Infosys’ blog on industry solutions, trends, business process transformation and global implementation in Oracle.

« Reinforce performance reporting with a process-driven approach - ePRCS | Main | Intrinsic trade compliance issues with SMEs »

EU's proposal to modernize its dual-use regulation and its impact on various industries

The European Union (EU) controls the export, transit, and brokering of dual-use items within its territory and jurisdiction of its 28 member states*. It considers this control as an important instrument in contributing toward global peace and security.

What are dual-use items?

In simple words, a dual-use item is referred to as a good, software, or technology meant to be used by the civilian population for legitimate purposes; but can also be misused for terror attacks, international crimes, human rights violation, or the development of weapons of mass destruction.

For example, a substance that reacts chemically to release vast amounts of energy can be used in a regular college chemistry lab for educating students. At the same time, it can be possibly used in an explosive or a missile warhead. Here is another example: An electric motor that is used for generating electricity for domestic households can also be used in an armored military vehicle like a battle tank.  

According to the available statistics, export of controlled dual-use items from EU was around EUR59 billion, in 2014 alone, which is approximately 3.4 percent of the total EU exports.

How is the export in dual-use items controlled?

Through EU Regulation (EC) No 428/2009, a common EU list of dual-use items is in place and it is binding on all member countries of the EU to control the items in the list. The member countries usually place a license requirement on any enterprise involved in international trade of these items.

What is the proposal to modernize the existing dual-use regulation?

In September 2016, EU presented a proposal for a regulation to modernize EU dual-use control. The proposal aims at modifying or rather expanding the current list of items to adjust for the technological and scientific developments that the world has witnessed in the recent past.  

The main agenda of the proposal is to prevent human rights violations associated with certain cyber surveillance technologies. It is believed that if such technology is exported and falls into the wrong hands, then it could be used by repressive and authoritarian regimes to spy and intercept international communication which can pose a serious security risk to various nations and their citizens.

Which industries will be impacted and require a centralized trade management system to comply?

If this proposal is approved and enter into force, EU companies trading in cyber surveillance technologies will be required to obtain an export license and follow new procedural requirements.

Under such circumstances, it will be imperative for all those enterprises which export any of the following products to manage their trade through a robust centralized system.

  1.         Computer and network surveillance related products
  2.         Spyware manufacturing products
  3.         Information extraction software

The proposal also talks about a catch-all mechanism that allows member states to ask any exporter to apply for an export license because of human rights considerations.

This 'catch-all' clause is in contrast to the current provision according to which only the states are authorized to monitor the export. Hence, any exporter might be asked to procure a license before exporting the goods that are similar to any other goods existing in the dual-use list. Under such a circumstance, identifying and assigning the license and keeping a trail of the same manually will be an extremely challenging task for enterprises.

How can Oracle Global Trade Management help?

With its out-of-the-box (OOB) feature for license management, an enterprise can easily configure a number of licenses based on quantity or value. These licenses can be automatically assigned to the export orders involving the affected goods and makes the process hassle-free.

Further, once the quota or the value of any of the licenses reaches a critical level, the system can notify the business and the business can further apply for new / additional licenses with the relevant government authorities.

In addition, all scenarios that require any kind of export / import control measures can be modeled in the system and the entire process of screening, rescreening, and releasing sales orders can be made automatic using another OOB feature of trade compliance management.

Please meet us at the Infosys Booth during the OTM SIG APAC 2016 Conference (Singapore) and we shall be delighted to showcase our GTM solutions.  

*28 member states since no formal process of UK to exit from the EU has started as on today.

Written by: Mohammad Haider Talat and Ravikiran Narayan Khobragade

Post a comment

(If you haven't left a comment here before, you may need to be approved by the site owner before your comment will appear. Until then, it won't appear on the entry. Thanks for waiting.)

Please key in the two words you see in the box to validate your identity as an authentic user and reduce spam.

Subscribe to this blog's feed

Follow us on

Blogger Profiles