also been made to improve speed of response, flexibility and reduce the bureaucratic burden on exporters, including two new UGEAs, covering intra-group exports of software and technology, and encryption. Therefore, unless the UK regulation is similarly amended, the two sets of regulations will be out of step. It is not yet clear what position the British government will take on this issue.


2. Military Goods

Although in principle, licensing requirements for military goods, to and from the EU, remain largely unchanged, EU Member State military goods import and export regulations sometimes treat transactions with non- EU countries differently from those with other EU Member States. Failure to verify this can lead to complications and delays. In practice, we are seeing some companies experience delays arising from the fact that some EU countries (e.g. France and Italy) apply different rules for military transactions from EU and non-EU countries. For example, a demand for proof that UK companies are approved military exporters, or requesting an import licence for sensitive goods.


Northern Ireland

Currently, there are no immediate changes to export licensing requirements for dual-use items moving between Northern Ireland and Great Britain, and between Northern Ireland and the EU. Under the Northern Ireland protocol, Northern Ireland will continue to be treated as if it was part of the EU for export control purposes and licences will not be required to authorise the movement of dual-use goods between the EU and Northern Ireland . UGEAs will remain valid for exports from Northern Ireland. The new EU dual use regulation update will apply to exports from Northern Ireland  (see guidance  for further information)


Embargoes

Any exporters dealing with destinations that are subject to an arms embargo should refer to the relevant sanctions regulations under the Sanctions and Anti-Money Laundering Act 2018. There are no immediate substantive changes to embargoes imposed by the UK, but exporters are warned to check the new regulations carefully since differences in the language of the UK regulations may lead to differences in application. In any event, UK embargoes  may differ from EU embargoes over time as the UK is no longer part of the EU embargo regime.


Support with UK Export Compliance

For support with compliance with national and international export controls, please contact our Regulatory Risk team members:

  • Stacey Winters is a Partner in Deloitte’s Risk Advisory Practice
  • Julia Bell is a Director in Deloitte’s Risk Advisory Practice
  • Serena Helate is a Consultant in Deloitte’s Risk Advisory Practice

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Key contacts:

Stacey Winters

Stacey Winters

Partner

Stacey Winters leads our Aerospace and Defence sector in the UK. Serving our most prominent Aerospace and Defence clients, Stacey has years of experience in supporting both commercial Aerospace and Defence programmes around the world. Her subject matter expertise is focused on regulatory risk and compliance, with a particular focus on export controls, including the US ITAR. Functionally, Stacey leads our Global Export Control and Sanctions practice, and has over 17 years’ experience in standing up compliance programmes for complex organisations with diverse global compliance obligations. Her experience spans organisational and functional design, programme development and management, automation, risk assessments, audits, and investigations, and Government liaison. Stacey also has global responsibility for our Risk Advisory services across the Aerospace and Defence sector. Stacey works with a number of our clients across industries, particularly in the field of sanctions compliance, and has recently supported a number of companies assessing the potential risks and opportunities presented by the lifting of EU sanctions against Iran. Her sanctions experience has focused on EU and US sanctions against Russia, Iran and the US trade embargo on Cuba. Stacey has worked across the media, telecommunications and energy sectors to help clients assess risk and implement effective internal controls when working with these jurisdictions. Stacey is on the editorial board of World ECR and an active member of various trade associations in the UK and the US. In 2008, Stacey was awarded Professional Woman of the Future by the Woman of the Future Awards and Real Business magazine and was named one of the UK’s “35 Women Under 35” by Management Today. She is an advocate for gender equality and enjoys her role as a mentor to inspiring young women. Stacey earned a B.A degree with Honors in Export Management and European Languages from Napier University, Edinburgh, Scotland. Stacey is mother of two boys and an active supporter for breast cancer research charities.

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.