Even if the goods are not subject to an export authorisation, it is highly recommended to request an EUS. An EUS can be a valuable addition to an internal compliance program, offering various benefits. In our practice, we frequently receive inquiries from clients regarding the necessity, application, enforcement, and monitoring of the EUS. This article delves deeper into these specific aspects.
Why request an EUS?
- End-Use Verification: It can help verify the intended end-use of the goods. It can be a preventive measure to prevent the goods from falling into the wrong hands or being used for unwanted purposes.
- Regulatory compliance: It is an important tool for meeting the requirements of export regulations and reducing the exporter's responsibility. Regulations around dual-use goods and export controls can change quickly. By requesting an EUS, you can better prepare for future changes in legislation that may impose stricter requirements.
- Prevention of misuse: It helps in preventing misuse of the goods by undesirable parties.
- Internal compliance and risk management: The EUS provides an additional layer of documentation and accountability that can be useful for internal audits and in adherence to company procedures. Even if an authorisation is not required, an EUS can help conduct a thorough risk assessment of the transactions and customers.
- Limitation of liability: Should an incident occur involving the goods, an EUS can help to demonstrate that the exporter has taken the necessary steps to ensure compliance and limit responsibility.
- Strengthening customer relationships: By requesting an EUS, you demonstrate to your customers and partners that you are serious about compliance and security, which can strengthen transparency and trust in business relationships.
What elements should an EUS contain?
If goods are being sold for which it is mandatory to draw up an EUS, the EUS should be requested before the goods are shipped and as part of the export license application process. The exporter must ask the buyer or end user to complete and sign the EUS form, which should then be included with the authorisation application.
It is important that all information in the EUS is consistent with other documentation related to the export transaction, such as contracts and invoices. Additionally, the EUS should be regularly updated to ensure it complies with the latest laws and regulations. This is particularly important in the case of changes in destination countries or if there is a change in the nature of the goods.
While an EUS is not entirely standardized, there are guidelines and best practices indicating the ideal content to meet export control and compliance requirements. The Wassenaar Arrangement and other non-proliferation treaties provide recommendations for the content of an EUS. However, they do not impose binding formats.
- Important elements that an EUS should contain as a minimum:
- End-user identification
- Description of the goods
- Statement of end use (e.g., non-military use/no arms trade)
- Compliance statement (all relevant national and international laws)
- Signature and date (authorized person within the organization)
- Use of company letterhead
In addition to the above, some countries or companies may require specific forms or formats. Exporters can also develop their own EUS templates that meet the needs of their trading partners.
Customs Knowledge has developed an EUS template that complies with the current applicable EU legislation and criteria as set by government bodies such as the CDIU. We can also assist in drafting a specific, tailor-made EUS.
Supply to wholesalers or distributors?
An EUS is essential to ensure that products are used exclusively by the end user and are not resold without authorisation. When supplying wholesalers or distributors, the EUS must explicitly state whether resale within certain markets or to specific end users is permitted. Every party in the supply chain must adhere to the EUS conditions to prevent products from reaching unauthorized end users or countries with export restrictions. Failure to comply with the EUS can lead to legal and financial consequences, including sanctions or loss of export licenses.
Therefore, it is crucial that suppliers ensure wholesalers are aware of their obligations under the EUS and pass these on to their customers. The EUS should also include clear instructions for resale, with a requirement for wholesalers to identify and document end users. Additionally, suppliers should obtain written confirmation that the end user agrees to the EUS terms before products are resold. Regular monitoring of EUS compliance, especially for deliveries to wholesalers, is necessary, and it is advisable to include a clause in the sales agreement that obligates the wholesaler to obtain an EUS from the end user.
Legalisation of an EUS
When drafting an EUS, it is crucial to follow the correct legalization procedures. In our practice, we often encounter clients who face challenges with the legalization process. Depending on the destination and the type of product, different forms of legalization may be required. Clients often believe they have completed all necessary steps, only to find that the EUS is deemed non-compliant by the CDIU due to missing legalization. This can range from notarial certification, where the signatory's authority is verified by a notary, to consular legalization, where the validity of the document is confirmed by the consular department of the destination country. It is therefore essential to determine the required form of legalization on a case-by-case basis to ensure compliance with regulations.Bottom of form
Examples of legalization:
- Notarization: In some cases, it may be useful or even required to have an EUS notarized. This involves a notary verifying the end user's signature and confirming that this person is authorized to act on behalf of the company.
- Consular legalization: Consular legalization may be necessary for certain destinations. This means that the EUS is legalized by the consular section of the destination country to confirm its validity and authenticity.
- Legalization by competent authorities: In many countries, the end-user declaration must be legalized by the competent authorities or a body authorised by them, such as the (local) Chamber of Commerce.
For each specific case, company, product, destination, and end user, it is essential to determine the required form of legalization.
Conclusion
An End User Statement (EUS) is a crucial tool in export control, even when the goods do not require an authorisation. Requesting an EUS offers multiple benefits for exporters, including verifying end use, ensuring compliance with export regulations, preventing misuse, and limiting liability. Furthermore, an EUS contributes to a company’s internal compliance program by providing an additional layer of documentation and risk management.
Customs Knowledge offers support in drafting and legalizing an EUS that complies with the most recent EU legislation and international guidelines. In this context, Customs Knowledge has developed an EUS template that meets the current EU legislation and criteria as set by entities such as the CDIU.
If you are looking for more information about the content of an EUS, please feel free to contact one of our specialists!