The challenge with military goods

1. When are goods considered military goods?

When thinking of military goods, many people immediately think of weapons systems, ammunition or military vehicles. But the category is broader. Parts, communication equipment, protective equipment, military software or technology for maintenance and repair may also be considered military goods. Sometimes the military purpose of the goods is clear. In other cases, it is less visible, for example where parts are involved that technically resemble civil products.

2. Why military goods are particularly sensitive

The sensitivity of military goods is related to international security and foreign policy. Governments want to prevent military goods from ending up with unwanted end users, in conflict areas or with parties subject to sanctions. That is why military goods are not only considered in terms of the product itself, but also in terms of destination, end user and ultimate use.

This makes the subject sensitive for all parties in the supply chain. A supplier may think that he only supplies one part. A logistics service provider may only see a technical description. Nevertheless, these actions can already be a reason to conduct further internal investigation.

3. Practical example: an infrared camera

A Dutch wholesaler supplies riflescopes developed for military firearms to a defense contractor in Germany. The goods are transported by truck and do not leave the European Union. The supplier assumes that no authorisation is required, because there is free movement of goods within the internal market.

That assumption is incorrect. Riflescopes covered by the Common Military List of the European Union are military goods. It is forbidden to transfer military goods from the Netherlands without a transfer permit. The fact that the goods remain within the European Union does not automatically mean that export control rules do not apply.

This example shows that military goods have their own authorizing system that deviates from the rules for regular goods and also differs in part from the dual-use regulation. Companies are therefore wise to determine in advance whether a product is classified as military goods and which authorisation requirements apply to the proposed transaction under investigation.

4. Responsibilities and approach

The risks associated with military goods are significant. Carrying out activities without establishing the relevant responsibilities and obligations can lead to enforcement measures, reputational damage and disruption of commercial relationships. Banks may also become reluctant where it is insufficiently clear which goods are being supplied and to whom.

Military goods are not only relevant to manufacturers or defence companies. Traders, distributors, freight forwarders, maintenance companies and advisers may also encounter military goods in their commercial activities. Their role may be different, but they may still come across signals that call for further investigation. It is essential that the parties involved establish their responsibilities and obligations.

For organisations involved with military goods, preparation is therefore essential. They must know which products fall within military regulations, which authorisations are required and which information on end-users must be recorded. It must also be clear who within the organisation is responsible for assessment and decision-making.

A practical first step is to prepare an overview of all defence-related goods, parts, software and technology with which the organisation works. On that basis, it can be determined where authorisations, internal controls or additional contractual arrangements are required.

Do you have questions about the regulations on military goods? Please do not hesitate to contact one of our advisers.

While every care has been taken in the preparation of this publication, Customs Knowledge accepts no liability for any errors or omissions, nor for their consequences. This article is not intended as specific advice. Please also refer to the General Terms and Conditions of Customs Knowledge BV.